America First Investment Policy
The “America First Investment Policy”, signed on February 21, 2025, introduces a significant shift in U.S. foreign investment strategy, with the dual goal of bolstering economic growth while ensuring national security. The policy prioritizes attracting investments from allied nations, particularly in critical sectors like technology, energy, and infrastructure. To facilitate these investments, the U.S. government has created a "fast-track" process that streamlines approvals, making it easier for foreign allies to invest in key American industries. The idea is to make the U.S. a prime destination for international capital that can support innovation, create jobs, and contribute to the nation's economic growth.
However, the policy adopts a more cautious approach to foreign investments, particularly in sensitive industries such as artificial intelligence, semiconductors, biotechnology, and critical infrastructure. The goal is to prevent the transfer of strategic technologies to entities that could pose a threat to national security.
The policy includes provisions that allow passive investments by foreign entities, as long as such investments do not involve control of the company or access to sensitive data. This approach aims to maintain a flow of capital into the U.S. economy while protecting critical industries and technologies. Additionally, the policy reviews the existing U.S.-China tax treaty, which has historically facilitated investments by U.S. firms in China, with the potential to suspend or terminate it. This review reflects concerns that the treaty may have contributed to technological advancements abroad, potentially impacting U.S. industries.
The policy also includes measures designed to protect U.S. investors from risks associated with foreign entities. For example, it ensures that U.S. pension funds and university endowments do not invest in companies involved in sectors such as defense or military, thereby safeguarding American investments from potential exposure to entities that may present security concerns.
According to preliminary data on China-US trade from 2016 to 2024, the total trade value between the two countries grew from over USD 520 billion in 2016 to over USD 680 billion in 2024, reflecting a general upward trend in both imports and exports, except during the pandemic in 2019 and 2020. Over the same period, the U.S. trade deficit with China expanded from more than USD 250 billion to over USD 350 billion, demonstrating that the trade war and tariffs imposed by Washington had minimal impact.
While supporters argue that these measures are crucial to safeguarding U.S. interests and protecting critical technologies and industries, critics express concerns about potential unintended economic effects. They worry that the policy could discourage foreign investment, leading to higher costs for U.S. businesses and consumers. Additionally, there are concerns that it could strain relations with countries that maintain strong economic ties with other global powers, as well as apprehension about government overreach in business decisions.
In summary, the policy represents a shift aimed at balancing national security priorities with the need for economic openness. Its success will depend on how effectively it manages to attract investment from allied nations while limiting investments from less aligned entities. The long-term implications for U.S. competitiveness, innovation, and international relations remain uncertain, and it will be important to track its effects on global investment flows, diplomatic relations, and the broader geopolitical context.