The Federal Reserve Board published a FEDS Notes article by staff economist Cody Kallen that reviews foreign direct investment into the United States in 2025. The note finds that aggregate inward FDI was little changed from 2024 despite sharply higher tariffs and elevated trade policy uncertainty, but that headline stability masked large differences across industries. FDI fell sharply in food manufacturing and transportation equipment, while it rose in metal product manufacturing because of Nippon Steel's USD 14.2 billion acquisition of U.S. Steel and increased in electrical equipment, appliance and component manufacturing, which the note links to demand associated with data center construction and the U.S. AI boom. Looking at new equity-based investment, the note says greenfield FDI announcements declined from 2024 but stayed broadly in line with 2022 and 2023, with no notable sector rotation and no clear sign that foreign investors were joining the AI boom through new project announcements. Cross-border acquisitions showed a different pattern. The number of foreign acquisitions of U.S. firms fell to its lowest level since 2015, but completed deal values rose moderately and announced deal values surged, driven almost entirely by high-tech targets. Announced foreign acquisitions of U.S. high-tech companies reached USD 213 billion in 2025, indicating a pipeline of transactions that would only enter official FDI statistics if completed in 2026 or 2027. The note says the main issues to watch are whether investment patterns in tariff-affected industries persist as the tariff environment evolves and whether the large announced acquisitions of U.S. high-tech firms close successfully, since that will be an important determinant of total FDI into the United States in 2026.
Federal Reserve Board2026-06-26
Federal Reserve Board staff note finds U.S. inbound FDI was resilient in 2025 as AI boosted high tech acquisitions
A Federal Reserve Board staff FEDS Notes article says aggregate foreign direct investment into the United States was broadly steady in 2025, even as tariffs and policy uncertainty rose. Industry outcomes diverged sharply, with declines in food and transportation equipment manufacturing and gains in metal products and electrical equipment. New foreign acquisitions fell by number but announced deal values surged, led by USD 213 billion of high-tech transactions tied to the AI boom.