Investing in America Series: Foreign investors look past uncertainty to long-term opportunity
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
“May you live in interesting times” is an oft-cited curse that, despite the mythology around its Chinese provenance, most probably originated in the West. There is little doubt that these times are interesting, and some of the greatest and most unpredictable changes are happening in the US, the leader of the western world.
This has not dimmed the appeal of the country as a place to do business. Preliminary figures from the US Bureau of Economic Analysis show that foreign investment in America in 2025 reached $232bn, the highest level since 2021. While acquisitions were, as always, by far the largest proportion, expansions of existing facilities also showed an increase. Manufacturing accounted for more than half of the inflows, and Japan topped the list of investor nations, injecting more than $50bn into America, nearly twice as much as second-placed Germany. New investments or expanding sectors were transportation and warehousing, computer and electronics manufacturing and chemicals manufacturing.
In June, the FT hosted an event in New York to mark the publication of its fourth annual FT-Nikkei Investing in America ranking. The index scores top American cities on their attractiveness to foreign investors based on criteria such as the availability of a skilled workforce, diversity and the ease of doing business. The 2026 winner was Boston.
As access to energy became a hot topic with disruptions caused by the Iran war and the increased load on the US energy system from growing data centre demand, rankings for 2026 included a new energy resilience score. This was a factor which helped Boston to the top spot, along with the city’s deep bench of intellectual capital.
Energy resilience was just one of the factors influencing the appeal of America as a destination for FDI that were discussed under the Chatham House Rule by panellists from foreign-owned companies that do business across the country.
Macro appeal
Speakers at the June event gave a consistent message about the draw for foreign businesses to America. Stable economic growth, an innovative mindset and deep capital markets as well as commercial openness and the ease of doing business all combine to bring investment into a market which is “too big to ignore”.
The appeal to foreign companies of US innovation and tech leadership is exemplified by the Spanish government’s decision in April 2026 to establish a biotechnology venture capital fund in Boston, stepping into a space created by the exit of US federal funds. This gives Spanish companies access to America’s intellectual capital while retaining intellectual property rights.
This article is part of the Investing in America series, a signature initiative by the FT and Nikkei in the US. This collaboration highlights the key issues faced by foreign investors in the country.
💾 View and download the entire report
🔎 Visit the Investing in America hub for more from this series
For a number of European companies in sectors ranging from pharmaceuticals to consumer goods to technology, the US is the largest single market by revenues — in some instances generating more sales than the EU as a whole. This is true also for some Japanese companies — Toyota and Sony gather more revenue in the US than in their home market.
Honda builds more cars in the US than it does in Japan, and Komatsu, the heavy equipment manufacturer, has more manufacturing locations in North America than in Japan.
Many such companies have a longstanding presence in the US, but the pressure to expand manufacturing capabilities to America is likely to bring new money to its shores. Policies introduced during the Biden administration were designed to spur this “reshoring” of production, from incentives such as the Chips Act and the Inflation Reduction Act to federal procurement guarantees to “buy American”. Augmented by more punitive measures introduced during both Trump administrations, including tariffs and treaty renegotiations, the cumulative effect is that for companies seeking to sell goods into the US market it is helpful to have produced them there.
One manufacturer at the June event pointed out that making goods locally makes sense not only due to the political drivers: manufacturing in the consumer’s own market provides a better understanding of local preferences. Bringing manufacturing back to the US would also have the added benefit of reinvigorating local jobs and communities, in turn providing more growth and adding to the appeal of the economy.
Local considerations
As with the cities ranked by the IIA index, not all states are created equal. Local policies and attitudes play a large part in the success of a project, and when capital investments in manufacturing can take six to eight years to complete before production even begins, supportive governments and communities can make or break the outcome. Speakers advised that new investors should inform themselves about local availability of inputs beyond the obvious necessities such as energy and resources.
Sourcing labour, for instance, can make or break a facility, firstly in the construction stage but just as significantly when it comes to operation. This is where local institutions can make a huge difference. Educators willing to work with employers to devise relevant programmes to foster the specific skills needed are a boon to companies setting up new facilities where there is limited or no existing talent pool. Collaborative apprentice and training programmes that guide young people directly into jobs foster company loyalty and reduce turnover. In the case of one company this was cited to be as much as 100 per cent in a year until a more stable local manufacturing labour market was established. Illinois and Kansas were two states where companies said they have had particularly positive experiences of working with local colleges.
Adding to the difficulty of finding young people to work in manufacturing across the nation is the fact that many years of outsourcing has atrophied the level of expertise. One speaker noted that there is not much manufacturing in education, saying: “We need to teach America how to make things — they don’t know.” It will take time to build the facilities and to teach people the necessary skills: “You can’t just say you are going to industrialise” and expect it to happen. Messaging and education aimed at young people could help jobs in manufacturing seem “cool” again, which could attract them into the sector and make re-industrialisation more achievable.
Despite the shortfall in skilled talent, speakers agreed that hiring locally is the most successful approach, even for foreign-owned companies, so there was little complaint about tighter immigration policies. This jibes with the administration’s goal that US workers should have priority access to job opportunities.
Another factor that might make some locations more appealing for investment is tax policy. Increasingly divergent tax rates are causing migration between states, with some areas experiencing attractive levels of population growth while others are shrinking.
Sector opportunities
The expansion of data centres and the accompanying growth opportunities came up in nearly every conversation. Data centre projects have gone from requiring $100mn to $200mn a decade or so ago to commanding funds in the multibillion-dollar range, lifting sectors adjacent to the build-out.
The energy sector in particular is being reinvigorated by AI’s appetite for power. This has dovetailed with an increased focus on energy resilience due to war-induced energy supply disruptions. While the US is self-sufficient in upstream fuel, distribution is another matter. Pipelines, LNG facilities, energy transport, “behind-the-meter” supply and even nuclear energy generation will need more investment. One speaker noted that the US grid distribution network is ageing and long overdue for upgrade, giving huge scope for investment that would produce benefits across the whole economy, from job creation to efficiency gains.
Resilience was a buzzword that extended well beyond the energy sector, with the current administration looking for ways to ensure that its domestic needs are not vulnerable to any “single point of failure” for any supplies critical to the economy’s function. Security of supply is also bolstered by diversification, which might suggest that America is keen to spread its allegiance and sourcing more widely, offering more opportunities for new partnerships.
In few sectors is diversification more significant than in critical minerals, where China has a stranglehold on processing, if not deposits, of minerals essential to the production of most electronics. Project Vault is the Trump administration’s solution, a $12bn initiative to establish a strategic critical minerals reserve.
Canada has large deposits of such minerals which are already being accessed under joint agreements, but the test will be finding communities willing to host the dirty work of processing rare earths. China is years ahead in processing and manufacturing, for instance in magnets, so even once sites have been identified any project seeking to catch up will need a very long-term view and probably significant government support.
This approach is somewhat presaged by the activity in the technology sector, where foreign market leaders in particular are being encouraged to increase their US onshore manufacturing capacity. America’s desire for greater resilience in the supply of chips to cement its leadership in tech, along with tariff barriers and data centre demand, have all driven companies such as Samsung and TSMC to raise their commitments to US-based facilities. In September 2025, the Texas Semiconductor Innovation Fund extended a grant of $250mn to Samsung for its $4.73bn semiconductor fabrication facility in the state.
One other factor influencing investment opportunities is consumer preferences. These have been changing as ecommerce habits have grown and become more entrenched. New consumer requirements around issues such as sustainability have presented new areas of growth, for instance a shift to paper-based packaging materials from plastics. On the downside, a post-Covid swing from consumer goods to services is a drag on the manufacturing sector, a near-term offset to the more supportive long-term strategy.
Challenges
Despite the push to reverse the hollowing-out of the industrial base, many of the speakers raised the issue of tariffs as a concern when planning for large capital investments in production capacity. Most of the equipment required to establish new plants is made offshore and therefore is also subject to import duties. While America may eventually have capacity to create its own equipment, in the near term the added expense is problematic. When tariffs are constantly subject to recalibration, companies struggle to plan with any certainty as costs could alter dramatically once construction is already underway. Some cited this as being a major contributing factor to inflation — both for their own operations and for the economy at large. Still, most felt that in the long run a return of manufacturing to the US was a positive trend that would continue.
The overall lack of policy clarity on a three- to five-year view was also cited as a limiting factor when making a long-term commitment to capacity in the US. The administration’s approach to longer-term trade agreements such as Nafta, now the USMCA, with talk of annual renegotiation or even abolition, increases uncertainty.
Several speakers said that learning the rules of doing business in America could be tough, as they are complex and varying, but that the effort seemed worthwhile for access to such a large and open market.
While employment is robust, one speaker highlighted that the labour market is currently going through a period of reduced dynamism. Two factors may lie behind employee reluctance to move jobs and low employment mobility: insecurity or uncertainty around the longer-term impact of AI and persistently high interest rates. The latter has also affected consumer preferences which have shifted from the Covid-era desire for goods to a greater desire for services, which seems to be weighing on the manufacturing sector, despite otherwise supportive policies.
AI has been a driver for specialised hiring but seems to be more of a challenge overall. A shortage of the necessary skills for data centre rollout is slowing progress in the sector while more broadly across the economy, some workforce reskilling or redundancy seems likely. With the benefits still unquantifiable and costs also rising, CEOs do not yet know how to make workforce plans to accommodate AI. As one speaker put it, there is plenty of data but not yet many insights into its usage. Successful adoption is likely to require a change in corporate cultures and a redesign of end-to-end processes.
Supply chains are also facing numerous challenges. Extreme weather events, geopolitical tensions and rising trade barriers are affecting companies no matter where they do business. Some of these uncertainties are centred around US policy, however, and the added unpredictability of the current administration’s mercurial approach to rules and regulations. Fortunately, in the wake of Covid more companies have become aware of where their supply-chain risks lie and what measures they can take to mitigate them.
Besides the added hit to imported equipment, which is significant especially for low-margin businesses, inflation was a word that made few appearances. One speaker said that industrial energy costs had not risen as much as consumer petrol prices. Nonetheless, the absence of discussion around inflation was surprising.
Conclusion
America’s economy is the world’s largest, as well as being its most innovative and one of those most open for business. A combination of administrative carrots and sticks is being used to implement a new industrial policy that aims to rebuild US manufacturing leadership. This will not be a quick process but it is already offering opportunities for those willing to invest for the long term. For the speakers in New York, optimism around the outlook for the US economy still prevails, no matter how much noise is made about the decline of America’s leadership in the world.
Comments