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.
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