What follows is a brief summary written by Vinson & Elkins LLP on what we expect to see from the incoming Trump administration on export controls, economic sanctions and CFIUS.
Export Controls
The incoming Trump administration is likely to continue the trend of strengthening export controls over AI and advanced semiconductors destined to China. During President-elect Donald Trump’s first term, the Bureau of Industry and Security broadly restricted exports to Huawei Technologies Co., Ltd. and a number of its affiliates, among other measures intended to keep U.S. technology out of China. The Biden administration has continued ramping up export controls on China, most recently by announcing on December 2, 2024 expanded export controls intended to impair China’s ability to produce advanced-node semiconductors capable of use in advanced weapon systems, AI, and advanced computing. Trump is expected to continue enhancing these restrictions during his second term.
Economic Sanctions
Trump has signaled his intention to limit the use of sanctions in his second term in favor of tariffs, fearing the negative impact of sanctions on the U.S. dollar. The Biden administration has imposed increasingly restrictive sanctions on Russia and Belarus since the war in Ukraine began in 2022. It remains to be seen whether, and in exchange for what, Trump will alleviate any of these sanctions measures.
The previous Trump administration reimposed sanctions on Iran that had been lifted during the Obama administration, and the U.S. embargo on Iran is expected to continue in full force under the incoming administration. Trump may also seek to tighten the U.S. embargo on Cuba, as he did during his first term, perhaps by eliminating certain longstanding exceptions that the Office of Foreign Assets Control (OFAC) has issued via general licenses. In the final days of the previous Trump administration, Cuba was re-designated as a state sponsor of terrorism, which carries a wide range of restrictions. While the Biden administration has eased Cuba sanctions in some respects, it has remained on the state sponsors of terrorism list.
Consistent with his “America First” message, Trump is poised to increase tariffs on imports from top trading partners Canada, Mexico, and China.
CFIUS
We expect use of the Committee on Foreign Investment in the United States (“CFIUS”) to continue to increase, as it has over the past few presidential administrations. The foreign investment review process overseen by CFIUS was particularly active during Trump’s first term, has remained active under President Joe Biden, and we expect that to continue during the incoming Trump administration. During his first term, Trump publicly blocked more transactions and, through the confidential CFIUS process, forced more abandonments of transactions notified to CFIUS than any president before or since. In total, Trump blocked four transactions and forced 59 abandonments of transactions during the four years of his first term. This is more in absolute terms than President Obama in the eight years he was in office, and — although we only have three years of data — is more on an annualized basis than Biden.
Below is a chart showing forced abandonments and presidential blocks by year and by president since 2007, when CFIUS began providing more comprehensive data on CFIUS outcomes.
Trump also is likely to continue to emphasize protectionism to promote domestic industry growth, especially against Chinese competitors. CFIUS scrutiny over investments from or with a nexus to China likely will endure and may become even more searching.
The new outbound foreign investment program implemented by Biden to scrutinize U.S. investments in certain industries in China will almost certainly persist under the incoming administration and may even be expanded.
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