In February 2025, when U.S. President Donald Trump signed an executive order temporarily suspending enforcement of the Foreign Corrupt Practices Act, a law prohibiting firms from engaging in bribery in overseas business, investors reacted immediately. Stock prices skyrocketed for firms currently or previously under investigation for violations of the FCPA. Within weeks, the average firm suspected or convicted of bribery gained $6.5 billion in market value—far more than it would have had to pay in a typical FCPA penalty.

When the suspension ended and the law went back into force in June, many observers expected investors to pull out. If U.S. prosecutors again had the authority to enforce anticorruption rules, businesses potentially implicated in bribery investigations would no longer be good bets for growth. Yet this reversal never came. Investment in these firms continued to rise steadily through the remainder of 2025 and into early 2026. This boom was not shared equally, however. The FCPA applies to all firms, American and foreign, that are listed on U.S. stock exchanges or do business in the United States. Yet valuations rose almost exclusively for U.S.-based companies with past or ongoing FCPA investigations. Foreign firms subject to the FCPA that had comparable histories of suspected corruption saw very little increase in investment.

One year after the FCPA was first suspended, the market divergence between U.S. and foreign firms suggests that investors are not simply responding to the likelihood that Washington is watering down its antibribery enforcement overall. Rather, they are expecting the law to be enforced selectively. Investors believe U.S. authorities will avoid punishing American firms for corruption but could use it to pressure their foreign competitors. If the markets are right, there has been a fundamental change in the function of one of the most important laws governing international commerce. Instead of operating as a neutral constraint that disciplines corrupt firms regardless of nationality, the FCPA may increasingly become a tool of economic statecraft to benefit the United States. Such a change threatens to dismantle the global anticorruption order that the United States helped build.

LEVELING THE PLAYING FIELD

The FCPA was created to solve a collective action problem. While bribery benefits individual firms—slipping foreign officials some cash, for instance, can help a company secure contracts, licenses, or regulatory favors—it raises costs for the business community as a whole and threatens the reputation of any company operating overseas. It also presents a national security problem: corrupt payments can create covert ties between firms and foreign leaders, facilitating potential espionage and leaks of sensitive information. When Congress enacted the FCPA in 1977, amid Watergate-era revelations of widespread corporate slush funds and illicit international payments, U.S. policymakers recognized that they could not prevent foreign officials from accepting bribes. What they could do was reduce the incentive for American multinational corporations to pay bribes abroad by threatening them with prosecution at home. Through the legal concept of extraterritoriality, if a firm paid a bribe to a foreign leader, the firm could be held liable in U.S. courts.

But domestic business groups were not immediately supportive of the new law. They argued that unilateral enforcement placed U.S. multinationals at a competitive disadvantage. Other countries, most notably France and Germany, often not only tolerated bribery but also allowed firms to deduct some of these payments from their taxes. Throughout the 1980s and early 1990s, the FCPA appeared to be headed for an early demise: enforcement was low and, under the Reagan administration, Congress openly debated repeal.

To address businesses’ concerns, Washington chose to internationalize the FCPA rather than scale it back. In 1998, Congress expanded the law’s scope to cover foreign firms and individuals who had contributed to corrupt schemes while in the United States or involving U.S. commercial mechanisms, such as U.S. dollars, the U.S. Postal Service, or American bank accounts. This move expanded the application of FCPA rules to foreign firms required to file reports with the Securities and Exchange Commission—which includes those listed on U.S. stock exchanges—even if the actual behavior occurred elsewhere. According to data compiled by Stanford Law School, the Department of Justice and the SEC have taken action to enforce the FCPA more than 770 times since the law was first enacted, 41 percent of which involved foreign defendants. These actions usually involve hefty fines, but in some cases also result in prison sentences. In one of the largest cases involving a foreign firm, for instance, the German conglomerate Siemens agreed in 2008 to pay approximately $450 million in criminal fines to the Justice Department and $350 million to the SEC for bribery violations in multiple countries.

Investors anticipate that the relaxation of enforcement will not extend to foreign competitors.

Washington also worked with the Organization for Economic Cooperation and Development to establish the 1997 antibribery convention to share responsibility for fighting business corruption with other industrialized economies. The convention, which now comprises 46 countries (including several non-OECD members), commits its members to criminalizing foreign bribery and to participating in a system of peer review in which they can be shamed and publicly held accountable for failing to adhere to their commitments. But it took time for the convention to work. Only by 2009 to 2010, when the OECD shifted its peer review approach from monitoring legal requirements toward evaluating countries’ actual prosecution of corruption, did firms reduce bribery in international business transactions. As our previous research on the effectiveness of the antibribery convention shows, as well as that of one of us (Malesky) with the political scientist Nathan Jensen, cases of corruption fell by 25 percent in the four years after this change was implemented compared with the four years before it. 

The FCPA remains the cornerstone of the international antibribery system. The United States has pursued cases against U.S. firms as well as foreign companies listed in U.S. markets under its FCPA authority, while also collaborating with OECD partners on their own investigations. The United States is by far the most important anticorruption prosecutor, initiating about 59 percent of all cases under the antibribery convention. The credibility of the global antibribery framework rests on a shared expectation that the United States is as willing to punish its own firms as it is those in other countries. 

AMERICA FIRST, ANTICORRUPTION SECOND

Trump’s executive order in February 2025 ordered the Justice Department to suspend FCPA enforcement for six months, or until it had revised enforcement guidelines to align with the administration’s focus on prioritizing American interests. Echoing the complaints of businesses that opposed the FCPA in the 1970s and 1980s because they worried it put American companies at a disadvantage, Trump claimed that the FCPA hurt U.S. firms by forcing them to respect antibribery standards that foreign competitors violated with impunity.

Washington followed the suspension of the law with further signals that it was unlikely to pursue strict antibribery enforcement even if the FCPA was reinstated. In May, the Justice Department introduced a new voluntary self-disclosure policy, which offers declinations of enforcement—formal offers to discontinue an FCPA case—to firms that promptly report misconduct and cooperate with prosecutors, including repeat offenders. Such actions will likely encourage firms to bribe abroad because disclosing misconduct is enough to reduce their risk of punishment.

Then, in June, the Trump administration ended the suspension of the FCPA when the Justice Department updated its enforcement guidelines. The new rules prioritize cases tied to cartels and transnational criminal organizations rather than typical corporate bribery of a public official. But what constitutes a cartel or criminal organization is ambiguous, making it easier for Washington to enforce the law opportunistically. The updated guidelines also instruct prosecutors to safeguard “fair opportunities for U.S. companies,” implying that the law may be weaponized against foreign competitors.

Senior officials have reiterated these priorities repeatedly, including at a December conference where several Justice Department leaders emphasized the new focus on enforcing cases that affect U.S. economic or security interests, or “things that matter to the American people,” as Acting Assistant Attorney General Matthew Galeotti said. Enforcement actions taken since the FCPA was formally reinstated reflect this shift. At least five of the seven investigations in 2025 for which the Justice Department publicly charged an individual or firm with violating the FCPA involved an alleged connection to a transnational criminal organization or damage to U.S. economic interests.

The FCPA is now a less credible threat than it used to be to U.S. firms that engage in bribery overseas. Markets agree. Whereas stock prices of tainted U.S. companies—those currently or previously suspected of bribery—have continued to rise since February 2025, equivalently tainted foreign firms have lost value after the June guidance was released. From June to December, these foreign firms, on average, were worth less than what they had been worth before the FCPA was originally suspended, while the average value of similar U.S. firms increased by 16 percent, or almost $20 per share. Investors seem to anticipate that the relaxation of enforcement will not extend to foreign competitors. Instead, as Washington has signaled, the FCPA will be deployed as U.S. leverage in trade disputes, procurement battles, and geopolitical rivalries.

GLOBAL REVERBERATIONS

Markets are moving faster than international institutions, such as the antibribery convention, in recognizing the implications of the changes to the FCPA. Investors have already internalized that U.S. anticorruption law lacks credibility against U.S. firms but retains coercive value for foreign ones. Once entrenched more widely, the expectation that the United States will only enforce the law selectively will create a vicious cycle. U.S.-based firms will adjust their compliance strategies and take more risks—and potentially engage in more overt corruption—when they think rules will not be enforced. And once expectations that the law will be fairly applied are lost, restoring enforcement will become far more difficult than maintaining it was.

The transformation of U.S. antibribery tools into economic weapons also threatens to undo the global system the United States helped establish to punish business corruption. The OECD antibribery regime depends on reciprocity: governments constrain their own firms that violate the law in exchange for others doing the same. Selective enforcement by the United States undermines that bargain. Other governments will have little reason to police their firms, or cooperate with U.S. prosecutors to enforce antibribery laws, if Washington no longer credibly commits to punishing American companies for bribery. The original collective action problem of international corruption, in which each individual firm has an incentive to make bribes, will return.

The United States spent decades building and exporting a model of extraterritorial accountability that anchored a rules-based order to enforce anticorruption. Policymakers do not need to formally repeal the FCPA or dramatically tear up rules-based economic exchanges to shatter these global frameworks. Instead, Washington may only have to signal that the era of neutral enforcement is over and watch as the rest of a pivotal legal order unravels.

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