The United States and Japan have formalized the initial wave of investments under a trade deal designed to bolster economic ties and counter China’s influence, with , marking the announcement of the first three projects totaling $36 billion. The agreement, brokered during President Donald Trump’s administration, saw Japan commit to a substantial $550 billion investment in the US economy in exchange for reduced tariffs on Japanese exports, particularly in the automotive sector.
The centerpiece of this initial investment is a $33 billion natural gas power plant in Portsmouth, Ohio, spearheaded by Japan’s SoftBank Group. Trump described the facility, capable of generating 9.2 gigawatts of electricity, as “the largest in history” in a post on his social media platform. The plant is strategically positioned to power energy-intensive operations, including artificial intelligence data centers. Alongside this, a $2.1 billion deepwater crude oil export facility is planned for the Gulf of Mexico, to be operated by Sentinel Midstream, and a $600 million synthetic industrial diamond manufacturing plant will be constructed in Georgia, led by Element Six, a subsidiary of De Beers.
Japanese Prime Minister Sanae Takaichi emphasized the strategic importance of these investments, stating they would “strengthen the US-Japan alliance” and foster resilient supply chains in critical sectors like energy, AI, and data centers. She also highlighted the potential for increased sales and business expansion for Japanese companies through the supply of related equipment. The announcement followed Takaichi’s recent landslide election win earlier this month.
The $550 billion pledge, extending through , the end of Trump’s second term, represents a significant commitment from Japan. In return for this investment, the US agreed to reduce tariffs on Japanese exports from 25 percent to 15 percent, a move crucial for Japan’s automotive industry. Trump underscored the importance of tariffs in securing the deal, stating, “The scale of these projects are so large, and could not be done without one very special word, TARIFFS.”
The trade deal grants President Trump considerable authority over the investment process. He retains ultimate decision-making power over which projects are approved for Japanese investment, with a strict 45-day deadline for Japan to meet funding demands following project announcements. Failure to comply could result in increased tariffs or “catch-up” payments from Japan.
Japanese industrial giants, including Toshiba, Hitachi, and Mitsubishi Electric, are poised to benefit from the Ohio power plant, potentially supplying essential equipment. Similarly, Nippon Steel, JFE Steel, and Mitsui OSK Lines could play key roles in the development of the Texas oil export terminal. The synthetic diamond plant is expected to benefit diamond tool manufacturers. According to Japan’s economy ministry, these projects aim to reduce US dependence on imports, particularly from China.
Ryosei Akazawa, Japan’s economy minister, described the arrangement as a “win-win relationship” promoting mutual benefits between the two nations. The initiative follows months of negotiations between the US and Japan to establish the mechanisms for investment and identify suitable projects. US Trade Secretary Howard Lutnick characterized the deal as a “massive America First trade win,” emphasizing the strategic and economic advantages for the United States.
Financing for the projects is expected to come from a combination of sources, including Japan Bank for International Cooperation (JBIC), Japan’s state-owned financial institution, and commercial banks backed by Nexi, Japan’s export credit agency. The specifics of the funding breakdown are still under discussion. SoftBank founder Masayoshi Son, described as “central” to the progress of the talks, is reportedly leveraging the scheme to support Project Crystal Land, an AI and robotics complex in Arizona, and has expanded the project’s scope to include other US states to secure necessary energy infrastructure.
The Gulf of Mexico oil project is projected to generate $20–30 billion annually in crude exports, reinforcing America’s position as a global energy supplier. The Ohio natural gas facility will generate enough electricity to power approximately 7.4 million homes, equivalent to nine nuclear reactors.
