On February 21, President Trump issued a memorandum titled “America First Investment Policy,” confirming the United States’ openness to investment from allies and partners while also calling for further restrictions on Communist China’s investment in the U.S. and U.S. investment in China. These policies are seen as Trump’s most significant and impactful actions targeting the Communist Party of China since entering his second term.
Trump has been focused on addressing China’s almost $300 billion trade surplus with the U.S. On February 21, he issued a memorandum to various U.S. government agencies outlining the “America First Investment Policy” and urging the Committee on Foreign Investment in the United States (CFIUS) to further limit Communist China’s investment in the U.S. He also called on the U.S. government to use the recently implemented Outbound Investment Security Program (OISP) to restrict American investment in China. The memorandum also requires partners to not collaborate with the Chinese Communist Party when investing in the U.S.
The memorandum labels Communist China as a “foreign adversary” and states that these policy changes are necessary to protect America’s “crown jewels” in areas such as technology, food supply, agriculture, energy, minerals, natural resources, ports, and shipping terminals.
The “America First Investment Policy” memorandum includes measures to promote foreign investment in the U.S. by allies and partners. It introduces a new “fast-track” process aimed at facilitating additional investments by specific allies and partners in U.S. enterprises involved in advanced technology and other critical sectors. However, foreign investors are prohibited from cooperating with adversaries like Communist China.
Passive investment is encouraged under the policy, as long as the investments do not entail controlling ownership, voting rights, board participation, governance rights, management influence, involvement in decision-making, or access to technology and information.
Additionally, investments exceeding $1 billion in the U.S. will qualify for a “fast” environmental review process. The policy calls for CFIUS to halt the use of overly bureaucratic, complex, and open-ended risk mitigation measures against investors from adversary countries, focusing instead on promoting investments from major partner countries with specific actions that can be completed within designated time frames.
The memorandum further explains that the extent of restrictions on foreign investors acquiring assets in the U.S. involving critical technology, infrastructure, personal data, and other sensitive areas will be tied to the “verifiable proximity and interdependence” between the investor and Communist China or other American adversaries.
In addition to promoting investments from allies and partners in the U.S., the Trump administration will also enhance restrictions on certain types of foreign investment from adversary countries. This includes focusing on limiting Communist China’s investment in strategic U.S. industries such as technology, critical infrastructure, healthcare, agriculture, energy, raw materials, and other strategic sectors, as well as preventing purchases of “significant U.S. businesses and assets” by individuals connected to China.
The memorandum expands CFIUS’s jurisdiction over “greenfield” investments involving real estate near certain U.S. government facilities. It aims to protect American farmland and real estate near sensitive facilities, strengthen CFIUS authority over greenfield investments to limit foreign access to U.S. talent and business in sensitive technologies (especially artificial intelligence), and broaden the range of “emerging and foundational” technologies that CFIUS can oversee.
Regarding the ongoing Outbound Investment Security Program (OISP) reviews by the U.S. Treasury, the memorandum provides further guidance on the scope of U.S. foreign investment subject to review. Trump first announced OISP review on his inauguration day, January 20, as part of the “America First Trade Policy.” The latest guidance includes expanding departments and areas under review and broadening the types of transactions subject to restriction.
The memorandum specifically calls for blocking U.S. investment in Communist Chinese military enterprises and considers all policy options for achieving this. It also calls for the termination of the bilateral tax agreement between the U.S. and China signed in 1984, where China offered tax incentives to attract American investment.
The release of the “America First Investment Policy” order is considered the most significant and impactful action taken by the Trump administration in countering the Communist China threat since taking office over a month ago.
Following the Trump administration’s move to impose hefty fees on Chinese merchant shipping, Chinese shipping stocks immediately plummeted, causing fluctuation in the Shanghai and Shenzhen indexes.
China’s $295 billion trade surplus with the U.S. holds a critical place on the concerns list of the new Trump administration. The U.S. announced an additional 10% tariff on imports from China on February 1.
This new tariff affects all Chinese goods being shipped to the U.S. Trump views this tariff as a retaliation for China’s failure to prevent the flow of fentanyl drugs to the U.S.
China has strongly expressed dissatisfaction with this move, criticizing it as damaging the confidence of Chinese companies investing in the U.S.
However, this seems to be precisely the outcome that the Trump administration desires. In addition to restricting Communist China’s investment in U.S. technology, energy, and other strategic industries, the administration has recently called on the Mexican government to impose tariffs on Chinese imports – a move aimed at countering Chinese companies attempting to bypass U.S. tariffs through Mexico.
China’s current economy is widely viewed as “unbalanced,” with a sluggish market and low consumer confidence. With Trump’s tariffs and “America First” trade and investment policies taking effect, the economic outlook for China is expected to become more pessimistic.
Amid escalating tensions between the U.S. and China, President Trump is actively working to end the Russia-Ukraine war to redirect full attention towards Beijing.
Trump administration officials, including Vice President J.D. Vance and new Defense Secretary Pete Hegseth, have recently stated that the U.S. aims to concentrate most of its military assets in Asia to counter the Chinese threat.