Foreign investment in the United States is generally touted as favorable by politicians, policymakers, and economic development organizations at the federal, state, and local levels. They gladly show up at ribbon-cuttings when new factories open. Economic impact reports are commissioned to quantify how many jobs foreign investments have brought to a region, and how much the companies pay in taxes. U.S. and foreign officials praise the positive contributions these overseas-based companies make to American communities.
The United States has largely been a welcome environment for foreign investment. That’s part of the reason it is the leading country for foreign direct investment (FDI) inflow, which generally is defined as new construction projects, finance deals, and mergers and acquisitions. Japan is the number one investor into the U.S., followed by Canada, Germany, the United Kingdom, and Ireland.
The Inflation Reduction Act (IRA), the CHIPS and Science Act and other recent U.S. policies have spurred more FDI into the country. South Korea has been the largest clean-tech and semiconductor investor into the U.S. since the passage of the IRA. SK Hynix, for example, recently announced a $3.9 billion chip plant in Indiana. Governor Eric Holcomb attended the announcement, saying he was “proud to officially welcome SK Hynix to Indiana.”
But the official warm welcome that foreign investors receive in the U.S. may not be matched by common sentiment among the American electorate. And the results of the November presidential election will chart two very different paths for the United States on a number of fronts, including its relations with Asia and U.S. policies on foreign investment, trade, tariffs, and protectionism.
A second Biden administration would likely maintain and seek to expand first-administration policies that have spurred billions in Asian investment in the U.S., such as the IRA and its electric vehicle tax credit. But former President Donald Trump’s camp has called for revising the IRA, including its electric vehicle tax credits, throwing Asian automakers and suppliers into uncertainty. This kind of proposed policy reversal doesn’t happen without the perceived support of a substantial base of voters.
A national survey conducted in March by Washington, D.C.’s Advocus Partners tapped into this sentiment. The survey asked:
Economic development officials and other state leaders in the United States may be shocked to see that fewer than one-third of respondents hold a positive view of foreign investment.
A follow-up question asked:
On this question, it’s probably fair to say responses were at least partially influenced by the deluge of recent and negative TikTok coverage and, to a lesser extent, negative coverage of ownership of American farmland by Chinese companies. China’s current radioactivity in the U.S. is probably impacting these results and how Americans feel about foreign ownership of anything in the U.S., writ large.
We have seen such anti-foreign investment spikes in the past. The fear of Japanese takeover of American real estate, especially on the West Coast, was so pervasive in the 1980s zeitgeist, that it was a key plot point of the 1988 film “Die Hard.” By the early ‘90s, one survey showed that 58 percent of Americans were uncomfortable with Japan’s level of investment in the United States.
Things improved for Japan once Americans began to appreciate the quality and value of Japanese cars and once Toyota and others began building manufacturing plants in the U.S. that employed American workers. But it hasn’t gone away. Consider the pushback by U.S. regulators and union workers to Nippon Steel’s proposed purchase of U.S. Steel.
Jobs at the state level have always been the tangible result of FDI. When I worked at Hyundai Motor in 2012, our Montgomery, Alabama, plant announced it was adding a new shift and advertised 877 new jobs. The plant received nearly 20,000 applications.
But does that appreciation travel upstream to create an affinity for the foreign investors who created those jobs? That’s unclear. It may be too many dots for most Americans to connect. Or maybe the story has not been well-told to Americans by the companies and U.S. states, through repeated messaging in the media, advertising, and on social media and by effective use of data.
Many foreign investors in the United States have been shy to trumpet their foreign-ness, for reasonable fear of backlash. But the current political climate, which may only get hotter after November, may require especially Asian investors to distinctively brand themselves as Japanese, or Korean, or Indian, or else get swept up in the anti-China sentiment in the heartland and on Capitol Hill. Perhaps coincidentally, Hyundai Motor is advertising the Korean-ness of the colors on its Genesis luxury vehicles.
Even though one conspicuously villainized foreign investor – Japan in the 1980s, China now – can throw a cloud over all foreign capital, most FDI into the U.S., including from Asia, does not come from China. Most of it comes from allies, strategic partners, and good friends of the United States.
Companies from these countries make products and services that seek only U.S. market share, rather than the uninterrupted attention of young Americans with smartphones. Friendly foreign investors have made long-term commitments to the U.S. and communities here.
That’s a story worth telling.