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2mo ago

U.S. FDI Drops Sharply to $52.8 Billion on Tariff Uncertainty

Companies have rushed imports ahead of tariff hikes, pushing the current-account deficit to a record high.

U.S. President Donald Trump delivers remarks on tariffs in the Rose Garden at the White House in Washington, D.C., U.S., April 2, 2025. REUTERS/Carlos Barria/File Photo
Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., June 25, 2025. REUTERS/Jeenah Moon
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Overview

  • Commerce Department data show first-quarter FDI fell to $52.8 billion from a revised $79.9 billion in Q4 2023, the weakest quarterly inflow since late 2022.
  • Elevated business uncertainty over President Trump’s proposed tariff plans is cited as the primary factor behind the investment pullback.
  • The FDI slump helped drive the U.S. current-account deficit up to $450.2 billion, as firms front-loaded imports to sidestep expected duties.
  • Nippon Steel’s $14.9 billion acquisition of U.S. Steel and $21 billion in U.S. manufacturing investments from Hyundai Motor and Hyundai Steel are slated to boost future inflows.
  • Economists warn that quarterly FDI figures are inherently volatile due to one-off mergers and big projects but anticipate inflows to rebound as announced foreign manufacturing projects get underway.