After Three Years of Decline, US FDI Rebounded in 2025

After three years of steady decline, new foreign direct investment (FDI) in the United States has finally rebounded, according to recently released data from the Bureau of Economic Analysis (BEA). For years, the United States has attempted to court FDI through landmark legislation, such as the CHIPS and Science Act, the Inflation Reduction Act, and, more recently, the One Big Beautiful Bill Act. Despite these efforts, inward FDI continued to decline, doing little to reverse the deterioration of the U.S. manufacturing base or reduce the ballooning trade deficit.

In 2025, inward FDI in the United States reached $232.2 billion, a nearly 50 percent increase from 2024. As a share of gross domestic product (GDP), FDI reached 0.8 percent, up 0.3 percentage points from 2024. (See figure 1.) However, FDI into the United States remains well below its levels in the mid-2010s and in 2021, when FDI exceeded $350 billion.

Figure 1: Inward FDI as a share of GDP, 2015–2025

The BEA divides FDI into three categories: acquisitions, expansions, and establishments. Greenfield investment includes the establishment and expansion of foreign business operations in the United States. It is generally the more impactful subset of FDI, resulting in greater job growth, increased capital stock, heightened productivity, and stronger economic growth.

In 2025, greenfield investment reached one of its highest levels in the past decade, rising from $8.9 billion in 2024 to $13.8 billion. Expansions of existing foreign-owned businesses accounted for the bulk of the increase, tripling over the past year to $9.2 billion, while expenditures to establish new businesses declined from $6.4 billion to $4.6 billion. (See figure 2.)

Figure 2: Greenfield investment by type

Greenfield FDI in 2025 was heavily concentrated in advanced technology industries, with states such as Arizona and Texas receiving some of the largest amounts of greenfield investment in the country, at $2.7 billion and $1.9 billion, respectively. Both states are hubs for semiconductor manufacturing and have benefited from strong foreign investment in the industry, supported in part by incentives enacted under the CHIPS and Science Act. These include the 25 percent investment tax credit for semiconductor manufacturers, which was increased to 35 percent under the One Big Beautiful Bill Act.

While greenfield investment grew substantially in absolute terms, it remained just a fraction of total FDI into the United States. In 2025, greenfield investment accounted for about 6 percent of new FDI, a slight increase from 2024 and significantly higher than during the 2015 to 2021 period, when it was less than 4 percent. (See figure 3.)

Figure 3: Acquisitions vs. greenfield investment (as a percentage of total FDI)

Japan was the largest source of FDI in the United States, investing $50.5 billion in 2025, followed by Germany at $26.7 billion. China, which was one of the largest investors in the United States in the mid-2010s, is now one of the smallest sources of new U.S. FDI.

One important factor behind this decline has been the heightened scrutiny placed on Chinese FDI in the United States by the Committee on Foreign Investment in the United States (CFIUS). A presidential memorandum issued in February 2025 instructed CFIUS to restrict Chinese investment in strategic sectors, including technology, health care, and critical infrastructure, and to limit the availability of mitigation agreements for deals involving Chinese investors. This intensified regulation has discouraged Chinese firms from pursuing investments in the United States. As a result, Chinese investment totaled just $80 million in 2025, all of which was greenfield investment.

Though greenfield FDI is the more desirable form of FDI for the United States, this is not to say that acquisitions are not economically beneficial. As the largest component of U.S. FDI, acquisitions represent an irreplaceable economic tool. Unlike greenfield investments, which can often take years to complete, acquisitions tend to deliver quicker results with less risk, making them more appealing to investors. In addition, acquisitions often inject capital, facilitating companies’ adoption of more productive technologies and processes and thereby boosting the productivity and competitiveness of U.S.-based firms. In 2025, the value of acquisitions increased by 49 percent to $218 billion, the highest value since 2021. (See figure 4.)

Figure 4: Total FDI investment by type

The increase in U.S. FDI in 2025 is a welcome turnaround from the last few years of decline, but it cannot be taken for granted. Although FDI has increased, it remains far from the levels seen between 2015 and 2018, and greenfield investment remains a small fraction of total inward FDI. Going forward, U.S. policymakers must continue to prioritize legislation that incentivizes FDI, particularly greenfield investment, which delivers the greatest long-term benefits for American competitiveness.

In addition, the U.S. government must continue to view Chinese FDI with enhanced scrutiny and maintain CFIUS’s heightened restrictions. China’s long-standing use of innovation mercantilist practices, including intellectual property theft, and its deployment of economic espionage campaigns against the United States underscore the need for sustained vigilance. Allowing unrestrained Chinese investment could undermine both the competitiveness and security of American firms.