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The Biden administration significantly expanded CFIUS’s enforcement authority and implemented a separate regime for the review of certain outbound investments. WilmerHale’s 2025 M&A Report offers some thoughts on how the Trump administration will use these tools in the context of cross-border deals. This excerpt provides an overview of what to expect from CFIUS:

There was a time not too long ago when CFIUS was a voluntary regime that primarily impacted the defense, telecom, and aerospace sectors. But those days are gone. Today, the CFIUS regime has the potential to impact any foreign person’s acquisition of or investment in a US business involved in a wide range of technologies and economic sectors. CFIUS is keenly interested in nearly all advanced technology sectors, and the Committee made clear in 2024 that it would become far more aggressive about policing compliance with CFIUS mandatory filing requirements and mitigation agreement
obligations.

The incoming Trump Administration is unlikely to change course in any material way because support for aggressive CFIUS enforcement is one of the few bipartisan commitments in Washington. What does all this mean for parties pursuing cross border M&A in 2025? CFIUS should be factored into deal strategy discussions earlier, and parties should be prepared for more post-deal scrutiny for transactions that are not submitted to the Committee.

Here’s what the memo has to say about “reverse-CFIUS” review of outbound deals:

Broadly speaking, this outbound investment review regime is intended to deter investment in Chinese technologies and products that are perceived as constituting a national security threat to the United States. Pursuant to the new rules, US investment in (i) Chinese companies engaged in quantum computing, (ii) Chinese companies developing AI systems with certain military or mass-surveillance end uses, and (iii) Chinese companies trained using certain computing thresholds and certain semiconductor activities may be prohibited. Other investments in Chinese AI and semiconductor businesses are permissible but subject to a mandatory Treasury Department notification requirement within 30 days of the investment’s closing.

In light of this new regime, US persons and entities pursuing investment in Chinese technology companies must put significant due diligence processes in place to ensure compliance with the new rules. There is no safe harbor under the rule, which means companies and individuals that knew or should have known they made a covered investment will be subject to potential prohibitions and notification requirements. The Treasury Department has stated that its evaluation of the sufficiency of an investor’s due diligence “will be made based on a consideration of the totality of relevant facts
and circumstances.”

– John Jenkins