[1] CFIUS, led by the U.S. Treasury Secretary, includes members from key government departments such as Defense, State, Commerce, and Homeland Security.
CFIUS was established in 1975 by President Gerald Ford's Executive Order 11858, pursuant to Section 721 of the Defense Production Act, initially to study and provide policy recommendations regarding foreign investment.
[7] CFIUS focuses on preventing U.S. technology or money from reaching restricted countries through foreign business deals;[8] close scrutiny is particularly given to acquisitions of critical infrastructure, such as public health or telecommunications.
CFIUS has investigated "restrictions on sale of advanced computers to any of a long list of foreign recipients, ranging from China to Iran",[9] including deals involving U.S. allies, such as the acquisition of United Defense by U.K. company BAE Systems in 2005.
[10] All companies proposing to be involved in an acquisition by a foreign firm are supposed to voluntarily notify CFIUS, although the committee may also unilaterally initiate a review, and maintains jurisdiction over "non-notified transactions" indefinitely, including those that have since been completed.
In 1992, the Byrd Amendment required CFIUS to investigate proposed mergers, acquisitions, and takeovers where the acquirer is acting on behalf of a foreign government and affects national security.
[18] In 2008, President Bush added the United States trade representative and the director of the Office of Science and Technology Policy by Executive Order 13456 implementing the law.
[18] In 2018, President Donald Trump signed the Foreign Investment Risk Review Modernization Act (FIRRMA), which granted CFIUS new powers over particular types of FDI that mainly concern Chinese investors.
[29] Trump's successor, President Joe Biden signed an executive order in September 2022 directing CFIUS to sharpen its scrutiny of foreign investment that could impact cyber security, quantum computing, biotechnology, and sensitive data.
Nippon and U.S. Steel subsequently challenged the decision in federal court, arguing that the president's action was politically motivated and lacked a legal basis.
Legal experts have highlighted the limited scope for judicial review in cases involving national security, noting the courts' traditional deference to executive decisions under the CFIUS statute.
[35] In February 2025, Donald Trump signed an executive order that directed CFIUS to restrict Chinese investment in strategic economic areas.
"[37] Advocates for its current level of confidentiality argue that there are few alternatives, as CFIUS' work is based on classified national security information, which cannot be disclosed to the public.
In a February 2006 interview with the New York Times, another former Reagan administration official, Clyde V. Prestowitz Jr., noted that the United States "need[s] a net inflow of capital of $3 billion a day to keep the economy afloat. ...