FDI Outlook 2026: National security review in the transition to a multipolar world

Tariffs are no longer a background assumption. They are actively changing transaction rationales (especially “build vs buy”, localisation and friend-shoring decisions), valuation, and the political optics of foreign ownership in sensitive sectors.

The increase in the US tariff burden by the Trump administration affects more than just trade policy; screening authorities increasingly treat tariff-driven dislocation as an FDI predatory-acquisition risk: targets lose value, supply chains become fragile, and capacity becomes strategic.

For Europe, tariff volatility is also feeding into a broader policy debate about strategic autonomy and enforcement posture, including in areas that intersect directly with investment screening and remedies (e.g., digital regulation, critical inputs, energy security).

Investors should hence expect regulators and political stakeholders to ask not only “who owns the asset?”, but also “is the asset relevant from a dependency point of view?” – inputs, customer concentration, market access, export controls, and the ability to operate the asset under a changed trade regime.

A notable feature of 2026 will likely be that transatlantic capital is increasingly assessed through the same resilience toolkit previously associated primarily with investments in Europe from non-allied jurisdictions. This is not necessarily an “anti-US” policy, but a by-product of geopolitical developments, i.e.:

• a wider EU economic security agenda, and
• greater sensitivity around defence industrial capacity, critical infrastructure (including digital), and data governance.

The direction of travel is reinforced by the EU’s move toward mandatory screening across Member States and a common minimum scope (see Trend 4).

US investors in Europe should consider in particular the following aspects:

• Data localisation / sovereign control questions increasingly result in conditions on deal approval (e.g., where data is stored, where models are trained, who can access code and telemetry).
• Defence adjacency (dual-use capability, “critical” suppliers, cyber) can pull transactions into more intensive review tracks.
• Governance and control rights (board seats, vetoes, information rights) may be treated as sensitive even with minority equity interests.

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Across multiple jurisdictions, FDI screening attention in 2026 likely will particularly concentrate on four clusters that reflect the macro and strategic-autonomy themes above:

• Raw materials and upstream resilience: Critical raw materials are now hard-wired into the EU’s minimum scope for screening under the agreed reform package. We also see increased political sensitivity where raw-materials consolidation intersects with national security reviews in allied jurisdictions (Canada is a prominent example).
• Digital infrastructure and data centres (and the AI compute stack): While “data centres” may not always be named explicitly in statutes, they typically fall under digital infrastructure / critical entities concepts – now clearly embedded in the EU’s minimum screening scope. Investors should expect scrutiny to focus on: physical location, connectivity, upstream suppliers, cyber posture, and cross-border access to sensitive datasets.
• Defence and dual-use capability (including “defence adjacency”): Defence and dual-use items are explicitly within the EU minimum scope, and defence-adjacent tech is increasingly treated as strategic even when commercially deployed. In the EU, structural mitigation (governance ring-fencing, cleared personnel, export-control compliance architecture) is becoming more common – mirroring approaches long seen in other jurisdictions.
• Energy security, renewables, and transition infrastructure: Energy infrastructure sits squarely within the EU’s screening minimum scope. In addition, energy security has re-emerged as a politically charged lens for investment controls outside Europe as well – including in legacy infrastructure contexts.

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A number of large global economies are expected to revise existing, or introduce entirely new, FDI laws in 2026:

US: The US continues to consider changes to existing national security reviews by the Committee on Foreign Investment in the United States (CFIUS). CFIUS is exploring a “fast track” pilot program – consistent with President Trump’s America First Investment Policy – to facilitate allied country investments in the United States. The “fast track” process would require participating foreign investors to “avoid partnering with United States foreign adversaries,” and in 2026 we might see CFIUS increasingly conditioning its clearances on foreign investors’ terminating certain commercial relationships with such foreign adversaries. The America First Investment Policy also highlighted that the US may seek to (i) enhance CFIUS’s ability to review “greenfield” (i.e., start-up) investments in the United States (because a foreign person’s start-up/establishment of a US company is generally not subject to CFIUS’s jurisdiction), (ii)to take other actions seeking to restrict Chinese investments, and (iii) have CFIUS impose mitigation agreements that are focused on concrete actions parties may take, rather than open-ended mitigation agreements. The US Department of Agriculture also introduced proposed rules in December 2025 related to reporting on foreign ownership of agricultural land, increasing the likelihood that in 2026 CFIUS will become aware of foreign acquisitions of farmland that are not accompanied by a CFIUS filing.

China/Singapore: In deal practice, “Singapore washing” has emerged, a growing practice whereby Chinese-founded technology companies and other firms relocate key operations, headquarters or legal registration to Singapore to mitigate regulatory and geopolitical barriers tied to their country of origin. By establishing a base in Singapore – a neutral, business-friendly jurisdiction with strong global financial links – these companies aim to distance themselves from Chinese regulatory oversight (including foreign investment controls and export restrictions) and to circumvent or lessen the impact of both (US) outbound investment controls and export controls targeting Chinese technology. This strategy has emerged at the intersection of tightening Chinese foreign investment and export control regimes (which scrutinize transfers of sensitive technology and talent abroad) and increasingly stringent US rules designed to restrict certain capital flows and technology transfers to China.

Canada’s national security review posture has tightened materially already in March 2024, with additional ministerial tools and an updated guidelines framework issued in March 2025. However, the expanded mandatory pre-closing notification is a central upcoming change expected only for 2026, with enabling regulations expected to bring the regime fully into effect on a forward timeline. This brings Canada structurally closer to a suspensory-style risk allocation model for sensitive sectors.

The Netherlands has proposed broadening the scope of sensitive technologies under its screening framework to include, among others, AI and biotechnology, with consultation and implementation timing pointing into early-2026 territory. A Dutch nexus (including hold-co structures) deserves early mapping, and minority thresholds can become relevant where a technology is designated “highly sensitive”.

Germany continues to operate a well-developed investment screening framework with ongoing evaluation and refinement. As the FDI regime remains scattered across various laws and regulations together with other matters, the Federal Government has voiced a renewed intent to codify a unified Investment Control Act – as is already the case in other jurisdictions. A draft is expected for 2026 and will continue rebalancing and reassessment of process and screened sectors. We don’t expect substantive changes to Germany’s status as a “high-process” jurisdiction in which investors should anticipate detailed information requests and consider mitigation structures early for critical infrastructure and advanced tech.

Japan is preparing further reform to sharpen and streamline national-security screening under FEFTA in 2026, including closing loopholes and potentially adopting more coordinated review architecture. Japan has also tightened aspects of its economic security perimeter via changes to exemptions and investor categorisation in 2025. For investors, this could result in more targeted scrutiny in cyber/IT and sensitive sectors, with an emphasis on indirect acquisitions and influence/control structures.

Finally, in the EU a political agreement on the revised FDI Screening Regulation has been reached with formal adoption to follow. Key elements include:

• mandatory screening mechanisms in all Member States;
• coverage of intra-EU investments where the EU investor is owned/controlled by a third-country person;
• a common minimum scope (dual-use/military, certain advanced tech, critical raw materials, critical entities in energy/transport/digital infrastructure, and more); and
• more structured cooperation and transparency around how comments/opinions are considered.

While 2026 is only a “bridge year” before the new EU Regulation applies from 2027, investors should plan both for the existing national regimes and the incoming EU-level minimum standards which may already influence the current EU coordination mechanism.