flexiblefullpage -
billboard - default
interstitial1 - interstitial
catfish1 - bottom
Currently Reading

Are we facing a new era in Foreign Direct Investment?

Building Owners

Are we facing a new era in Foreign Direct Investment?

The construction industry is already feeling the effects of the recent tariffs, not only with higher steel and aluminum prices, but with higher prices on Canadian lumber.


By Brian Gallagher, Vice President of Marketing, O’Neal, Inc. | July 17, 2018
Are we facing a new era in Foreign Direct Investment?

Chinese acquisitions and investments in the U.S. fell 92% in the first five months of this year, according to consulting and research firm Rhodium Group. Photo: Pixabay

In 2017, the A.T. Kearney Foreign Direct Investment Confidence Index concluded, “Investors are bullish about economic growth and FDI [Foreign Direct Investment] prospects, but are monitoring political risks for abrupt changes to the business environment.” 

Fast-forward to 2018, and that monitoring is heightened. Trade negotiations and legislation having an impact include: The Tax Cuts and Jobs Act, President Trump’s renegotiation of NAFTA and other trade agreements, the Foreign Investment Risk Review Modernization Act of 2017 (FIRRMA), and tariffs and trade wars.

Some of these actions may have their intended effect of protecting U.S. companies and the nation’s security. For example, the construction industry should reap benefits from tax cuts that lower their effective tax rates. But while easing financial burdens on U.S. businesses—especially small businesses—may be good for the economy, there is widespread concern regarding actions seen as hostile to international trade. Governmental proceedings, as they unfold day-to-day, are very dynamic and fluid. They represent a confluence of political, economic, security, and social issues, and the complexity of the situation is currently causing large international companies to press pause on their investments.

Yet FDI is critical to a thriving domestic economy. According to the Office of the Chief Economist within the U.S. Department of Commerce, “FDI supports a host of benefits in the United States, such as good jobs and innovation resulting from research and development.” And historically, the U.S. has been about average in terms of its restrictiveness on foreign investment. Currently, however, Congress is reviewing FIRRMA, a proposed bill that seeks to protect national security by limiting foreign control of the country’s critical infrastructure.

Significant upheaval was triggered in the first half of 2018, when the White House announced a 25% tariff on foreign-made steel and 10% tariff on aluminum. The action was largely a response to China’s perceived “dumping” of cheap steel and it made a statement about the Trump administration’s attitude toward global trade relations and the perceived status quo. 

Maintaining a healthy global economy based upon reciprocal economic relationships—and with the U.S. as an equitable participant—is key to the stability of our own economy.

Stakes rose much higher in early July, when the U.S. imposed an additional 25% tariff on $34 billion of goods imported from China. China responded with an equivalent tariff on $34 billion of goods it imports from the U.S. By July 10, the Trump administration had released a list of $200 billion worth of Chinese goods that could be subject to 10% tariffs. Hearings on these proposed tariffs are scheduled to occur Aug. 20-23.

Beyond this escalation between the world’s two largest economies, Canada announced that it would match (but not escalate) the dollar value of the U.S.’s steel and aluminum tariffs with tariffs of its own, with affected products including consumer goods. Europe is pondering how it can respond to U.S. tariffs without becoming embroiled in a damaging trade war—a task made more difficult by President Trump’s threats to impose tariffs on European auto imports. Switzerland, Russia, China, India, Canada, Mexico, Norway, and the European Union have begun working with the World Trade Organization (WTO), pursuing dispute settlement.

It’s impossible to judge just how long the domino effect will continue. Some experts are predicting that Europe, China, and other economic powerhouses will form mutually beneficial trade relationships with one another that exclude the U.S.

According to consulting and research firm Rhodium Group, Chinese acquisitions and investments in the U.S. fell 92% in the first five months of this year. CSNBC recently reported “Foreign direct investment worldwide is on the decline due to trade war fears, immigration, and protectionist policies.” This follows FDI that was already in decline. According to the United Nations World Investment Report 2018, global foreign direct investment fell by 23% in 2017, and the UN expected it to grow little (or not at all) in 2018. On July 11, the Bureau of Economic Analysis (BEA) released numbers on expenditures initiated by foreign investors in 2017 (the latest available data), and those expenditures were down 32% since 2016.

Various experts have reported that the construction industry is already feeling the effects of the recent tariffs, not only with higher steel and aluminum prices, but with higher prices on Canadian lumber. The news outlet Route Fifty shared a Moody’s Investors Service report which found that “states with the greatest trade dependency on China, Canada, and Mexico are at highest risk of seeing their tax revenues decline—namely Michigan, Kentucky, and Louisiana.” The report also identified manufacturing hubs like Detroit and Greenville, S.C., as well as port cities, as being at high risk.

FDI raises the standard of living for communities and creates opportunities for construction companies across the U.S. Maintaining a healthy global economy based upon reciprocal economic relationships—and with the U.S. as an equitable participant—is key to the stability of our own economy.

Brian Gallagher is Vice President of Marketing with O’Neal Inc., an integrated architecture, engineering, and construction firm. He can be reached at bgallagher@onealinc.com.

Related Stories

| Dec 27, 2011

State of the data center 2011

Advances in technology, an increased reliance on the Internet and social media as well as an increased focus on energy management initiatives have had a significant impact on the data center world.

| Dec 27, 2011

USGBC’s Center for Green Schools releases Best of Green Schools 2011

Recipient schools and regions from across the nation - from K-12 to higher education - were recognized for a variety of sustainable, cost-cutting measures, including energy conservation, record numbers of LEED certified buildings and collaborative platforms and policies to green U.S. school infrastructure.

| Dec 21, 2011

DOE report details finance options for PV systems in schools

The report examines the two primary types of ownership models used to obtain PV installations for school administrators to use in selecting the best option for deploying solar technologies in their districts.

| Dec 21, 2011

Few silver linings for construction in 2012

On the brighter side, nearly half of respondents (49.7%) said their firms were in at least “good” financial health, and four-fifths (80.2%) said their companies would at least hold steady in revenue in 2012.

| Dec 21, 2011

Hoboken Terminal restoration complete

Restoration of ferry slips, expanded service to benefit commuters.

| Dec 21, 2011

BBI key to Philly high-rise renovation

The 200,000 sf building was recently outfitted with a new HVAC system and a state-of-the-art window retrofitting system.

| Dec 20, 2011

Gluckman Mayner Architects releases design for Syracuse law building

The design reflects an organizational clarity and professional sophistication that anticipates the user experience of students, faculty, and visitors alike. 

| Dec 20, 2011

Research identifies most expensive U.S. commercial real estate markets

New York City, Washington, D.C. and San Mateo, Calif., rank highest in rents.

| Dec 20, 2011

Third annual Gingerbread Build-off winners announced

Nine awards were handed out acknowledging the most unique and creative gingerbread structures completed.

boombox1 - default
boombox2 -
native1 -

More In Category


MFPRO+ Special Reports

Top 10 trends in affordable housing

Among affordable housing developers today, there’s one commonality tying projects together: uncertainty. AEC firms share their latest insights and philosophies on the future of affordable housing in BD+C's 2023 Multifamily Annual Report.



halfpage1 -

Most Popular Content

  1. 2021 Giants 400 Report
  2. Top 150 Architecture Firms for 2019
  3. 13 projects that represent the future of affordable housing
  4. Sagrada Familia completion date pushed back due to coronavirus
  5. Top 160 Architecture Firms 2021