Navigating the evolving U.S. national security investment landscape

CFIUS: Streamlining and scrutiny in tandem

The Trump Administration’s America First Investment Policy Memorandum (AFIP), issued in February 2025, directed CFIUS to develop a fast-track review process to facilitate investments from U.S. allies, while tightening restrictions on transactions involving foreign adversaries, including China. Pursuant to AFIP, CFIUS launched a known investor pilot program, which will inform the implementation of a broader program for “frequent filers” from certain countries.

A significant majority of covered transactions reviewed by CFIUS over the past five years have been cleared. In 2024, CFIUS required mitigation for approximately 9% of notices filed, a significant decrease from 21% of notices in 2023. At the same time, CFIUS is willing to escalate cases. President Trump has blocked two acquisitions by China-linked entities, and the Department of Justice (DOJ) suit against Suirui and Jupiter Systems (discussed further below) reflects the U.S. government’s willingness to pursue enforcement. Moreover, parties abandoned four transactions in 2024 after CFIUS informed them that it was unable to fully mitigate the risks identified.

Regulating outbound investment

The Outbound Investment Security Program (OISP) took effect in January 2025, marking the first time the U.S. has broadly regulated outbound investment for national security purposes outside the sanctions context. Under OISP, U.S. persons must notify the U.S. government about certain investments in China-connected entities engaged in semiconductors, quantum information technologies, and artificial intelligence, and a subset of such investments are prohibited. Following the codification of OISP under the COINS Act, the U.S. Department of the Treasury is currently working on regulations that will broaden the scope of the program to cover investments in additional countries and technologies.

Recent enforcement and reciprocal review developments

Recent developments involving Suirui and Meta further illustrate the expanding reach of national security review. The DOJ suit against Suirui and Jupiter Systems for failure to timely divest in accordance with the Presidential Order suggests that U.S. authorities may increasingly use investigations, litigation, and enforcement tools to address perceived national security risks. Separately, the Chinese government’s decision to block a deal between Meta and AI startup Manus underscores that national security and technology-policy review is now a reciprocal, cross-border issue. These developments underscore the need to conduct due diligence on counterparties and pursue regulatory approvals early in the transaction process.

Implications for market participants

National security regulation is an important consideration in transaction timing, diligence scope, and deal negotiations. As national security controls of foreign direct investments, as well as enforcement and blocking actions, expand across multiple jurisdictions, investors and counsel should carefully consider the risk and timing implications of the inbound and outbound investment regulatory landscape.