In 2020 Australia experienced the most significant outflow of US direct investment in 15 years according to new research from the United States Studies Centre (USSC).

In his latest report, Australia-US bilateral investment in 2020: Taxing timesUSSC Trade and Investment Program Director Dr Stephen Kirchner reveals that US investment in Australia recorded its third consecutive year of decline, with Australia accumulating nearly A$150 billion of losses in US investment. Australia has fallen short in attracting US capital compared to peer economies, even prior to the onset of the pandemic in 2020.

“The drop in US investment in Australia started in 2018 and COVID-19 accelerated this trend, adding an additional A$12 billion in outflows to the United States in 2020,” Kirchner says.

The report shows that over the two years 2017-2019, growth in US foreign direct investment (FDI) in Australia significantly underperformed peer economies such as Canada, the United Kingdom, and New Zealand.

Kirchner explains, "this suggests the recent weakness in US direct investment is specific to the US-Australia investment relationship, rather than being driven by weakness in US investment more broadly."

Despite the net outflows in recent years, the US remains the single largest source of foreign investment in Australia, with an accumulated A$929 billion invested in Australia, accounting for 23.3 per cent of all foreign investment in Australia.

The report highlights the need for Australian lawmakers to address domestic policy settings that are unfriendly to foreign capital, which otherwise undermine Australian state and federal government efforts to attract and facilitate foreign investment.

“By adopting an agenda which includes corporate tax reform, streamlining the regulation of foreign direct investment, and re-opening the borders to facilitate due diligence on cross-border deals, Australia can reignite the cooling interests of US and other foreign investors,” says Kirchner.

Australia-US bilateral investment in 2020: Taxing times is now available for download.

To book a briefing with Dr Kirchner, please email us at

Key points

  • US investment in Australia has declined for three consecutive years and Australia has underperformed peer economies in attracting US capital, preceding the COVID-19 pandemic.
  • US FDI transactions in Australia underperformed, with an inflow of just A$1.1 billion in 2019, followed by an outflow of A$12 billion in 2020, the first such outflow since 2005.
  • The total value of two-way investment between Australia and the United States was just under A$1.8 trillion in 2020, down from a record A$1.85 trillion in 2019.
  • To curb this trend Australian lawmakers should adopt an agenda for increasing foreign investment, including corporate tax reform, streamlining the regulation of foreign direct investment and re-opening the borders to facilitate due diligence on cross-border deals.

View report

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