Foreign direct investment (FDI) in the United States dropped significantly in the first quarter of 2025. According to fresh data from the U.S. Department of Commerce, inflows amounted to just $52.8 billion, down from $79.9 billion in the final quarter of 2024.

🔹 This sharp decline in capital inflows coincides with growing uncertainty around President Donald Trump's tariff policies. As businesses reconsider their strategies in response to changing import rules, many are holding off on major investments until clearer guidelines are established.

Temporary Slowdown or Alarming Trend?

Despite the worrying numbers, analysts caution that this slowdown might be temporary. Several major foreign firms are launching new manufacturing projects across the U.S., which could soon turn the tide. One notable example is Japan’s Nippon Steel, which plans to acquire US Steel in a $15 billion deal — a move expected to lift investment figures in upcoming quarters.

The decline in FDI also coincided with a record current account deficit, which reached $450.2 billion in Q1 2025. Companies rushed to import goods in advance of Trump’s proposed tariffs, putting further pressure on the trade balance.

Tariffs Undermine Dollar and Inflate Deficit

In addition to weakened FDI, America’s external trade faces serious strain. Imports surged to an all-time high of $1 trillion, driven by non-monetary gold and pharmaceutical goods. In contrast, service imports dipped slightly due to lower payments for intellectual property licenses.

Economists warn that the combination of a ballooning current account deficit and federal budget shortfalls could undermine the long-term confidence in the U.S. dollar as a safe haven.

Trump: Tariffs Bring Jobs Back to America

President Trump views the situation differently. He argues that aggressive tariffs are motivating companies to bring manufacturing back to U.S. soil, aligning with his “America First” policy to boost domestic industry.

However, economists like Paul Ashworth from Capital Economics remain cautious. While he acknowledges that uncertainty may have affected some investment decisions, he believes the Q1 drop in FDI could be attributed to one-off deals or isolated business transactions, rather than a broader systemic problem.

Still, Ashworth warned: “Prolonged uncertainty over tariffs may cause firms to delay investment even further, potentially weighing on future economic growth.”



#US , #economy , #TRUMP , #Tariffs , #worldnews

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