Overview

Foreign investment in California experienced an increase last year, despite ongoing trade disruptions linked to tariffs imposed by President Trump. An annual report from the Los Angeles County Economic Development Corp. highlights a significant rise in foreign-owned enterprises and the jobs they support.

The data indicates a growing trend in foreign investment, particularly in technology sectors across Southern California and the Bay Area.

Key details

  • Direct foreign investment in California rose last year.
  • The number of foreign-owned enterprises increased by 4%, reaching a total of 19,717.
  • These enterprises supported 847,245 jobs in the state.
  • Japan, the United Kingdom, Canada, France, and Germany were the top five countries with foreign-owned businesses in California.
  • Stephen Cheung, CEO of the LAEDC, noted that growth was driven by tech industries.
  • Industries contributing to investment growth include AI, aerospace, defense, and life sciences.
  • New foreign tech companies in California include Japan’s Ebara Corp., U.K. venture company Improbable, Germany’s MTU Aero Engines, and France’s Thales Alenia Space.
  • Southern California accounted for over half of the foreign businesses, totaling 11,840, which supported 501,679 jobs.
  • The Bay Area had 6,306 foreign businesses, supporting 291,274 jobs.
  • Retail, manufacturing, and professional and business services saw the largest gains in company numbers.
  • Leisure, education and health, and financial services also experienced significant job growth.
  • The growth in foreign investment reflects business plans made prior to the tariffs being imposed.

Context

The increase in foreign investment comes amid a backdrop of trade tensions and tariffs that have altered the landscape of international trade and investment in the United States. The report suggests resilience in California's economy, particularly in sectors that are crucial for future technological advancements.

What happens next

Looking ahead, the next report may indicate a potential slowdown in foreign investment due to the ongoing trade disruptions anticipated in 2025, as noted by Cheung.

What we don't know yet

Details regarding the specific impacts of the tariffs on individual sectors and the exact nature of the trade disruptions expected in 2025 are not confirmed.