Webinar follow-up: More on today’s geopolitics and their impact on local development

By Charlie Smith, Independent consultant

Geopolitics today are fast-changing and affecting development everywhere. I addressed some of these impacts in a recent webinar for Golden Shovel Agency, and the high number of questions from participants showed just how engaged developers are right now. Since I was not able to get to all of the questions, I wanted to take the opportunity to provide some answers – and hopefully add some insight.

Are geopolitics hurting FDI to the US?

The numbers would say no. FDI to the US has risen in recent years and numbers from the first half of 2025 are robust. Greenfield FDI increased 5% on a dollar basis, per the UN Conference on Trade and Development. This is in a context of a global slowdown in FDI, so there is a “flight to safety” factor that favors the US amid an uncertain geopolitical environment. The scale of opportunity in the US and protection from Chinese imports are also advantages over other markets. 

That said, tougher realities elsewhere could find their way to the US. Keep an eye on economic growth in source countries for FDI locally. If challenges in Germany, for example, mean that corporate HQ is struggling, proactive engagement can help sustain – or expand – their investment in your community.

I sometimes hear from business leaders abroad that policy instability in the US increases their perception of investment risk. People-to-people ties and proof of community buy-in for FDI can reduce that perception and offer long-term growth partnerships.

Which countries are showing new potential for FDI to the US?

In terms of total dollar value, South Korea is the biggest source of FDI to the US since 2020, outside of the EU and Canada. Derisking trade with China and supporting US manufacturing goals are win-win options for the country’s companies and national strategy. And in a moment when the US is reducing its global security role, South Korea is eager to keep its American alliance strong.

Sweden, Denmark, and Finland have also dramatically expanded in the US over the past five years, increasing FDI by 50-100%. It is no coincidence that Sweden and Finland have joined US-led NATO (long a taboo in both countries) in the same timeframe, as the region looks to improve US ties and hedge against a belligerent neighbor in Russia.
For economic developers, review your target industries and identify leading firms in other countries you may not have looked at yet. Emerging-market companies often take a long-term, relationship-based perspective that favors personal engagement.

Is the US maritime initiative real, and what could be the FDI impacts?

Growing US shipbuilding capacity requires foreign partnerships, so the FDI potential is real. After China, the biggest shipbuilding countries are big sources of FDI to the US: Japan, South Korea, Italy, etc. The numbers are also sizable. Korean company Hanwha Group spent $100 million purchasing a Philadelphia shipyard in 2024, then announced a $5 billion buildout.

The ability to quickly scale shipbuilding will be a critical factor for where FDI takes place. Legacy assets, both in infrastructure and human resources, are key. Workforce gaps can benefit from creative solutions; Hanwha is flying US staff to Korea for expedited training, for example. Also important is a location’s willingness to have shipyard assets controlled by foreign entities. Preparing and positioning for each of these factors will help communities stand out.

Has there been much tariff retaliation, including possible bond dumping?

Despite expectations, we have not seen wide-scale retaliatory tariffs against the US. So far, countries have been more interested in securing a “best case scenario” US tariff rather than entering a full-blown trade war, especially in a challenging global economy.

Countries that have chosen retaliatory tariffs have unique strengths vis-à-vis the US. China’s successful retaliatory measures stem from its economic heft and control of rare earths. Canada can use the scale of bilateral trade as leverage, but doing so risks harming an economy that is itself deeply tied to the US; many Canadian tariffs have been lifted after talks.
At a high level, bond dumping is not materializing as a tariff response, but two trends are worth noting. First, while China continues a multi-year effort to sell US bonds, it is done at a measured pace. Second, other countries are still interested in US bonds and foreign ownership of US debt has hit record highs this year – another “flight to safety” effect. 
Events this spring showed that confidence in the US is not unlimited, though. To prepare for risks, scenario planning remains an invaluable tool for economic development leaders. Be

it a simple exercise with in-house staff or a facilitated event to glean more insights and strategies, that preparation will help you navigate potential outcomes.

To get all of my insights, be sure to watch the webinar recording here and connect with me on LinkedIn.