On July 8, 2025, President Trump issued an order to unwind the acquisition of Jupiter Systems, Inc., a U.S. company, by Hong Kong-based Suirui International Co., Ltd., a subsidiary of China’s Suirui Group (collectively Suirui), five years after the transaction closed. According to the Treasury Department’s July 11 statement, the Committee on Foreign Investment in the United States (CFIUS) had “identified a national security risk arising from Suirui’s ownership of Jupiter relating to the potential compromise of Jupiter’s products used in military and critical infrastructure environments.”
Three weeks earlier, on June 13, the President authorized the investment of Japan’s Nippon Steel Corp. in United States Steel Corp. based on unique national security risk mitigation terms. A proposed acquisition of U.S. Steel by Nippon Steel had been blocked by the Biden administration just six months prior.
These two decisions early in the new administration highlight the broad authority exercised by CFIUS and the significant impact that the committee’s review can have on foreign investments into the United States. They illustrate the importance of parties to a transaction appropriately considering potential national security concerns that CFIUS might have prior to closing a deal.
Order to Unwind Chinese Acquisition of U.S. Technology Company
CFIUS is an interagency committee with broad authority to review foreign investment in the United States for national security concerns. CFIUS may impose mitigation measures on parties to a transaction to address its concerns or it may clear a transaction without condition. In only a handful of exceptional circumstances has a CFIUS review resulted in a decision by the President to prohibit a transaction on the grounds that mitigation cannot adequately address the national security concerns. The President’s extraordinary July 8 order to unwind Suirui’s acquisition of Jupiter Systems five years after closing highlights important considerations for potential parties to a transaction.
First, it illustrates the risks for transactions that are not notified to CFIUS. Suirui, a Chinese cloud communication service company, acquired Jupiter Systems, an audiovisual equipment technology company, in 2020 without reportedly notifying CFIUS to mitigate concerns the committee might have had. Five years later, CFIUS asserted jurisdiction over the acquisition and concluded that it presented national security risks, resulting in the costly divestment order.
While filing with CFIUS establishes a safe harbor for a transaction that receives CFIUS clearance, the Jupiter Systems decision highlights that CFIUS can exercise jurisdiction over non-notified transactions indefinitely, and that the present administration is willing to do so in certain circumstances.
Second, the Jupiter Systems order puts into practice the provision of the administration’s America First Investment Policy, identifying that it will use CFIUS “to restrict PRC-affiliated persons from investing in United States technology, critical infrastructure, health care, agriculture, energy, raw materials or other strategic sectors.” (“PRC” refers to the People’s Republic of China.) U.S. concern with investments in U.S. technology businesses by Chinese companies is not new. But the Jupiter Systems decision illustrates how the Trump administration might use CFIUS to address other investments in sensitive sectors from Chinese-affiliated companies.
While every assessment about whether a filing with CFIUS is appropriate is context-dependent, the retroactive prohibition of the Jupiter Systems transaction is a stark reminder that parties need to carefully consider any concerns that CFIUS might have with a foreign investment into the U.S. These include when the U.S. company is in a sensitive sector and when the buyer is affiliated with China or another foreign adversary.
Japanese Steel Investment Approved Subject to Unique National Security Agreement
In January, President Biden prohibited Japan’s Nippon Steel from acquiring U.S. Steel following a CFIUS assessment that the transaction threatened to impair U.S. national security. In April, President Trump directed CFIUS to conduct a de novo review of the proposed transaction. Based upon that review, President Trump issued an order to approve the investment subject to the terms of a National Security Agreement (NSA) between the parties and the U.S. Government.
CFIUS uses NSAs as a tool to mitigate national security risks presented by proposed transactions. According to a joint press release by Nippon Steel and U.S. Steel, the companies committed in their NSA to:
- An approximate $11 billion new investment by Nippon Steel in U.S. Steel by 2028, including an initial investment in a greenfield project that will be completed after 2028;
- U.S. Steel remaining a U.S.incorporated entity with its headquarters in Pittsburgh;
- A majority of the members of U. S. Steel’s board of directors being U.S. citizens;
- U.S. Steel’s key management personnel, including its CEO, being U.S. citizens;
- U.S. Steel maintaining capacity to produce and supply steel from its U.S. production locations to meet market demand in the U.S.; and
- Nippon Steel refraining from preventing, prohibiting, or otherwise interfering with U.S. Steel’s ability to pursue trade action under U.S. law
Of particular note, the NSA provides the U.S. government with a “Golden Share” in U.S. Steel. This Golden Share grants the U.S. government the right to appoint an independent director and consent rights over certain matters that include:
- Reductions in the committed capital investments under the NSA;
- Changing U.S. Steel’s name and headquarters;
- Redomiciling U.S. Steel outside of the United States;
- Transfer of production or jobs outside of the United States;
- Material acquisitions of competing businesses in the United States; and
- Certain decisions on closure or idling of U.S. Steel’s existing U.S. manufacturing facilities, trade, labor, and sourcing outside of the United States
Golden Shares are used at times by foreign governments to maintain certain controls in company decision-making, but they are novel for CFIUS. While much remains to be seen about the impact of the Golden Share in this NSA, the provision and the order approving an investment that had previously been blocked indicate the administration’s willingness to consider new ways to address concerns with proposed transactions.
Key Takeaways
Given the rarity of a presidential order prohibiting a transaction based upon CFIUS review, these two cases offer unique insight into the CFIUS process and how the administration might approach inbound investments by foreign parties. They highlight the following key issues that parties to cross-border transactions should consider:
- If the investor is affiliated with China, Russia or another foreign adversary
- If the U.S. company is in a sensitive industry, such as technology, energy, data management, government contracting, or defense
- If a voluntary filing with CFIUS can avoid a costly order to unwind in the future
- If novel solutions can help address CFIUS’s national security concerns
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.
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