U.S. current account deficit hits record high as foreign direct investment plummets to $52.8 billion in Q1 2025
Foreign direct investment into the U.S. saw a remarkable downturn in the first quarter, falling to $52.8 billion from a downwardly adjusted $79.9 billion in the fourth quarter of 2024, as reported by
the Commerce Department
. This decline occurred amid heightened business uncertainty related to President Donald Trump's tariff proposals.
This decrease may be temporary, as substantial foreign companies' manufacturing projects in the U.S. are set to commence, and Nippon Steel's nearly $15 billion acquisition of U.S. Steel will influence current and future quarters' statistics.
The reduced first-quarter FDI inflows contributed to an expansion of the U.S. current account deficit, reaching a record high of $450.2 billion, as businesses accelerated imports in anticipation of Trump's significant tariffs.
The Bureau of Economic Analysis within the Commerce Department also indicated that current account data for the fourth quarter was adjusted to reflect a gap of $312.0 billion, revised from the previously reported $303.9 billion.
Current account overview
The current account data tracks the net flow of goods, services, and investments into and out of the country. A substantial and persistent U.S. trade deficit has historically been mitigated by investment inflows into U.S. financial assets and foreign direct investment, which encompasses plant and equipment as well as corporate mergers and acquisitions.
The first-quarter FDI inflows marked the lowest dollar amount since the $42.4 billion recorded in the fourth quarter of 2022, a time characterized by elevated post-pandemic inflation. Aside from this decline, quarterly FDI figures had remained above $61 billion since the easing of the COVID-19 pandemic, peaking at $135 billion in the third quarter of 2021, according to data from the Commerce Department.
Read more: UAE emerges as global FDI hotspot, second only to the U.S.
U.S. FDI leadership
Historically, the U.S. remains the largest recipient of FDI globally, attracting investments across diverse sectors such as manufacturing, consumer products, technology, and finance. In 2023, new foreign direct investment expenditures in the U.S. totaled approximately $148.8 billion, though this was down 28 percent from 2022 levels. The decline partly reflects a global slowdown in FDI flows, with UNCTAD
reporting
a second consecutive year of global FDI decline in 2024, posing challenges especially for developing economies.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Tahawul Tech
20 minutes ago
- Tahawul Tech
Agentforce 3 Archives
"We are setting a new standard for customer innovation by focusing on both people and technology". Learn more about @Verizon's use of Gemini models in app development below. #Verizon #GeminiAI #tahawultech
Tahawul Tech
20 minutes ago
- Tahawul Tech
Scaling AI Agents Archives
"We are setting a new standard for customer innovation by focusing on both people and technology". Learn more about @Verizon's use of Gemini models in app development below. #Verizon #GeminiAI #tahawultech
Zawya
27 minutes ago
- Zawya
US lawmakers introduce bill to bar Chinese AI in US government agencies
A bipartisan group of U.S. lawmakers on Wednesday planned to introduce a bill in both houses of Congress that would bar U.S. executive agencies from using artificial intelligence models developed in China, including those from DeepSeek. The introduction of the bill, dubbed the "No Adversarial AI Act," comes after Reuters reported that a senior U.S. official has concluded that DeepSeek is aiding China's military and intelligence operations and has had access to "large volumes" of Nvidia's chips. DeepSeek shook the technology world in January with claims that it had developed an AI model that rivaled those from U.S. firms such as ChatGPT creator OpenAI at much lower cost. Since then, some U.S. companies and government agencies have banned the use of DeepSeek over data security concerns, and President Donald Trump's administration has mulled banning its use on U.S. government devices. The bill introduced Wednesday into the U.S. House of Representatives by Representative John Moolenaar, a Michigan Republican who chairs the Select Committee on the Chinese Communist Party, and Representative Raja Krishnamoorthi, an Illinois Democrat who is the ranking member on the committee, would create a permanent framework for barring the use of all Chinese AI models from U.S. executive agencies, as well as those from Russia, Iran and North Korea. The bill would require the Federal Acquisition Security Council to create a list of AI models developed in those countries and regularly update it. Federal agencies would not be able to buy or use those AI technologies without an exemption, such as for carrying out research, from the U.S. Congress or the Office of Management and Budget. The law also contains a provision that can be used to get technologies off the list with proof that they are not controlled or influenced by a foreign adversary of the U.S. "The U.S. must draw a hard line: hostile AI systems have no business operating inside our government," Moolenaar said in a statement. "This legislation creates a permanent firewall to keep adversary AI out of our most sensitive networks - where the cost of compromise is simply too high." Also co-sponsoring the bill in the House are Representative Ritchie Torres, a New York Democrat, and Representative Darin LaHood, an Illinois Republication. In the U.S. Senate, the bill will be led by Senators Rick Scott, a Florida Republican, and Gary Peters, a Michigan Democrat.
