Committee on Foreign Investment in the United States (CFIUS)

Foreign investment lawyers aren’t expecting a big change in how the Committee on Foreign Investment in the U.S. operates under a second Trump administration, although a new round of tariffs against China and the continued easing of export restrictions among close U.S. allies could change the investment landscape and the number of filings submitted to CFIUS.

The Treasury Department is moving forward with a rule that will add 59 military bases across 30 states to the jurisdiction of the Committee on Foreign Investment in the U.S. and increase the scope of transactions CFIUS can examine for land purchases near eight other military bases (see 2407090003). The rule, released this month in prepublication form, includes multiple bases that lawmakers for months have urged Treasury to add to its purview, including two near planned Chinese lithium battery and electric vehicle plants.

The Treasury Department should make sure its investment screening regulations don’t unfairly discriminate against foreigners and should do more to curb a rise in “xenophobic” U.S. state and federal land laws, nonprofits told the agency and the Committee on Foreign Investment in the U.S. They criticized several bills that could place new investment restrictions on people from “countries of concern,” including China and Iran, and said they’re concerned CFIUS may not have the resources to manage its expanding jurisdiction.

The Committee on Foreign Investment in the U.S. has levied nearly $70 million in penalties so far this year, including a $60 million fine against T-Mobile after the telecommunications company violated its national security agreement. The announcement, the first time CFIUS has named a company it has penalized, comes after the committee last year issued a record-setting four penalties (see 2407230017) and in April proposed expanding its enforcement powers (see 2404110037), underscoring its recent focus on punishing violators and increasing penalties.

The next administration should look to raise criminal penalties for trade theft, broaden the scope of the Committee on Foreign Investment in the U.S. and refocus its export controls on military technologies to better compete with China, the Information Technology and Innovation Foundation said this week. ITIF also said the U.S. should push for a new “techno-economic alliance” of key trading partners and develop a new multilateral export control regime focused on semiconductors and artificial intelligence.

Senate Democrats are urging the Treasury Department to quickly finalize a proposed rule that could make investment advisers subject to more sanctions-related compliance requirements, adding that the agency should also require advisers to follow rigorous due diligence requirements that currently apply to large banks. But financial industry organizations said Treasury should revise the proposal because investment advisers are already covered by existing anti-money laundering laws and aren’t the right target for new compliance guardrails.

A "snapshot" report just released by the Government Accountability Office reminded Congress that the GAO has studied -- and made recommendations -- on many aspects of how to manage economic competition with China, including providing more resources to the Committee on Foreign Investment in the United States, improving information sharing with companies to keep more counterfeits out of U.S. commerce, and improving the tariff exclusions process for steel and aluminum imports.

Japan, which suffered economic coercion from China earlier than any other country, is largely on the same page as the U.S. when it comes to supply chain resilience and restrictions on exports, but the two diverge in their attitudes about China's role in the global economy.

Rep. Jake LaTurner, R-Kan., called on two key members of the Committee on Foreign Investment in the U.S. to prevent Cnano Technology USA, a subsidiary of China-based Cnano Jiangsu Technology Co. Ltd., from opening a manufacturing plant for electric vehicle battery parts in Johnson County, Kansas.

A congressional proposal to allow the Committee on Foreign Investment in the U.S. to reopen or alter previously mitigated transactions when national security risks have increased would discourage foreign investment in the United States, an expert at the Center for a New American Security said in written comments posted Jan. 4.