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US foreign direct investment share reaches record high

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As Donald Trump begins his second term in the Oval Office, the US share of global cross-border investment projects has risen to a record high.

The figures for greenfield projects, where companies build or expand new plants and operations in a foreign country, were released as political and business leaders gathered in Davos to discuss how a Trump presidency could reshape the global economic order through higher tariffs and remanufacturing.

The proportion of new foreign direct investment (FDI) projects announced in the US rose from 11.6% in 2023 to 14.3% in the 12 months ending November 2024, according to a Financial Times (FT) analysis of data collected by fDI Markets, a company that has tracked cross-border investment since 2003.

Economists attribute this increase to buoyant consumer demand and government incentives in the world’s largest economy.

Germany and China decline while project arrivals to the US increase

The US attracted over 2,100 new FDI projects in the 12 months ending November 2024. In contrast, China signed fewer than 400 projects during the same period, approaching a historic low and well below the over 1,000 investments it received annually during the decade leading to the mid-2010s.

New projects in Germany fell to 470 in the same timeframe, marking the lowest figure in 18 years for Europe’s largest economy. This represents a sharp decline from the 1,100 greenfield investments recorded a year earlier.

According to fDi, the estimated value of new greenfield direct investment projects announced in the US during this period rose by over $100 billion to $227 billion.

Most investment in the real estate sector

The data, derived from corporate project announcements, press reports, and estimates of FDI over the life of the projects rather than annual capital expenditure, indicate significant growth in greenfield investments across various US sectors.

Record 12-month project totals were observed in the semiconductors, industrial equipment, construction, electronic components, renewable energy, and aerospace industries, many of which benefited from the support of the CHIPS Act.

While foreign investors were drawn to multiple sectors, real estate emerged as the most popular, followed by software and IT, industrial equipment, and business services.

62% of foreign investments in the US came from Western Europe

IMF figures released last week indicate that the US economy is expected to grow by 2.7% in 2025, outpacing the 1% growth forecast for the Eurozone.

Western Europe accounted for 62% of FDI projects in the US in the 12 months ending November 2024, up from 58% in the decade leading to 2019.

In contrast to the rise in inward FDI, the number of US overseas projects fell to 2,600 during the same period, the lowest level in two decades, excluding the pandemic peak. Experts suggest that the Biden administration’s industrial policies have encouraged companies to retain production domestically.

Is American ‘protectionism’ working?

“The US is attracting more and more global investment projects, reflecting a strong demand outlook and much stronger productivity growth compared to other countries,” said Innes McFee, global economist at Oxford Economics.

While McFee acknowledged the uncertainties posed by Trump-era policies, he added that a looser budget would boost demand and increase incentives to invest in the US in the short term. Protectionist policies could amplify this effect.

Nathan Sheets, chief economist at US bank Citi, highlighted America’s importance as a hub for artificial intelligence innovation, low energy costs, and the Biden administration’s investment incentives under the Inflation Reduction Act (IRA) and the CHIPS Act.

Sheets noted that China’s declining share of FDI stems from geopolitical factors and Western attempts to “de-risk” reliance on China. Rising energy costs in Europe due to the Ukraine war, which began in February 2022, have further bolstered the appeal of the US’s cheaper energy landscape to investors.

Trump will address the World Economic Forum in Davos on Thursday via video link. The president did not immediately raise import duties in his inauguration-day decrees.

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Trump issues tariff threats to 12 more countries after Japan and South Korea

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US President Donald Trump has published letters detailing tariff rates for Malaysia, Kazakhstan, Tunisia, South Africa, Bosnia and Herzegovina, Indonesia, Bangladesh, Serbia, Cambodia, Thailand, Laos, and Myanmar.

On his Truth Social media account, Trump shared the tariff letters for these 12 countries, following similar announcements for South Korea and Japan.

In the letters, Trump announced the tariff rates that will be applied to these countries starting August 1, noting that the rates would increase in the event of any retaliation.

Trump indicated that adjustments are possible, stating, “These tariffs may be modified up or down depending on our relationship with your country.”

The letters specified that the proposed tariff rates are 25% for Malaysia, Kazakhstan, and Tunisia; 30% for South Africa and Bosnia and Herzegovina; 32% for Indonesia; 35% for Bangladesh and Serbia; 36% for Cambodia and Thailand; and 40% for Laos and Myanmar.

Three agreements: Britain, China, and Vietnam

Previously, Trump announced that a 25% tariff would be applied to all products sent from Japan and South Korea to the US starting August 1, separate from existing sectoral tariffs.

These tariffs were nearly identical to those announced in Trump’s April 2 “liberation day” speech, which caused significant turmoil in global financial markets.

The reciprocal tariffs were postponed a week later to July 9, allowing markets to stabilize. However, since then, the White House has only signed three trade agreements: with Britain, China, and Vietnam.

Carrot and stick for Japan and South Korea

White House Press Secretary Karoline Leavitt stated on Monday that the new tariffs will be imposed on August 1 for countries that have not yet signed an agreement, giving them more time for trade negotiations.

The scale of Trump’s tariff threat on Monday put pressure on the markets, despite the postponement. The S&P 500 closed down 0.8% on Monday, while the currencies of Japan, South Korea, and South Africa depreciated by about 1% against the US dollar.

In letters published on the Truth Social platform, Trump said the US trade deficit in goods with Japan and South Korea is “a major threat to our economy and even our national security.”

In letters addressed to Japanese Prime Minister Shigeru Ishiba and South Korean President Lee Jae-myung, Trump stated that if either country raises tariffs in retaliation, “whatever figure you choose to increase it by, we will add that to the 25% we are imposing.”

However, he signaled that the proposed tariffs could be negotiated, adding that if the countries open their markets, “we might consider making an adjustment… These tariffs may be modified up or down depending on our relationship with your country.”

On Monday, Trump also announced he would impose high tariffs on Indonesia, Malaysia, Thailand, Kazakhstan, Laos, Myanmar, and several other countries.

The US already applies a range of sectoral tariffs on imports from all countries. These include a 25% tariff on automobiles and auto parts and a 50% tariff on steel and aluminum imports. A US official confirmed that goods already subject to sectoral tariffs, such as automobiles and metals, will not be affected by the new rates announced by Trump.

Washington is also conducting national security investigations that could lead to tariffs on a range of other goods and sectors, including aviation, pharmaceuticals, lumber, copper, chips, and consumer electronics.

In recent weeks, Trump has hardened his rhetoric toward Tokyo, targeting the key trading partner and accusing it of being “spoiled” for refusing to buy more American rice.

Weeks of negotiations between US and Japanese trade officials resulted in a series of proposals aimed at preventing a trade impasse, including Japan purchasing more US energy and agricultural products. However, Tokyo also demanded a full exemption from Trump’s 25% automobile tariffs.

Meanwhile, trade negotiations between South Korea and the US have been postponed due to political turmoil in Seoul following the impeachment of former South Korean President Yoon Suk Yeol.

EU negotiations

Additionally, the European Union was expected to sign an interim trade agreement this week to keep tariffs at 10% while negotiations with the US continue.

EU Trade Commissioner Maroš Šefčovič told member states on Monday that both sides are working on plans to reduce the 25% tariff on vehicles. However, according to two individuals familiar with the talks, there is no guarantee that the 50% steel tariffs will also be lowered.

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US intelligence officials claim Iran’s nuclear facilities were destroyed

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Two of President Donald Trump’s top intelligence officials claimed that new intelligence indicates Iran’s nuclear facilities were “destroyed” in US airstrikes over the weekend.

CIA Director John Ratcliffe and Director of National Intelligence (DNI) Tulsi Gabbard issued their statements hours apart, reinforcing the administration’s day-long effort to counter media reports of an initial government assessment that the strikes did not significantly set back Iran’s nuclear program.

“New intelligence confirms what @POTUS [the US President] has stated repeatedly: Iran’s nuclear facilities have been destroyed,” Gabbard announced on X.

Ratcliffe shared an image of his own statement on social media about two hours later. “Credible intelligence sources indicate that Iran’s nuclear program has been severely damaged in the recent attacks,” Ratcliffe’s statement read.

The CIA chief asserted that this information included “new intelligence from a historically reliable and accurate source/method,” indicating that several key Iranian nuclear facilities were destroyed and would take years to rebuild.

Ratcliffe added that the agency continues to gather “information from reliable sources” on the matter.

Neither Gabbard nor Ratcliffe provided further details about the intelligence or when it was obtained. However, DNI spokesperson Olivia Coleman later confirmed that the intelligence Gabbard mentioned was from US sources.

A former CIA analyst, speaking to POLITICO, described it as “highly unusual” for the agency’s director to release an analytical assessment in a press statement.

However, this individual, who spoke on the condition of anonymity to discuss sensitive intelligence processes, said it was unlikely the statement disclosed any sources or methods.

The Defense Intelligence Agency’s (DIA) earlier assessment was reported on Tuesday by CNN and other media outlets. It stated that the strikes had not destroyed essential components of the country’s nuclear program and had likely only delayed it by a few months.

On Wednesday, the DIA emphasized that its findings were not conclusive.

“This is a preliminary and low-confidence assessment, not a definitive conclusion,” the DIA said in a statement. “The assessment will become clearer as additional intelligence is obtained. We have not yet been able to inspect the physical facilities, which will provide us with the best indication.”

The leak of the DIA’s assessment infuriated Trump. On Wednesday, he posted an angry message targeting one of the CNN reporters who wrote the initial story, reiterating his claim that Iran’s nuclear facilities were “destroyed.”

Gabbard also criticized the “propaganda media” in her post.

During a nearly hour-long press conference at the NATO summit in the Netherlands on Wednesday, Secretary of State Marco Rubio and Secretary of Defense Pete Hegseth, standing alongside Trump, took turns angrily refuting the findings of the DIA report and the media’s coverage of it.

“Those who say the bombs were not destructive are just trying to undermine the president and the successful mission,” Hegseth charged at one point. The Secretary of Defense also told reporters that the Pentagon and the FBI were investigating how the classified report was leaked.

Israeli officials also defended Trump. On Wednesday, the Israeli Prime Minister’s Office released a statement from the Israel Atomic Energy Commission, which claimed that the combined effect of US and Israeli strikes had “set back Iran’s ability to develop nuclear weapons by years.”

Daniel Shapiro, who served as the deputy assistant secretary of defense for the Middle East during the Biden administration, cautioned against placing too much confidence in initial assessments.

“It is highly likely that these facilities have been seriously damaged, but we must wait for the data and actual information,” Shapiro said. He estimated that it would normally take the intelligence community several weeks to reach a definitive conclusion about the impact of such an attack.

In a post on Truth Social on Wednesday evening, Trump hinted that the administration might soon share more information about the damage caused by the strikes.

Trump announced that Pentagon chief Hegseth would hold an “interesting and undeniable” press conference today (June 26).

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Pentagon divided over military priorities in Asia and the Middle East

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Senior Pentagon officials are reportedly divided over the extent of military support for Israel versus engagement in Asia, a split that could influence the direction of foreign policy in a potential second term for Donald Trump.

Ben Smith, founder of the news site Semafor, explored this issue in a recent special report. According to Smith, General Michael “Erik” Kurilla, the commander of US Central Command (CENTCOM), is advocating for more resources to defend Israel as retaliatory actions from Iran increase.

In contrast, Elbridge Colby, the Under Secretary of Defense for Policy and a proponent of the US military focusing on China and the Indo-Pacific, opposes the diversion of American military assets from Asia to the Middle East.

An Iran war embodies the primary tension for Colby and his allies: the US has long sought to implement its “pivot to Asia,” a strategy first announced by Barack Obama in 2011. However, practical demands and political pressures consistently redirect American military involvement back to the Middle East.

Shifting priorities within the Pentagon

According to Smith, Colby’s opposition stems from concerns that deployments, such as the transfer of a Patriot missile battery from South Korea to the Middle East in April, could compromise US readiness for future conflicts with China or the Democratic People’s Republic of Korea.

Despite providing military aid to Israel, Trump has occasionally shown frustration with open coordination and allegedly dismissed his National Security Advisor, Mike Waltz, due to his close ties with Israeli Prime Minister Benjamin Netanyahu.

Trump’s potential appointment of Colby to a Department of Defense position has raised concerns among pro-Israel hawks, who might interpret it as a sign of diminishing US support.

Although Waltz’s dismissal and Trump’s allowance for an “independent” Israeli strike on Iran suggest a more non-interventionist approach, Colby’s influence appears to be waning.

CENTCOM chief Kurilla gains strength

Secretary of Defense Pete Hegseth reportedly dismissed several of Colby’s allies in April and has cultivated a closer relationship with Kurilla.

Eli Lake of The Free Press reported that the new Deputy Assistant Secretary of Defense for the Middle East, Michael Dimino, who is from the “restrainer” camp, has set off alarm bells among Trump supporters who believe engagement in the region is vital.

Referring to Dimino’s views, one Trump ally joked, “The guy who is going to be his deputy in charge of Middle East policy thinks the US shouldn’t be in the Middle East. Somebody call Elon at DOGE.”

Earlier this month, Al-Monitor reported that Kurilla had requested the deployment of a second aircraft carrier strike group to the region. While the Pentagon has not confirmed this deployment, the US has begun sending warships and aircraft to the area. The planned visit of the USS Nimitz to Vietnam was abruptly canceled due to “urgent operational requirements.”

The future of American policy

A key force behind the “restrainer” ideology is Defense Priorities, a think tank funded by Charles Koch’s Stand Together philanthropy group.

The organization recently published a carefully worded paper arguing for reducing Israel’s reliance on US military guarantees: “A more secure, diplomatically connected Israel would rely less on American military backing and more on regional partnerships to secure its future.”

Colby and the Pentagon press office did not respond to media inquiries, but internal dynamics suggest that those who favor traditional US intervention in the Middle East are gaining an advantage.

According to Smith, as Trump attempts to balance his “America First” policy with regional alliances, the outcome of this internal debate will determine the trajectory of US-Israel relations during a period of regional instability.

Elbridge Colby’s fixation on China

One claim in the report suggests that Colby is so focused on Asia that he “clashes with anyone doing anything else in foreign policy, including loyal Trump supporters.”

After Smith’s report was published, chief Pentagon spokesperson Sean Parnell stated in an email that reports of any internal division were inaccurate and that Colby was “fully aligned with the leadership team and moving in lockstep.”

In an interview with POLITICO last July, Colby emphasized his personal view that defending Eastern NATO requires allocating forces in a way that does not diminish the US’s ability to defend Taiwan.

Colby also identified “key capabilities” such as long-range fire, logistics, command and control (known as C4ISR), and air defense as areas where the US should focus on Asia, not Europe.

Having previously argued that US commitments to Ukraine were excessive, Colby has consistently underlined that the most tangible economic and military challenge to his country and its interests comes from China.

The strategist, who noted that he views Ukraine through a “China lens,” clarified that he was not calling for an immediate halt to all aid to Kyiv. He argued that while Russia’s actions are “evil,” the assistance provided by the US does not align with the tangible interests of Americans.

When asked what he would advise the US President to do now, Colby responded: “I would say, ‘I don’t want to talk about Ukraine right now. We are going to talk about Taiwan, China, and Asia first, and after we have addressed that problem satisfactorily, then we will spend time, political capital, and resources on Ukraine.'”

Last month, the Financial Times (FT) reported that Colby had told British officials a Trump administration would expect the British military to increase its focus on the Euro-Atlantic region.

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