John G. Murphy John G. Murphy
Senior Vice President, Head of International, U.S. Chamber of Commerce


February 14, 2024


Concern about international investment recently hit the headlines, spurred in part by news that Japan’s Nippon Steel Corporation (NSC) has agreed to acquire U.S. Steel. The Japanese company’s leaders pledged to respect all existing labor contracts while expanding R&D, investment, and production in the U.S.

However, critics on the left and the right have called for the administration to block the sale. It isn’t clear legal grounds exist to do so. However, in any event, such a move would pose real risks for U.S. prosperity and security — for three significant reasons.

The U.S. Wins Big from Inbound Investment

First, America benefits hugely from its openness to international investment. Breaking from this policy would be costly.

For decades, the U.S. has welcomed investments from around the world under what successive American presidents have called our Open Investment Policy. In fact, the U.S. is the world’s top destination for international investment.

International companies had invested more than $5 trillion in the U.S. by the end of 2021, with firms from Japan, Europe, and Canada accounting for about 90% of the total. In 2021 alone, these companies:

  • Spent nearly $300 billion on plant and equipment in the U.S.;
  • Invested $78 billion in R&D in the U.S.;
  • Supported U.S. payrolls of nearly $800 billion; and
  • Directly employed nearly 8 million Americans.

Japanese companies lead the way as investors in the U.S., and governors and state legislators work hard to woo their investments and the new jobs they support. Japanese firms have invested more than $700 billion across the U.S. and directly employ nearly 1 million Americans (and another 2-3 million indirectly).

Sending a signal to the world — and to Japanese companies — that the U.S. is overturning its open-door policy would undeniably have a chilling effect. The U.S. may no longer be seen as a welcoming place to invest, build, and hire.

The U.S.-Japan Alliance Is Vital to Our Security

Second, Japan is one of our closest allies. Saying otherwise would undermine U.S. national security across the Asia-Pacific.

The U.S.-Japan alliance is regularly called the “cornerstone” of the free world’s security arrangements in the Asia-Pacific region. Not only are more than 50,000 American military personnel based in Japan, but our bilateral alliance has been strengthened in recent years even as Tokyo has expanded its defense spending (much of it on U.S.-made defense systems).

Against that backdrop, there’s long been agreement that U.S.-Japanese investment strengthens rather than undermines our national security. Just this year, the bipartisan House Select Committee on the Chinese Communist Party recommended that Congress put Japan on a CFIUS “whitelist” of close allies—alongside Australia, Canada, New Zealand, and the United Kingdom—exempting investors from those countries from CFIUS jurisdiction for many U.S. transactions.

In fact, Rep. Mike Gallagher (R-WI), chair of Select Committee, recently commented on this to Politico: “Honestly, what Japan is doing right now in terms of their investment in their own defense is probably the single best thing that's happened for U.S. deterrence in the Pacific in 25 years. So unless I’m unaware of something, I don’t see why [NSC’s acquisition of U.S. Steel] would be a problem.”

Blocking the Sale Would Harm U.S. Interests Worldwide

Third, blocking this investment could inspire copycat moves overseas. That would harm U.S. economic interests worldwide.

Americans derive important benefits when U.S. companies invest abroad, and significant costs would follow if foreign governments blocked U.S. investments on spurious grounds.

Sales by the overseas affiliates of U.S. companies topped $7 trillion in 2021—a sum representing about one-third of U.S. multinationals’ total sales. Many of America’s largest companies earn more than half their revenue in this way.

U.S. companies invest in foreign markets to serve those markets—not as a substitute for domestic production. More than 90% of the production of foreign affiliates of U.S. multinationals is sold abroad.

Unsurprisingly, U.S. companies concentrate their high-wage, high-skill jobs in the U.S. Even so, these companies’ $7 trillion in overseas sales helps to fund their research and development activities, 85% of which continue to be performed in the United States, according to the U.S. Department of Commerce.

A baseless move to block investment in the U.S. could prove costly, including if U.S. companies’ ability to do business in foreign markets faces similar restrictions.

In sum, America benefits hugely from our openness to international investment. We can’t afford to slam the door on these benefits.

About the authors

John G. Murphy

John G. Murphy

John Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy and regularly represents the Chamber before Congress, the administration, foreign governments, and the World Trade Organization.

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