Trump backs off investment restrictions on China

Trump backs off investment restrictions on China
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President TrumpDonald John TrumpNFL freezes policy barring players from protesting during anthem McConnell spokesman on Putin visit: 'There is no invitation from Congress' Petition urges University of Virginia not to hire Marc Short MORE on Wednesday declined to impose executive actions to limit investments in American technology from foreign countries such as China, instead deferring to Congress to update the review process. 

The announcement followed reports earlier in the week that the administration was preparing rules to block China, in particular, from making significant investments in sensitive U.S. technologies. 

The stock market tumbled following the reports and administration officials rushed to deny that the actions would target China specifically.

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In particular, Trump put his backing behind the Foreign Investment Risk Review Modernization Act (FIRRMA), legislation that the administration had already signaled it supports.

"After reviewing the current versions of FIRRMA with my team of advisors — and after discussing them with many Members of Congress — 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 said in a statement released Wednesday morning.

FIRRMA would expand the scope of foreign investment restrictions the administration could block based on national security concerns, potentially blocking the transfer of information like personally identifiable sensitive data on individuals.

Trump threatened to use executive action should Congress fail to act.

"Should Congress fail to pass strong FIRRMA legislation that better protects the crown jewels of American technology and intellectual property from transfers and acquisitions that threaten our national security — and future economic prosperity — I will direct my Administration to deploy new tools, developed under existing authorities, that will do so globally," Trump said.

Trump's decision to back off on more immediate actions could signal a cooling of heated trade negotiations with China.

Trump earlier this month imposed tariffs on $50 billion of Chinese imports to the U.S. and threatened larger tariffs after China responded with tariffs on U.S. goods.

Treasury Secretary Steven MnuchinSteven Terner MnuchinDem lawmaker calls for cryptocurrency probe after Mueller indictments Meet the woman who is Trump's new emissary to Capitol Hill On The Money: Fed chief lays out risks of trade war | Senate floats new Russia sanctions amid Trump backlash | House passes bill to boost business investment MORE said declining the limits on investments did not constitute any sort of backing down.

"Is this us being weak on China? No," he said, adding that the legislation wasn't specifically meant to target China either.

Sen. Marco RubioMarco Antonio RubioSenate GOP attempts to wave Trump off second Putin summit GOP senator: We should accept Trump's 'apology' for Russian election interference comments Controversial Trump judicial nominee withdraws MORE (R-Fla.), who has cited China as a central strategic threat to the United States, derided the decision Wednesday as disappointing.

“Stronger CFIUS good for stopping bad deals. But some technologies critical to national security should NEVER be sold to or shared with #China. That’s why these promised restrictions are so important & why backing off on them would be so disappointing,” Rubio tweeted, referring to the Committee on Foreign Investment in the United States (CFIUS) that the new legislation would strengthen.

But industry groups were happy to hear of the approach.

“We are encouraged that the administration is focused on working with Congress to continue advancing CFIUS reform,” said Dean Garfield, president and CEO of the Information Technology Industry Council.

"Importantly, both the House and the Senate have advanced legislation to enhance our national security without unnecessarily impeding economic growth and job creation," he added.

Updated: 12:35 p.m.