Will Trump’s tariffs turbocharge foreign investment in America?

Subscribe to enjoy similar stories. For Global companies, there is no place quite like America. As growth in China and Europe has slowed, its economy has continued expanding at a decent clip.

America remains by far the world’s biggest consumer market, accounting for almost 30% of total spending, and is home to the largest stock of foreign direct investment (FDI), at around $5trn. Yet under Donald Trump doing business in America has become a trickier proposition for foreign firms. His tariffs are making it more expensive to export their wares to the country.

And his erratic way of announcing and imposing them sows uncertainty. In the days after a 25% tariff on Canada and Mexico was rolled out, one-month exemptions were made for cars and other goods covered by North America’s free-trade pact. An initial levy of 10% on Chinese goods was doubled within months of being implemented.

On March 11th Mr Trump announced a 50% levy on Canadian steel and aluminium, up from the 25% previously planned, only to backtrack hours later. He recently threatened a 200% tariff on wine and other booze from the European Union. All this creates a dilemma for foreign companies selling to the American market.

Do they double down by relocating a share of their production to the country to avoid tariffs and placate Mr Trump? Or do they seek new customers elsewhere? Foreign investment in America has soared in recent years. The annual flow of greenfield FDI reached a record $231bn in 2024, up from $97bn five years earlier, according to fDi Markets, a data service (see chart 1). Huge subsidies offered by the Biden administration to build factories for electric vehicles and other green technology as well as semiconductors played an important part in that