Overview
On February 21, 2025, President Trump issued a National Security Presidential Memorandum (NSPM) to multiple federal agencies outlining his “America First Investment Policy.” The NSPM details plans to encourage allies and partners to invest in the US, while simultaneously calling for additional restrictions on investment activity involving certain “foreign adversaries,” specifically, China.
While the NSPM itself does not make any immediate changes to US law, it foreshadows potentially significant changes with respect to the Committee on Foreign Investment in the United States (CFIUS), the Department of the Treasury’s Outbound Investment Security Program (OISP), and other regulatory regimes.
The NSPM primarily articulates broad policy objectives without significant detail, meaning how those policy changes are ultimately implemented will be particularly important. While the amorphous nature of the proposals may complicate planning for some companies, it also means there are likely to be several opportunities for industry to weigh-in and shape the new measures, such as commenting on proposed rules. The NSPM is the first step in what is likely to be a multipart and, potentially, lengthy process. Nevertheless, the NSPM is likely to have some immediate impact in terms of how CFIUS reviews transactions already within its jurisdiction.
Implications for CFIUS
The NSPM outlines a variety of measures intended to strengthen the ability of CFIUS to review and restrict certain foreign investment in the United States. Specifically, the NSPM directs administration officials to:
- Use CFIUS to “restrict” Chinese-affiliated persons from investing in United States technology, critical infrastructure, healthcare, agriculture, energy, raw materials, or other strategic sectors;
- Further protect United States farmland and real estate near sensitive facilities;
- Expand CFIUS’s authority to (a) review greenfield investments, (b) prevent foreign adversary access to US talent and “operations” in sensitive technologies (particularly AI), and (c) protect emerging and foundational US technologies.
By contrast, the NSPM suggests a number of changes that could potentially ease the CFIUS process for some parties. The NSPM calls for the creation of a “fast track” investment process for close allies and indicates the administration will direct more resources toward “facilitating investments from key partner countries.” The NSPM also directs changes to CFIUS’s approach to mitigation away from “overly bureaucratic, complex, and open-ended” mitigation agreements toward “concrete actions that companies can complete within a specific time.”
The NSPM notes the administration will continue to welcome “passive investment” from “all countries,” which presumably includes foreign adversaries, as well.
Implications for OISP
The NSPM outlines a number of potential changes with respect to outbound investment restrictions, many of which are likely to build on the recently promulgated OISP rules. The outbound-related policy proposals include:
- Establishing new rules to stop US companies and investors from investing in industries that further China’s military-civil fusion goals;
- Considering new or expanded restrictions on US person investment in Chinese sectors such as semiconductors, AI, quantum, biotechnology, hypersonics, aerospace, advanced manufacturing, and directed energy; and
- Using all necessary mechanisms to deter US persons from investing in China’s military-industrial sector, including potential sanctions-related tools.
Other Key Policy Initiatives
The NSPM also lays out several other policy changes, including measures to attract additional investment from allies, expedited environmental reviews, restrictions on certain university partnerships and grants, and various tax, accounting, and auditing measures.
The Path Ahead
Some of the NSPM’s proposals can be implemented by the executive branch via regulatory changes, while others will likely require Congressional action. Others, such as changes in CFIUS’s approach to mitigation, may not require any regulatory or legislative change. We expect the administration will likely take a broad view of what can be done without Congress and proceed under existing statutory authority whenever possible. Historically, Treasury has implemented significant changes under its authorities via notice and comment rulemaking. The NSPM contemplates such a process here, and we anticipate industry will have an opportunity to comment on proposed regulatory changes before they are implemented.
The NSPM is, however, likely to have an immediate impact regarding how CFIUS reviews and considers the transactions before it. For example, CFIUS may scrutinize investments currently within its jurisdiction more closely where those investments appear to touch on one of the concerns outlined in the NSPM. Conversely, CFIUS may be inclined to take a more permissive approach to investment from close allies and allow such transactions to proceed without mitigation or, at least, more streamlined mitigation measures. Time will tell how CFIUS implements the NSPM policy directives implicating transactions already within its jurisdiction.
Although the policies set forth in the NSPM may significantly impact the US investment landscape, most of the pronouncements are relatively high-level and the manner in which they are ultimately implemented remains uncertain. Therefore, it will be important for industry to stay closely engaged in upcoming rulemaking processes and Congressional action.
For more information on the NSPM and its potential impact on your company or specific transactions, please contact a member of Steptoe’s National Security & Cross-Border Transactions practice.
