Traders fear that Trump’s negotiations will put cross-border deals on ice

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Top traders and investors have warned that the incoming Trump administration could use the approval of cross-border deals to pressure foreign governments to comply with US policy priorities, such as increased use of t’ security.

Several advisers who have been talking to people close to the president-elect say that Donald Trump intends to use all government agencies to push other countries to support his plan, including blocking the authorization to deal and their companies.

“We’re definitely getting ready for this,” said one European banking and real estate executive. “People in this system have no qualms about using every wave they have to achieve their goals.”

Trump is expected to put pressure on European countries to increase their defense spending about 5 percent of GDP and push for better deals from business partners. He has threatened to impose tariffs on imports from Europe and the rest of the United States.

Inbound deals are overseen by the Committee on Foreign Investment in the US, or Cfius, which reviews deals for US national security risks. The intergovernmental panel is chaired by the Treasury Secretary and includes officials from foreign and domestic intelligence agencies as well as top economic advisers and representatives from major government departments. If the deal is deemed to have unresolved security risks, Cfius can recommend the president block or impose conditions on the transaction.

The approval process, which was once in control, has become more politicized under the first Trump and now the Biden administrations, according to several people who spoke to the Financial Times. In fact, the committee has a broad objective to determine what constitutes a national security risk, which creates room for political control.

“Cfius (has) broad discretion to do what he wants, as long as there is some connection to national security,” said one border lawyer. “There are some deals (in the pipeline) at the moment – let’s see what happens when they go through the Cfius process.”

Bill Reinsch, chairman of international business at the Center for Strategic and International Studies, said Cfius’ analysis of Nippon Steel’s proposed purchase of US Steel was more political than it should have been. Joe Biden’s refusal marked the first time that a US president intervened to stop a business involving a non-Chinese company from acquiring a target that does not have US military contracts. That denial is now the subject of litigation.

“The president announced his opposition early, and that broke the news and sent a strong message about what the administration needs to do,” Reinsch said. “(Trump’s) tendency is to look at these things from a personal perspective, and what he thinks is in his best interest. It will be politics under him again.”

A Treasury spokesman declined to comment on Cfius’ involvement in politics under Biden. Trump’s transition team did not respond to a request for comment.

During his first term, Trump sought to ban the social media platform TikTok, which is owned by Chinese parent company ByteDance, in part through the Cfius investigation. He also banned the Singapore-registered chipmaker Broadcom attempted a hostile takeover of $142bn of rival Qualcomm in 2018, based on Cfius recommendations.

“Trump’s first president was an illiterate,” said one foreign investment lawyer. “This time he will know how to press the levers of power and he will not only use Cfius, he will use the antitrust agencies, the Fed and many others . . . everything will be very unpredictable.”