Navigating Global Business Challenges: The Strategic Impact Of CFIUS And Tariffs In The Modern Economy

As global connectivity increases, cross-border investments fuel growth, innovation, and competitiveness. However, these transactions are subject to rigorous regulatory scrutiny, particularly by the Committee on Foreign Investment in the United States (CFIUS). CFIUS reviews foreign investments that may impact national security, including those involving critical infrastructure, technology, or sensitive data. Given rising geopolitical tensions and evolving economic policies, international businesses must understand CFIUS processes and their connection to tariffs.

The CFIUS Framework: Protecting National Security

CFIUS serves as a gatekeeper, evaluating mergers, acquisitions, and investments in U.S. assets that could result in foreign control. Although CFIUS review is largely voluntary, non-compliance can result in significant consequences, including transaction delays, substantial fines, or reversal of completed deals for certain transactions involving U.S. businesses dealing with critical technology, infrastructure, or sensitive personal data. The agency’s authority to block transactions that pose security risks highlights its increasing relevance in today’s geopolitical climate.

When companies submit a voluntary joint notice, they can receive a “safe harbor” letter from CFIUS, which restricts the agency from initiating a review of the transaction later, except under specific conditions.

The review process begins when a transaction raises concerns. Parties may submit either a voluntary joint notice or a streamlined declaration, each with distinct strategic and timing implications. Once filed, CFIUS conducts a forty-five-day assessment, examining ownership structures, backgrounds, and the assets involved.¹ If risks are identified, mitigation strategies such as technology access restrictions may be recommended, or the transaction may be blocked.

CFIUS filing fees are based on transaction size, from no fee for deals under US$500,000 to US$300,000 for transactions over US$750 million.² These fees support the review process, which becomes more rigorous for larger transactions.

CFIUS maintains strict confidentiality of filings to encourage companies to submit them.³

 Implications for U.S. Business Sellers

For U.S. companies considering sales to foreign buyers, CFIUS review is essential, especially for sensitive technology or infrastructure. Early engagement with CFIUS helps identify risks, supports negotiations, and enables necessary safeguards. Failing to notify or engage with CFIUS can result in sanctions, reversal of deals, and reputational harm if national security concerns arise.

Proactively addressing CFIUS requirements can shape deal structure, help sellers avoid unexpected costs, and ensure compliance. This approach is increasingly important as scrutiny of foreign investments grows in sectors such as semiconductors, telecommunications, and energy.

Incorporating CFIUS Into M&A Agreements

Given its importance, CFIUS considerations should be clearly addressed in merger and acquisition agreements. Contracts should specify which party is responsible for filing costs, mitigation measures, and potential delays. Agreements must also outline responsibilities if a transaction is blocked, including due diligence, legal fees, and penalties. Clear terms help minimize disputes and financial uncertainty.

 Broader Effects on International Business Relations

The CFIUS review process influences not only individual transactions but also international economic relations. Increased scrutiny can lead to more cautious investment strategies, delays, or rejection of promising deals. These factors may affect diplomatic relations and future cooperation. For businesses, compliance and transparency are essential for maintaining a strong international presence and managing geopolitical risks.

The Evolving Role of Tariffs and Their Intersection With CFIUS

Recent tariff developments, particularly those under the International Emergency Economic Powers Act (IEEPA), have increased complexity. Although the U.S. Supreme Court recently ruled against certain tariffs, their prior use and removal have affected trade flows and supply chains. In Learning Resources, Inc. v. Trump, the Court found that IEEPA does not authorize the president to impose tariffs unilaterally and that imposing 20%–145% duties on Chinese goods exceeded executive authority.⁴

Changes in tariff policies can alter the landscape of foreign investment. For example, the revocation or imposition of tariffs on strategic goods can shift the perceived risks of foreign acquisitions, influencing CFIUS evaluations. Companies must therefore develop integrated compliance strategies that consider both trade restrictions and investment screening to safeguard U.S. interests.

CFIUS Impact on Real Estate Transactions

Recent amendments to CFIUS regulations significantly affected U.S. real estate transactions involving foreign persons by expanding review authority near sensitive government sites. The Final Rule, effective 26 December 2024, broadened CFIUS jurisdiction to include real estate within specified proximities, adding 40 military installations (within a 1 mile radius) and 19 others (within a 100-mile radius), and re-designating 8 sites to a higher-risk 100-mile radius.⁵ This expansion reflects increased national security concerns, as proximity to these sites can trigger a CFIUS review of foreign property transactions. The rule clarifies that transactions completed before the effective date are generally not subject to review and introduces technical updates to better identify relevant sites. These changes signal heightened scrutiny of foreign real estate investments near critical U.S. government facilities.

Considerations in Emergence of U.S.-Iran Conflict

Amid the ongoing U.S.-Iran conflict, CFIUS considerations have become increasingly important for foreign investment in the United States, especially in sectors critical to national security such as energy, telecommunications, and advanced technology. Heightened tensions have led CFIUS to adopt a more cautious approach to transactions involving entities from countries of concern, particularly Iran. While direct Iranian investments are heavily restricted by sanctions, the U.S. government closely monitors indirect ownership, subsidiaries, or entities with Iranian ties that may pose security risks or enable illicit technology transfers. The conflict highlights the need for foreign investors and U.S. companies to conduct thorough national security reviews, comply with evolving regulations, and consider mitigation strategies to avoid transaction delays, legal issues, or enforcement actions by CFIUS. Overall, the U.S.-Iran conflict reinforces the critical role CFIUS plays in protecting U.S. strategic assets amid complex geopolitical challenges.

Interagency Involvement and Oversight

Beyond the CFIUS review process, several interagency bodies within the U.S. government oversee foreign investments and help ensure national security.

The Treasury Department

Within the Treasury Department, agencies such as the Internal Revenue Service (IRS), Financial Crimes Enforcement Network (FinCEN), and others monitor financial flows related to inbound investments. They track cross-border capital movements using international reporting forms to identify significant foreign funding entering the U.S. economy.

Voluntary and Mandatory Reporting

Some reports, such as those to the Bureau of Economic Analysis (BEA), are voluntary and have seen limited enforcement, but they still provide valuable data on foreign investment. Advisors, counsel, and accountants approach these obligations cautiously, as thresholds for streamlined or detailed reporting affect compliance practices.

Penalties and Enforcement

Penalties for non-compliance with reporting obligations can serve as a “smoking gun,” guiding Treasury and related agencies in enforcement. Failure to disclose relevant financial information increases the risk of investigations and enforcement actions, especially if inconsistencies or red flags are present.

Investment Subject to CFIUS

Concerns that investments may be subject to CFIUS review often cause parties to hesitate before filing or disclosing, due to fears of scrutiny or revealing sensitive financial information. This interplay between interagency oversight and CFIUS highlights the need for proactive compliance and clear communication among stakeholders in cross-border transactions.

Regulatory Developments in Florida and Beyond

Florida

While federal oversight is primary, regional regulations such as those in Florida also affect foreign investment. Florida’s CFIUS related issues mainly stem from Senate Bill 264 (SB 264),⁶ passed in 2023, which imposes strict state-level restrictions on foreign real estate ownership. These often overlap with, but differ from, CFIUS regulations and create a more complex compliance environment for investors from “countries of concern,” including China, Russia, Iran, North Korea, Cuba, Venezuela, and Syria.

The law prohibits foreign principals from directly or indirectly acquiring interests in agricultural land and property near military installations or critical infrastructure. Limited exceptions include minor stakes in publicly traded companies or certain non-controlling interests.

The legislation requires foreign owners with property held before 1 July 2023 to register with state authorities by 1 January 2024, or within thirty days of acquisition. The law also mandates disclosures and affidavits during Florida real estate transactions, with penalties for non-compliance but no effect on title insurability.

Legal challenges have been filed against SB 264, such as Shen v. Simpson,⁷ alleging constitutional violations. In Shen, four Chinese residents and an Orlando real estate firm argued the law discriminated against Asians and was preempted by federal law.⁸ The plaintiffs sought to block enforcement, but their initial motion was denied. In February 2024, the Eleventh Circuit temporarily halted enforcement for two plaintiffs, citing questions about federal preemption.⁹ In November 2025, the court upheld the law’s validity in a split decision, leaving SB 264 in effect without ruling on its overall legality.¹⁰ Implementation of the law continues, reflecting national trends restricting foreign ownership of critical assets, and underscores the need for buyers, sellers, and real estate professionals to understand and comply with these restrictions.

Texas and Virginia have enacted similar laws. Texas Senate Bill 147 restricts citizens and entities from certain countries of concern from purchasing real estate, especially land near critical infrastructure.¹¹ Virginia House Bill 2332 limits certain foreign-owned entities from acquiring agricultural land.¹²

Conclusion

Amid geopolitical uncertainty and changing trade policies, CFIUS remains central to protecting U.S. national security in international investments. Its rigorous review process and evolving tariff regulations highlight the need for proactive compliance and strategic planning. For global businesses, integrating CFIUS considerations into operational and legal frameworks is essential for navigating the complexities of modern international commerce.

Footnotes

1 50 U.S.C. § 4565.

2 31 CFR § 800.1101.

3 50 U.S. Code § 4565.

4 Learning Resources, Inc. v. Trump, No. 24-1287, 2026 WL 789123 (U.S. Feb. 20, 2026) (vacating and remanding Learning Resources, Inc. v. Trump, 784 F. Supp. 3d 209 (D.D.C. 2025)).

5 89 FR 93180.

6 Fla. SB 264 (2023).

7 Shen v. Simpson, 687 F. Supp. 3d 1219, 1248–49 (N.D. Fla. 2023).

8 Id.

9 Id.

10 Id.

11 2025 TX SB147.

12 VA HB 2332.

Originally published by FL Bar International Law Quarterly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.