Since the 2008 global financial crisis, the U.S. government has intensified the use of fiscal subsidies to lower domestic production and investment costs in an effort to counter manufacturing hollowing-out and revive the manufacturing sector. These subsidies are primarily aimed at promoting local investment and employment, giving them a generally inward-oriented character. Meanwhile, given that firms’ domestic and overseas investment decisions are often made under a unified strategic and financial framework, U.S. government subsidies, characterized by a strong inward-looking tendency, may generate spillover effects on OFDI.

Against this backdrop, this paper matches global greenfield investment data from fDi Markets, subsidy data from Subsidy Tracker, U.S. publicly listed firms’ information, and major host-country characteristics to empirically examine how U.S. government subsidies affect the greenfield investment behavior of U.S. listed companies from 2011 to 2021. The study finds that government subsidies increase the value of greenfield investment by U.S. firms by approximately 74.4% on average, indicating that U.S. government subsidies significantly promote greenfield investment by U.S. firms. Mechanism testing indicates that subsidies can stimulate greenfield investment by alleviating firms’ internal and external financing constraints and reducing their operating risks. Heterogeneity analysis of enterprises shows that this promotion effect is only significant for enterprises with high productivity and fierce industry competition, and is significantly higher in key and emerging technology industries than in other industries. Heterogeneity analysis of host countries shows that, after receiving subsidies, U.S. firms’ greenfield investment decisions are shaped predominantly by economic considerations, including access to labor, market expansion opportunities, and innovation resources. These factors significantly strengthen their investment propensity toward China. In contrast, the subsidy-induced greenfield investment shows no significant association with whether the host country is classified as a near-shoring or friend-shoring destination for the United States.

This paper deepens the understanding of the relationship between U.S. government subsidies and firms’ internationalization decisions, and offers policy insights for China in responding to U.S. industrial policies and optimizing subsidy policy design.