1. President Donald Trump's trade saber-rattling and protectionist economic policies are discouraging the flow of overseas money into job-creating US investments as foreigners grow worried about what an unpredictable government may do next.
2. The administration turned to the previously rarely deployed section 232 national security provision of the 1962 Trade Expansion Act to impose tariffs on steel and aluminum imports, and now uses it to threaten crippling duties on car imports. Trump is also turning to the Committee on Foreign Investment in the US, or CFIUS, as a way to limit foreign investment in sensitive technologies.
USA FDI REPORTS
1. Foreign direct investment in US businesses, factories and subsidiaries plunged in 2017 and is falling again this year. Part of the decline can be attributed to the fall in global FDI, shrinking 23 per cent worldwide. Following two record years in 2015 and 2016, FDI in the US last year was more along historical norms.
2. New Chinese deals in North America in the first half of this year dropped to a nine-year low of US$2.5 billion, compared with US$24 billion in the same period during 2017, according to a report released this week by law firm Baker McKenzie.
3. Overall foreign direct investment declined 32 percent in 2017, US government data show.
4. For foreign companies operating in the US, tariffs on steel and aluminum imports threaten investment in American production facilities. The tariffs impact global supply chains, as companies that originally settled in the US due to strong global connections now face trade barriers.
5. According to a study released in June by Rhodium Group, a New York-based research firm, FDI — which it defines as completed acquisitions and greenfield investments made by a foreign company that can also include the purchase of real estate — fell more than 90 percent in the first half of 2017, to $1.8 billion.
6. Chinese investors also sold $9.6 billion in U.S. assets, resulting in overall negative FDI flows from China to the United States.
OTHER COUNTRIES
1. China announced US$22 billion in new deals in Europe in the first six months of 2018 - favouring Sweden, Germany, Britain and France over the US, Baker McKenzie found.
2. Global FDI flows fell by 23 percent in 2017, to $1.43 trillion from $1.87 trillion a year earlier. Flows to developed economies dropped by one-third, while investment into the United States fell by 40 percent, to $275 billion from $457 billion in 2016.
3. In 2017 investments into Canada plunged to their lowest levels since 2010, according to Statics Canada. That’s related to fears over NAFTA and an outflow of capital from the country’s oil patch, but it also has to do with Canada wanting to put the brakes on foreigners scooping up real estate.
4. Over the last two years both British Columbia and Ontario have started taxing non-Canadians who buy homes in those provinces. The two governments have blamed foreigners and, more specifically, Chinese investors, of buying houses and inflating real estate markets. That’s likely contributed to a decline in FDI in the country.
VIEWS
1. In the short term, investors may look to invest in other economies where the political outlook is more easily predicted
2. Part of the concern stems from Trump's use of CFIUS, an inter-agency government panel that reviews foreign deals for national security risks, as a way to curb investment. The administration has backed bipartisan legislation to strengthen CFIUS that is making its way through Congress.
3. Trump is also using 232 investigations, sometimes called the "nuclear option" in trade laws, to counter cheap imports.
4. Stricter immigration policies could cause FDI to fall further in the future. FDI increases when migration to a country rises. Because immigrants talk up where they live to people back home who then want to buy homes or businesses in the area.
(Source: straitstimes, CNBC)
