This client alert provides an update on current operational and policy trends at the Committee on Foreign Investment in the United States (“CFIUS” or the “Committee”). Some of these trends appear in the recently released unclassified public version of CFIUS’s Annual Report to Congress covering 2025 (the “2025 Report”), which provides the first full-year picture of CFIUS activity during the second Trump Administration, and in the recently released National Security Science & Technology Strategy. Although the 2025 Report provides useful historical context and identifies several priorities of the second Trump Administration, it does not capture more recent operational dynamics and pressure points. This alert therefore begins with a snapshot of the state of the Committee and then summarizes key takeaways from the 2025 Report and the National Security Science & Technology Strategy.
We have observed the following recent trends in CFIUS’s operations:
Pressure on Timely Reviews and Mitigation Negotiation. While review and investigation timelines generally improved during the first year of the Trump Administration, that progress has recently slowed or reversed in certain cases — especially those involving mitigation. We see several reasons:
- First, the prolonged government shutdown from February through the end of April 2026 caused a substantial backlog of transactions. The Committee has still been able to process easier cases in a timely manner, but the workload has rendered timely coordination and analysis of more complicated matters challenging.
- Second, there has been considerable turnover and thinning of career staff across the executive branch. CFIUS has not been immune to this trend, and while the impacts differ across agencies, the broader result is that there are fewer resources — especially seasoned career staff — trying to manage a busy docket.
- Third, the proliferation of national security regulatory regimes is taxing a relatively small cadre of experienced national security officials. For example, Treasury and other CFIUS member agencies are involved in developing and enforcing other authorities, including (i) the Outbound Investment Security Program, including expansion under the Comprehensive Outbound Investment and National Security (“COINS”) Act, (ii) the Federal Communications Commission’s (“FCC”) Covered List, (iii) the Commerce Department’s Connected Vehicles Rule, (iv) the Department of Justice’s (“DOJ”) Data Security Program, and (v) the Section 1260H List of Chinese Military Companies — to name just a few. As a result, the demands on political officials and career staff, particularly senior career staff, are greater and strain their capacity to focus on individual CFIUS cases. These dynamics are in some instances slowing internal coordination and the development of mitigation positions. They also produce mitigation proposals that are less well-developed and reflect reduced oversight from senior career officials. In turn, negotiations and approval processes are prolonged.
These challenges are exacerbated by the fact that the career staff and political leadership at certain agencies have less direct connection than historically has been the case. Senior policy officials in certain agencies have appeared more willing to revisit or challenge staff recommendations, which can lead to late-stage questions or, in some cases, requests to withdraw and refile notices even where a transaction previously appeared to be on a path to approval.
Policy Debate Over Foreign Acquisitions of Sole-Source and Single-Qualified-Source Suppliers. There is an ongoing internal policy debate among the CFIUS agencies over the extent to which any non-U.S. company should be allowed to acquire suppliers that are either sole or single-qualified sources for key Department of War (“DOW”) programs. While the Administration generally is supportive of foreign investment from allies, there is a view that the “America First” policies of the Administration — including the “America First Investment Policy” (“AFIP”) — require a strong commitment to enhancing U.S. domestic industrial policy. Under that view, allowing foreign acquisitions of domestically owned and operated suppliers of sole-source or single-qualified-source items that are critical to key weapons systems and programs is inconsistent with those efforts to reindustrialize the manufacturing base, particularly the defense manufacturing base. These policy interests historically would have been addressed with straightforward supply assurance mitigation commitments. While CFIUS continues to use such supply assurance agreements, the policy considerations for certain suppliers are more acute, and in those instances, mitigation discussions may also become a broader debate about whether and how the overall transaction advances the “America First” interests.
More Balanced Approach to Mitigation in Other Circumstances. While certain transactions involving the defense industrial base have received greater attention and are more likely to face mitigation (or, in some cases, prohibition), as described above, transactions involving other types of risks have had an easier path. For example, consistent with the AFIP’s guidance on reducing burdensome mitigation and attracting investment unrelated to China, DOJ — which ordinarily leads CFIUS’s review of transactions involving U.S. businesses with significant sensitive personal data — has dialed back its insistence on mitigating such transactions where there is no party with a direct or close tie to China or a country of concern. This shift results from a change in DOJ leadership priorities, CFIUS’s broader differentiation among investors, and perhaps the Data Security Program going into effect last year. DOJ’s own data tells the story: in its FY2027 Performance Budget Congressional Submission, DOJ reports having mitigated only 14 percent of DOJ-led cases in FY2025 — less than half of the average percentage of DOJ-led cases mitigated during the prior five-year period despite a similar volume of cases.
Active Non-Notified Outreach. While the Trump Administration’s overall policy is generally favorable to, and more expressly supportive of, foreign investment compared to the Biden Administration, it has remained focused on identifying transactions not filed with CFIUS and, in some instances, requesting that the parties file with CFIUS. This focus is not limited to investments or acquisitions from countries of concern, such as China; we have seen numerous instances over the last year of inquiries involving investments and acquisitions from allied and partner countries. This is an important trend for investors from allied and partner countries to note because it suggests that a proactive approach to CFIUS is essential to transaction planning and broader U.S. growth strategies. That strategy, however, need not always involve filing; we have found that the CFIUS agencies are often receptive to engagement short of formal filings that can ensure the government’s questions and interests are addressed.
Known Investor Pilot Program. The Administration has touted the launch of the Known Investor Pilot Program (“KIPP”) as a way to streamline CFIUS reviews for known, trusted investors. In practice to date, however, the results have proved mixed — the burdens to participate in the program are considerable in terms of time and information required, and we have not yet seen the KIPP materially alter CFIUS’s substantive approach where a transaction presents national security risk or result in greater procedural efficiencies or predictability for participants.
Increased Focus on Real-Estate Transactions. Consistent with the Administration’s National Farm Security Action Plan announced in mid-2025, CFIUS has been increasingly scrutinizing real-estate transactions involving proximity to military installations, as a result of both voluntary filings and non-notified outreach. In addition, with the U.S. Department of Agriculture (“USDA”) having formalized a process for its involvement through a 2025 memorandum of understanding with Treasury as the chair of CFIUS and having taken steps to expand its information gathering and mapping of foreign farmland purchases, USDA has started to become more involved in CFIUS reviews and identifying non-notified land transactions. This increased focus on real-estate transactions follows several years of consistent congressional and public attention on CFIUS’s role in reviewing various Chinese-linked land acquisitions and the continued passage of state laws restricting such transactions.
Focus on Being More Accessible to Transaction Parties. There is an emphasis from CFIUS leadership on endeavoring to be more accessible and transparent with transaction parties, where possible. This has included a willingness to meet and provide feedback on transactions, even before they are under formal review, as well as other outward-facing actions. For example, CFIUS launched a new website (which includes a section inviting pre-filing consultation) that emphasizes continued efforts to increase transparency and engagement with transaction parties.
Against that backdrop, the 2025 Report identifies at least four high-level trends. First, notwithstanding significant disruptions caused by lapses in appropriations that tolled CFIUS deadlines for more than 120 days during 2025, overall filing activity for notices remained relatively stable. Second, the report highlights implementation of new initiatives associated with the AFIP, including the launch of KIPP. Third, the data suggest that CFIUS continues to pursue a more selective and risk-based approach to mitigation than was observed during the peak mitigation years of the Biden Administration. Finally, the report continues to demonstrate the Committee’s sustained focus on mitigation and enforcement.
Overall, taking into account the unusual procedural disruptions caused by government funding lapses, we believe the 2025 Report reinforces several trends we identified in our review of the 2024 Report: In 2025, CFIUS remained highly active, continued to devote significant resources to monitoring and enforcement, and increasingly differentiated between investments from allied jurisdictions and investments raising heightened geopolitical concerns, including by, for example, launching the KIPP.
Notable points from the 2025 Report include:
1. Government Funding Lapses Meaningfully Affected the CFIUS Process. The most distinctive feature of the 2025 Report is the impact of repeated lapses in appropriations. CFIUS’s statutory deadlines were tolled for more than 120 days during 2025, and additional lapses extending into 2026 also affected certain cases filed in 2025. The Committee explicitly notes that these funding interruptions delayed acceptance of new filings and created uncertainty for transaction parties. Examples of shutdown-related impacts include:
- The funding lapses coincided with a sharp increase in CFIUS’s use of its extraordinary-circumstances extension authority — the Committee invoked that authority eight times in 2025, compared with two such extensions in 2024, one in 2023, and zero in 2022.
- The number of site visits conducted by CFIUS compliance staff fell roughly by half as compared to 2024 — 79 such visits in 2024, and 40 in 2025 — a reduction that we think more likely reflects last year’s significant reduction and turnover in CFIUS personnel, increased responsibilities for other national-security authorities, and early Administration pauses on spending and travel, rather than a decreased emphasis on compliance and enforcement.
- As discussed below, the number of notices withdrawn and refiled increased meaningfully compared to 2024.
- The ripple effects from the government shutdowns continue, in some cases, to be felt through case backlogs and unusual delays in getting certain case reviews on the clock.
Despite the funding-related challenges, the 2025 Report indicates that, excluding tolled days, CFIUS cleared approximately 67 percent of covered transactions either during the 30-day declaration assessment period or the 45-day review period (for notices).
2. Filing Activity Surged for Declarations but Notices Remained Relatively Stable. CFIUS reviewed 140 declarations in 2025, up from 116 in 2024, but cleared nearly the same number: 92 in 2025 compared with 91 in 2024. As a result, the declaration clearance rate fell from approximately 78 percent in 2024 to 66 percent in 2025, while the share resulting in requests for full notices rose from 15 percent to 26 percent. The increase in declarations filed likely reflects parties from friendly jurisdictions testing the waters of the Trump Administration’s stated objective to facilitate an “open investment environment” under the AFIP. For example, investors from France, Germany, Singapore, and South Korea filed 24 more declarations in 2025 than 2024. However, the percentage of declarations receiving a request for a full notice in 2025 as compared to 2024 suggests that the AFIP has not dramatically changed the threshold at which CFIUS determines further scrutiny is warranted to complete its national security assessment. The increase also likely reflects the strain on the process caused by the federal government shutdown in the last quarter of the year.
Notice volume, by contrast, remained largely unchanged. CFIUS reviewed 207 notices in 2025 compared to 209 notices in 2024. Likewise, approximately 55 percent of notices proceeded to investigation in both years (114 investigations in 2025 compared to 116 in 2024). These figures suggest a relatively stable level of review activity notwithstanding the procedural disruptions experienced during 2025.
3. The Trump Administration Began Implementing a More Investor-Differentiated Framework. Unlike the 2024 Report, which largely focused on enforcement initiatives and regulatory updates, the 2025 Report highlights several new institutional initiatives associated with the AFIP. For example, Treasury highlighted its launch of the KIPP, which is intended to facilitate expedited review of investments by trusted investors from allied and partner countries. Though the pilot program is officially underway, it remains to be seen if KIPP will have a meaningful impact on review timelines and outcomes. Many repeat filers are already known to the Committee without KIPP, and for participants in the KIPP we still expect that CFIUS — consistent with its statutory mandate — will undertake a thorough review of the target company in the transaction regardless of the buyer or investor’s “known investor” status. It also remains unclear whether the information-sharing burden imposed on KIPP participants will be offset by a more streamlined review experience, especially if CFIUS identifies a risk arising from a particular transaction.
4. Mitigation Rates Remained Relatively Steady. In 2025, CFIUS entered into or imposed mitigation measures with respect to approximately 8 percent of notices reviewed, which is consistent with 2024. Thus, although mitigation remains a significant feature of the CFIUS process, the level of formal mitigation activity remained below the elevated rates observed during 2023 (15 percent) and 2022 (15 percent). This data coincides with our observations during 2025 that the Committee appears to be more selective in imposing mitigation, consistent with the AFIP, but does so when the circumstances require. Finally, for the second consecutive year, the number of mitigation agreements terminated (23) outpaced the number of new agreements entered (15).
5. Enforcement Remains a Core Priority. Although the 2025 Report places greater emphasis on facilitating trusted investment than the 2024 Report, enforcement and compliance remain prominent themes. The report highlights the ongoing work of the Office of Compliance and Enforcement and continues to emphasize monitoring of mitigation agreements and review of non-notified transactions, the latter of which was a goal highlighted by Assistant Secretary Pilkerton earlier in 2026. The 2025 Report highlights a “targeted approach” for identifying non-notified transactions, noting that the Office hired additional staff and evaluated new tools and datasets to assist with this effort. This resulted in investigation of 90 potential transactions, official inquiries into 62 transactions, and requests for filings for nine transactions.
The sustained investment in enforcement and compliance infrastructure suggests that, while the Administration may seek to streamline reviews for lower-risk transactions, parties subject to mitigation agreements should continue to expect close government oversight, though perhaps not at the levels seen during the Biden Administration.
The White House released the National Security Science & Technology Strategy (“NSSTS”) earlier this month. The strategy aims to support and enable the 2025 National Security Strategy. While the scope of the NSSTS is broader than any of the individual national security regulatory frameworks, certain points are relevant to those regimes by informing the overall context in which those regimes operate in the current Administration.
1. Technology Leadership as a CFIUS Priority. The NSSTS specifically instructs CFIUS to “consider U.S. technology leadership in assessing risks, including with reference to the foreign availability, the feasibility of potential military and other national security applications, and the extent to which a transaction may advance or improve U.S. innovation, resilience, or security in critical technology domains.” This is consistent with analysis and direction that we are seeing within CFIUS, including the above-mentioned policy focus on limiting foreign ownership when there is a sole-source or single-qualified source technology for critical weapons systems.
2. CFIUS Expansion. The NSSTS advocates expanding CFIUS in specific ways. First, the NSSTS indicates that the Administration, in consultation with Congress, intends “to monitor certain ‘greenfield’ investments that pose acutely high potential risks to national security.” Second, the Administration also intends “to expand CFIUS’s critical technology jurisdiction.” Third, the NSSTS also advocates for an expansion of “CFIUS’s awareness of non-notified transactions” by the promotion of “information sharing throughout the U.S. Government” and engagement with the academic and private sectors, where appropriate.
3. Outbound Investment Restrictions to Expand. The NSSTS notes that the Administration “will use all necessary legal instruments to prevent U.S. persons from investing in foreign adversaries’ military industrial sectors. ”Consistent with that goal, the Administration plans to strengthen the Outbound Investment Security Program even beyond the expansion contemplated by the COINS Act of 2025, including by enlarging the program’s reach to “encompass additional restrictions on U.S. investments in other areas implicated by China’s military-civil fusion strategy.” The NSSTS notes that the Administration will “encourage” allies to adopt similar regimes by, among other means, using such regimes as “indications of verifiable distance from adversaries’ predatory investment and technology-acquisition practices.” Such verifiable distance could then provide a basis for CFIUS to “focus or ease restrictions on foreign investment.”
4. Emphasis on Data Security Program. The NSSTS highlights the need for “new approaches” to “account for the evolving technology landscape, including the unlawful export of Americans’ sensitive data.” To address that concern, the Administration calls on “[r]elevant agencies” to “continue prioritizing the Data Security Program” to “protect government-related data and bulk genomic, geolocation, biometric, health, financial, and other sensitive personal data of Americans against foreign adversary access and exploitation.” Further implementation of the Data Security Program could provide an adequate alternative authority that would obviate the need for CFIUS mitigation in some data-security cases.
If you have any questions concerning the material discussed in this client alert, please contact the members of our CFIUS practice.
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