US Overseas Investment Position Watched Amid Worsening Trump Tariff Wars
Data from last quarter before Jan 20 transition expected to show signs of changing sentiment
The upcoming report on U.S. international investments for the final quarter of 2024 is important as it would be the last quarter before President Donald Trump’s January return to the White House. Tariff tensions that Trump’s statements on trade balance with allies and others have the potential to impact on the nation’s international investments.
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A recent Bloomberg report said some of Trump's actions may have eroded market confidence and there is even a threat of a recession in 2025. The market uncertainty could affect international investment in U.S. stocks as the low market confidence is threatening to erode the country’s GDP growth.
American companies could begin feeling the pinch when capital flows dwindle, and the negative net international investments worsen. Net international investments include overseas assets and liabilities held by a nation’s government, the private sector, and its citizens, Investopedia says. The NIIP is analogous to net foreign assets (NFA), which determines whether a country is a creditor or debtor nation by measuring the difference in its external assets and liabilities.
The Net International Investments Position was–$23.60 trillion at the end of the third quarter of 2024, according to the Bureau of Economic Analysis. The investments are expected to have declined in Q4 as uncertainties were rising as the transition loomed.
According to the third quarter report, the assets totaled $37.86 trillion, and the liabilities $61.46 trillion. The net investments were a drop from –$22.55 trillion (revised) in the second quarter.
At the end of September 2024, the U.S. owed more money to the rest of the world than the rest of the world owed to the U.S. This difference, called the net international investment position, was a negative $23.6 trillion.
This gap widened in the fourth quarter of 2024, to a negative $22.55 trillion, as Trump’s second term approached.
