A New Era of Investment Policy President Donald Trump has taken an even more aggressive stance against China in his second term by directing the Committee on Foreign Investment in the United States (CFIUS) to impose strict limitations on Chinese investments in strategic U.S. sectors. This move, outlined in the recently signed National Security Presidential Memorandum (NSPM), aims to protect American national security interests while simultaneously encouraging investment from allied nations.

“Although it will take time for the necessary agency and regulatory actions necessary to implement the policy, Trump 2.0 is taking an even more hawkish approach to China as he did in his first term,” said Larry Ward, a national security law expert and partner at Dorsey & Whitney.

The Scope of the Restrictions Under this directive, CFIUS will significantly tighten oversight on Chinese investments in industries deemed critical to U.S. security. These include:

• Technology and Artificial Intelligence – Protecting American innovation from potential intellectual property theft.
• Critical Infrastructure – Preventing foreign control over key U.S. infrastructure systems.
• Healthcare and Biotechnology – Safeguarding sensitive medical data and advancements.
• Agriculture and Energy – Limiting foreign ownership of farmland and energy resources.
• Raw Materials and Aerospace – Blocking access to critical supplies necessary for U.S. defense and technological dominance.

Trump’s memorandum states, “The Committee on Foreign Investment in the United States (CFIUS) will be used to restrict Chinese investments in strategic U.S. sectors like technology, critical infrastructure, healthcare, agriculture, energy, raw materials, and others.”

A Shift from Tariffs to Investment Controls Trump’s latest move marks a departure from the tariff-driven trade wars of his first term. Instead of imposing new import taxes, the administration is focusing on restricting Chinese capital from gaining access to key industries. Ward describes this as a “very different” approach compared to tariffs and trade concerns, arguing that “foreign investment is an issue that potentially impacts national security.”

The new directive reflects concerns over past security risks, such as the debate surrounding TikTok. “TikTok initially went through the CPA process and was examined on a national security basis, and then the determination was made that there were national security concerns,” Ward explained.

The National Security Threat from China According to the White House, China has systematically exploited American capital and technological ingenuity to strengthen its military, intelligence, and cyber capabilities. The NSPM explicitly highlights:

• China’s Military-Civil Fusion (MCF) Strategy – Using U.S. investments to enhance military and security operations.
• Cyber Warfare and Espionage – Chinese hackers have repeatedly targeted U.S. entities, including the Treasury Department’s CFIUS office. “Chinese hackers have repeatedly targeted U.S. entities, including recently breaching the Treasury Department’s CFIUS office,” the White House fact sheet noted.
• Land Ownership Concerns – China currently owns over 350,000 acres of U.S. farmland across 27 states, raising fears of security vulnerabilities near sensitive locations.

In response to these concerns, Trump stated, “We will also adopt new rules to stop U.S. companies from pouring investments into China, and to stop China from buying up America, allowing all of those investments that clearly serve American interests.”