Washington D.C. – U.S. President Donald Trump announced Tuesday a series of Japanese investments in key American sectors, marking a significant step in the implementation of a trade agreement signed between Tokyo and Washington. The investments, totaling $36 billion, will focus on energy, critical minerals, and semiconductor technology, according to statements released by the White House and the U.S. Department of Commerce.
The agreement, reached in July 2024, saw Japan commit to investing $550 billion in the United States by 2029, contingent on reductions in U.S. Tariffs on Japanese imports. Implementation was initially delayed due to disagreements over specific project details and financing mechanisms. Trump, speaking via his Truth Social platform, described the projects as “FORMIDABLE” and strategically vital.
The initial tranche of investments includes projects in Texas, Ohio, and Georgia. Specifically, these comprise a deepwater oil export terminal in Texas, a large-scale power plant in Ohio, and facilities for the production of critical minerals used in the semiconductor industry in Georgia. Commerce Secretary Howard Lutnick clarified that the $36 billion commitment represents a substantial boost to the U.S. Economy.
Japanese press had previously reported on February 12th that three projects were under advanced discussion, with a combined investment value approaching $40 billion. These projects center around synthetic diamonds for the semiconductor industry, a deepwater port terminal for oil, and power plants to support data centers powering artificial intelligence (AI) development.
Trump emphasized the role of tariff reductions in securing the investment, stating that the projects “would not have been realized without very special tariffs.” He further claimed the planned power plant in Ohio would be “the largest in history,” and the Texas liquefied natural gas (LNG) terminal would solidify U.S. “energy dominance.”
Lutnick detailed that the Texas terminal is expected to facilitate the export of “$20 to $30 billion worth of crude oil.” He characterized the moment as “a very exciting and historic period for the United States and Japan.”
The trade agreement stipulates a 15% cap on U.S. Tariffs on Japanese imports in exchange for the $550 billion investment commitment. A key element of the agreement grants Washington significant control over the destination of Japanese investments. A joint U.S.-Japan committee will review proposed projects before they are ultimately approved by President Trump.
Following project selection, Tokyo is obligated to guarantee the necessary funding within 45 days. The financial structure of the investments is designed to allow both countries to share in the profits generated by each project until the Japanese investment is recouped. Thereafter, the United States will retain 90% of the profits.
“Japan is bringing the capital. The infrastructure is being built in the United States. The revenues will be structured to allow Japan a return on investment and the United States to retain strategic assets and increased industrial capacity,” Lutnick explained.
The agreement represents a significant attempt to reshape the economic relationship between the two countries, moving beyond traditional trade imbalances towards a model of direct investment and shared economic benefit. The focus on strategic sectors like energy and semiconductors underscores a broader effort to bolster U.S. Industrial capacity and reduce reliance on potentially adversarial nations for critical supplies.
The selection process, with its emphasis on presidential approval, highlights the Trump administration’s continued focus on direct control over foreign investment decisions. This approach, while potentially streamlining the process, could also introduce an element of political risk for Japanese investors. The long-term success of the agreement will depend on maintaining a stable and predictable investment climate.
The initial projects announced Tuesday are likely to be followed by further investments in other sectors, as the U.S.-Japan committee continues its review of proposed projects. The $550 billion commitment represents a substantial economic injection for the United States, and its successful implementation could have far-reaching implications for the global economic landscape.
The focus on critical minerals and semiconductor technology also reflects growing concerns about supply chain vulnerabilities and the need to secure access to essential components for advanced technologies. By attracting Japanese investment into these sectors, the United States aims to strengthen its domestic industrial base and reduce its dependence on foreign suppliers.
The agreement also comes at a time of heightened geopolitical tensions in East Asia, with concerns about China’s growing economic and military influence. Strengthening economic ties with Japan is seen as a key element of the U.S. Strategy to counter China’s regional ambitions.
