By Daniel Paisant Jr.
Introduction
For decades, the United States has promoted itself as the world’s most open destination for foreign capital.[1] That openness, however, has never been absolute.[2] Beginning in the early 20th century and particularly since the end of the Cold War, the federal government has reserved the authority to block foreign investments into the United States that threaten national security.[3] The federal government exercises this authority primarily through the Committee on Foreign Investment in the United States (CFIUS), an interagency body of the executive branch that reviews, conditions, or prohibits certain foreign investments in United States businesses.[4]
Historically, CFIUS operated quietly and sparingly.[5] CFIUS reviewed a small fraction of transactions and blocked even fewer.[6] Most Americans encountered CFIUS only in the rare case where a high-profile deal made headlines.[7] Over the past decade, however, CFIUS has transformed from a narrow security check into a central instrument of economic and geopolitical policy.[8] The Foreign Investment Risk Review Modernization Act (FIRRMA) of 2018 dramatically expanded CFIUS’s jurisdiction, increased mandatory filings, and strengthened its enforcement authority.[9]
The Biden administration embraced and built upon this expanded framework, and the second Trump administration continued this trend.[10] In early 2025, the Trump administration issued a memorandum titled “America First Investment Policy,” laying out a more aggressive and explicitly strategic approach to foreign investment screening.[11] The memorandum emphasizes heightened scrutiny of investors from “foreign adversary” nations; preferential treatment for investments from allied countries; and the protection of sensitive sectors such as advanced technology, data infrastructure, energy, and agriculture.[12] While the memorandum itself does not change the law, it signals how the executive branch intends to use—and potentially stretch—CFIUS’s existing authority.[13]
The Trump administration’s approach raises unresolved questions about the scope of executive power under FIRRMA, the protections afforded to investors, and the future balance between national security and economic openness.[14] As CFIUS continues to evolve, the legal boundaries of foreign investment review remain unsettled.[15]
I. CFIUS Today: Structure, Power, and Expansion
CFIUS is an unusual creature in American administrative law. Established by an Executive Order of President Gerald Ford in 1975, CFIUS is not a traditional regulatory agency but rather an interagency committee chaired by the Secretary of the Treasury and composed of senior officials from across national security and economic agencies.[16]Because of the nature of the information submitted to CFIUS, many of the operations of the committee are shrouded in secrecy.[17] Since these transactions raise national security concerns, CFIUS may not make public any information or documentary material “except as may be relevant to any administrative or judicial action or proceeding.”[18]
Under current law, CFIUS may review “covered transactions,” including mergers, acquisitions, and certain minority investments that could result in foreign control of a United States business or provide access to sensitive technology, infrastructure, or data.[19] FIRRMA significantly expanded CFIUS’s jurisdiction by reaching non-controlling investments in so-called “TID [technology, infrastructure, data] U.S. businesses,” meaning businesses involved in critical technology, critical infrastructure, or sensitive personal data.[20] The process of reporting a transaction to CFIUS remains voluntary for the most part, but FIRRMA introduced the requirement of a declaration—an abbreviated filing with basic information on the transaction—for certain deals.[21]
Although participation in the CFIUS process is largely voluntary, the consequences of non-filing can be severe.[22] CFIUS retains authority to review transactions retroactively and impose civil penalties for failure to file required declarations or notices.[23] Failure to comply with CFIUS regulations can result in liability of up to $5,000,000 per violation.[24] CFIUS differs from ordinary regulatory regimes in two key ways. First, the review process is confidential, severely limiting the information disclosed to the public and the parties involved in the transaction.[25] Second, judicial review of CFIUS decisions is limited, with courts historically deferring to the executive branch’s national security determinations.[26]
In recent years, CFIUS has grown markedly more assertive.[27] As a result of public enforcement actions and astronomical civil penalties, the number of filings has increased substantially.[28] Against this backdrop, the Trump administration’s investment policy memorandum does not introduce CFIUS to new terrain so much as accelerate its transformation.[29] The critical legal question is not whether CFIUS will continue to expand, but how far the executive branch can push that expansion without exceeding statutory or constitutional limits.[30]
II. The “America First Investment Policy” and Executive Authority
The Trump administration’s memorandum articulates a more overtly strategic vision for foreign investment review than prior administrations.[31] Rather than framing CFIUS primarily as a neutral risk-assessment mechanism, the memorandum casts foreign investment as an arena of geopolitical competition in which economic openness must sometimes yield to strategic advantage.[32] This rhetorical shift has legal implications for how investors, challengers, and courts interpret and apply the existing statutory framework for CFIUS.[33]
Central to the memorandum is the concept of heightened scrutiny for investors linked to “foreign adversaries.”[34]Although FIRRMA directs CFIUS to consider whether a certain transaction involves a foreign actor or whether the deal could impair national security, it does not define “foreign adversary” as a legal category for the screening of investments.[35] Instead, the statute relies on a risk-based analysis that considers access, control, and vulnerability rather than solely nationality.[36] By elevating adversary status as a threshold consideration, the Trump administration wishes to substitute geopolitical designations for transaction-specific analysis.[37]
This approach raises unresolved questions about statutory interpretation and agency power.[38] While the President of the United States and the executive branch as a whole possess broad authority in matters of national security, CFIUS remains a creature of statute whose jurisdiction and procedures are clear in the legislation establishing its authority.[39] If adversary designation becomes dispositive rather than contextual, affected parties will be able to argue that CFIUS, an executive agency, has exceeded the bounds of FIRRMA’s delegated authority.[40]
The memorandum also contemplates preferential or expedited treatment for investors from allied nations.[41] On a policy level, this distinction reflects realistic risk allocation and diplomatic alignment.[42] Legally, however, FIRRMA does not expressly authorize tiered review standards based upon alliance status.[43] Implementing such differentiation through the memorandum, rather than legislation, may invite administrative law challenges based upon CFIUS exceeding its statutory authority.[44]
These unresolved questions implicate separation of power concerns.[45] Congress deliberately expanded CFIUS’s authority in 2018, and it did so through detailed statutory amendments rather than through an open-ended memorandum.[46] What President Trump is directing CFIUS members to do may supersede the committee’s statutory framework.[47]As dealmakers and courts grow more skeptical of expansive CFIUS operations, the committee may find its historically insulated position increasingly vulnerable to more frequent judicial scrutiny.[48]
III. The Uncertain Future of CFIUS’s Review of Transactions
As CFIUS’s authority has grown, its enforcement procedures continue to become more drastic.[49] What was formerly a primarily preventative review mechanism has begun to take on punitive characteristics.[50] Civil penalties, retroactive reviews of suspicious transactions, and compliance monitoring now occupy a central focus in the CFIUS framework.[51] This evolution may raise significant due process concerns.[52] CFIUS proceedings are largely confidential, adversarial safeguards are minimal, and parties receive limited explanations of adverse determinations.[53]If CFIUS does not provide investors with the opportunity to review and rebut the evidence on which the committee relied, it could result in a Due Process Clause violation.[54] The Trump administration’s directive in the memorandum for expanded CFIUS power may present opportunities for affected parties to challenge the committee’s decisions in federal court.[55]
Although CFIUS has operated since the Ford administration, legal challenges to the committee’s final decisions have been few and far between.[56] In fact, other than TikTok’s pending challenge initiated in 2020 in response to an order by President Trump, Ralls Corporation v. CFIUS is the only meaningful litigation related to CFIUS’s jurisdiction and powers.[57] Parties can bring constitutional claims challenging the decision-making process preceding presidential action.[58] The United States Circuit Court of Appeals for the District of Columbia held, however, that the statute clearly states the President’s ultimate decisions under FIRRMA are largely unreviewable.[59] As a result, affected parties often lack any meaningful methods by which to challenge the committee’s actions.[60]
The Trump administration’s emphasis on aggressive enforcement may intensify these tensions.[61] Greater scrutiny, larger penalties, and broader jurisdiction increase regulatory uncertainty and may deter investment from both foreign investors and domestic investors into foreign-owned businesses.[62] These concerns are particularly strong for states like Louisiana, whose economy depends heavily on foreign investment in energy production, sea-based trade, petrochemicals, and advanced manufacturing.[63] Increased unpredictability in the CFIUS process could chill investment in the sectors critical to the economies of Louisiana and the rest of the Gulf South.[64]
CFIUS is perhaps the most significant tool in the United States government’s national security arsenal.[65] Its power is immense.[66] As foreign investment review converges with export controls, sanctions, and supply-chain regulations, the distinction between national security and economic regulation continues to blur.[67] Whether this transformation can continue without corresponding procedural and statutory reforms remains an open question.[68] One thing is clear: As CFIUS becomes more aggressive because of the Trump administration’s directive in the “America First Investment Policy” Memorandum, judicial challenges to the committee’s actions will likely increase.[69]
Conclusion
CFIUS is at an important moment in its institutional evolution. The Trump administration does not view certain foreign investments as presumptively beneficial but as a potential vulnerability requiring active management. The shift highlighted in the Memorandum raises fundamental legal questions that the statutory framework does not fully resolve. The scope of executive authority, the adequacy of procedural and judicial protections, and the balance between security and openness all remain unsettled. These issues and their resolution will shape not only CFIUS procedures, but also the future of foreign investment into the United States.
[1] See Edward M. Grahan & David M. Marchick, U.S. National Security and Foreign Direct Investment 1–2 (2006).
[2] Id.
[3] See id.; Section 721 of the Defense Production Act of 1950, 50 U.S.C.A. § 2170 (1960)(d).
[4] See 50 U.S.C.A. § 2170 (2006); U.S. Dep’t of the Treasury, The Committee on Foreign Investment in the United States (CFIUS) [https://perma.cc/NB4W-DHB2], https://home.treasury.gov/policy-issues/international/the-committee-on-foreign-investment-in-the-united-states-cfius (last visited Jan. 28, 2026).
[5] See James K. Jackson, The Committee on Foreign Investment in the United States 5–10, Cong. Rsch. Serv. (updated Feb. 26, 2020).
[6] Id.
[7] Id.
[8] Id. at 11.
[9] See Foreign Investment Risk Review Modernization Act of 2018, H.R. 5841, 115th Cong. (2018).
[10] See Committee on Foreign Investment in the United States, Annual Report to Congress, U.S. Dep’t of the Treasury (2022), https://home.treasury.gov/system/files/206/CFIUS%20-%20Annual%20Report%20to%20Congress%20CY%202022_0.pdf [https://perma.cc/8XTT-7TSH]; Shelby L. Colson et al., President Trump Announces “American First Investment Policy”, Mayer Brown (Apr. 10, 2025), https://www.mayerbrown.com/en/insights/publications/2025/04/president-trump-announces-america-first-investment-policy [https://perma.cc/X32V-N6E3].
[11] The White House, America First Investment Policy (Feb. 21, 2025), https://www.whitehouse.gov/presidential-actions/2025/02/america-first-investment-policy/.
[12] Id. (highlighting the People’s Republic of China, Iran, and Russia, among others, as examples of “foreign adversary” nations).
[13] See Covington, Reflections on CFIUS and U.S. National Security and Foreign Investment Regulation in the First Four Months of the Trump Administration, (June 4, 2025), https://www.cov.com/en/news-and-insights/insights/2025/06/reflections-on-cfius-and-us-national-security-and-foreign-investment-regulation-in-the-first-four-months-of-the-trump-administration [https://perma.cc/JJB2-QL2Y]. The Trump administration’s memorandum highlights these specific industries as “critical American businesses” that are the most attractive for foreign investment. See The White House, supra note 11.
[14] See generally Rick Sofield et al., Early Signs of “America First Investment Policy” Implementation Are Here, Debevoise & Pimpton (May 19, 2025), https://www.debevoise.com/insights/publications/2025/05/early-signs-of-america-first-investment-policy-imp [https://perma.cc/L6C6-F4QB].
[15] Brian J. Egan et al., “America First Investment Policy” Aims to Reshape CFIUS and “Reverse CFIUS”, Skadden (Feb. 24, 2025), https://www.skadden.com/insights/publications/2025/02/america-first-investment-policy-aims-to-reshape-cfius [https://perma.cc/F559-HRHF].
[16] See Jackson, supra note 5, at 5–6.
[17] Id. (stating that information submitted to CFIUS “in confidence shall not be publicly disclosed”).
[18] Id. at 31.
[19] See 31 C.F.R. § 800.213 (2026).
[20] Id. §§ 800.248, 800.401 (2026).
[21] See Jackson, supra note 5, at 19.
[22] See 31 C.F.R. § 800.901 (2026).
[23] See Committee on Foreign Investment in the United States, supra note 10.
[24] 31 C.F.R. § 800.901(a)–(c) (2026).
[25] 50 U.S.C.A. § 4565(c) (2016).
[26] See John Taishu Pitt & Elliot Silverberg, CFIUS Reviews Should Be Subject to Judicial Scrutiny, Council on Foreign Rels. (Apr. 3, 2025), https://www.cfr.org/articles/cfius-reviews-should-be-subject-judicial-scrutiny [https://perma.cc/9PBK-X2BG].
[27] See generally Committee on Foreign Investment in the United States, supra note 10.
[28] See Barbara Linney et al., CFIUS Has Circled Its Civil Enforcement Wagons—Trump 2.0 Is Likely To Build Upon Activities Begun By Biden Administration, Reuters (Feb. 13, 2025), https://www.reuters.com/legal/legalindustry/cfius-has-circled-its-civil-enforcement-wagons-trump-20-is-likely-build-upon-2025-02-13/ [https://perma.cc/4AP2-FHUK].
[29] See The White House, supra note 11.
[30] See generally Pitt, supra note 26.
[31] See The White House, supra note 11.
[32] Id.
[33] James Brower & Nicholas Weigel, Are CFIUS Decisions Legally Vulnerable?, Lawfare (Jan. 16, 2025), https://www.lawfaremedia.org/article/are-cfius-decisions-legally-vulnerable [https://perma.cc/G3T2-3KU3].
[34] See The White House, supra note 11.
[35] See 50 U.S.C.A. § 4565 (2016).
[36] See 31 C.F.R. §§ 800.401–800.402 (2026).
[37] See The White House, supra note 11; 50 U.S.C.A. § 4565 (2016).
[38] See The White House, supra note 11; Brower, supra note 33.
[39] Drs. For Am. v. Off. of Pers. Mgmt., 793 F. Supp. 3d 112, 142–43 (D.D.C. 2025) (stating that executive agencies are creatures of statute and that they have no power to act except to the extent Congress has authorized).
[40] Id. (stating that when an agency acts without statutory authority, a court must set aside that action).
[41] See The White House, supra note 11.
[42] See The White House, supra note 11.
[43] See 50 U.S.C.A. § 4565 (2016).
[44] Drs. For Am., 793 F. Supp. 3d at 142–43.
[45] See Brower, supra note 33.
[46] See Foreign Investment Risk Review Modernization Act of 2018, H.R. 5841, 115th Cong. (2018).
[47] See Drs. For Am., 793 F. Supp. 3d at 142–43.
[48] See Brower, supra note 33.
[49] See Committee on Foreign Investment in the United States, supra note 10.
[50] See Linney, supra note 28.
[51] See Foreign Investment Risk Review Modernization Act of 2018, H.R. 5841, 115th Cong. (2018); The White House, supra note 11.
[52] See Brower, supra note 33.
[53] See 50 U.S.C.A. § 4565(c) (2016).
[54] See Brower, supra note 33.
[55] See Committee on Foreign Investment in the United States, supra note 10; Brower, supra note 33.
[56] See Brower, supra note 33.
[57] Id.
[58] Ralls Corp. v. Comm. on Foreign Inv. in the U.S., 758 F.3d 296, 311 (D.C. Cir. 2014).
[59] Id. (stating that “courts are barred from reviewing final ‘action[s]’ the President takes ‘to suspend or prohibit any covered transaction that threatens to impair the national security of the United States’”). See Brower, supra note 33 (stating that Ralls is the only meaningful litigation surrounding a CFIUS determination).
[60] See Brower, supra note 33.
[61] See Committee on Foreign Investment in the United States, supra note 10.
[62] See Linney, supra note 28.
[63] See La. Econ. Dev., Foreign Direct Investment (last visited Jan. 28, 2026), https://www.opportunitylouisiana.gov/why-louisiana/foreign-direct-investment [https://perma.cc/ZD7A-J7UA].
[64] Id.
[65] See Brower, supra note 33.
[66] Id.
[67] Id.
[68] See Drs. For Am. v. Off. of Pers. Mgmt., 793 F. Supp. 3d 112, 142–43 (D.D.C. 2025) (stating that executive agencies cannot act beyond their power expressly provided by congressional action).
[69] See Brower, supra note 33.