The White House won’t be looking to block companies with 25 percent or more of Chinese ownership from buying certain U.S. tech-related companies.
Instead, the government will rely on the newly strengthened Committee on Foreign Investment in the United States to deal with concerns about foreign purchase of sensitive domestic technologies, a senior administration official said Wednesday.
The issue has stirred controversy this week following news reports Monday that President Donald Trump was looking to step up efforts to safeguard U.S. technology. The administration has sought to stop China from stealing intellectual property, and intends to institute a series of tariffs while the issue is addressed.
Markets had worried that the U.S. was going to institute sweeping bans that might stifle investment and escalate a global trade war.
Stock futures, which previously indicated a lower open on Wall Street, turned positive as the news broke.
The Senate on Tuesday overwhelmingly adopted changes to CFIUS operates, beefing up the committee’s authority to assess threats against U.S. business, with tech a focus.
“We considered a number of different mechanisms for addressing the concerns articulated regarding the acquisitions of sensitive technologies that may threaten U.S. national security, national interests,” the official said. “In the end the president and his advisers settled on the idea that we have a strong and effective mechanism through the CFIUS process.. and that is a mechanism that can be used in the flexible and aggressive way to combat the practices that are troubling to the president.”
In a statement, Trump said the upgraded CFIUS “will enhance our ability to protect the United States from new and evolving threats posed by foreign investment while also sustaining the strong, open investment environment to which our country is committed and which benefits our economy and our people.”
“I have concluded that such legislation will provide additional tools to combat the predatory investment practices that threaten our critical technology leadership, national security, and future economic prosperity,” Trump added.
In addition to the committee’s involvement, Commerce Secretary Wilbur Ross also will be involved in examining export controls.
The move comes as the U.S. has gotten involved in a series of trade skirmishes as tariffs are readied for July 6 implementation. Treasury Secretary Steven Mnuchin is overseeing the process.
Mnuchin said the decision to rely on the committee came late Tuesday and was unanimous. Multiple reports indicated that the issue over how to regulate foreign investment in U.S. companies generated deep division in the White House, particularly between Mnuchin and Peter Navarro, a top economic advisor to Trump.
This is breaking news. Please check back for updates.
— Mnuchin will appear on CNBC’s “Squawk Box” at 8 a.m. ET Wednesday.
