The $550 billion (about 796 trillion won) U.S.-Japan joint investment fund that U.S. President Donald Trump has pledged has taken its first step.
On the 17th (local time), President Trump said on his social media, Truth Social, that the first grant from the $550 billion investment fund to be created with Japan "will be put into building a gas-fired power plant in Ohio, a critical minerals mining project in Georgia, and expanding a liquefied natural gas facility in Texas."
All three are key hubs for U.S. energy security. They are concentrated across the Rust Belt (declining Midwestern industrial rent(expense) zone), the political base of President Trump, and the South. Emphasizing that this investment is "a victory achieved by strong tariff pressure," President Trump formalized the rebuilding of U.S. manufacturing using Japanese capital. However, he did not disclose a specific list of target corporations.
The announcement is rooted in the trade agreement the two countries reached last year. At the time, President Trump demanded an astronomical $550 billion investment in return for lowering the tariff he intended to impose on Japanese cars from 25% to 15%. The Japanese government decided to put up a large sum to protect the auto industry, a core economic asset, in the United States, the world's largest consumer market. Minister Howard Lutnick said the fund is designed to serve as a gateway for Japanese capital to flow into cutting-edge industries such as semiconductors and artificial intelligence in the United States.
In particular, the announcement came abruptly ahead of the first summit with Japan's Prime Minister Sanae Takaichi, to be held in Washington on Feb. 19. Citing experts, Bloomberg analyzed that Trump-style pragmatic economic diplomacy—forcing allied capital into the U.S. mainland to seize control of energy and critical mineral supply chains—has entered the full-fledged execution stage. It is seen as an intention to restore U.S. industrial competitiveness by mobilizing not only simple market opening, as in the past, but also the financial power of friendly nations.
The investment also appears likely to be a major test for Prime Minister Takaichi. Having won a historic landslide in the recent election, Takaichi throughout the campaign expressed sympathy with President Trump's conservative values and emphasized a strong U.S.-Japan alliance. It is assessed as a strategy to accept U.S. demands to maintain security cooperation and tariff benefits, even at economic cost. Media reported that the two leaders plan to officially declare the launch of the investment fund at next month's summit, showcasing economic solidarity.
While responding to pressure to invest in the United States, the Japanese government is also struggling to secure practical benefits. Japan's Minister of Economy, Trade and Industry Akazawa Ryosei said the fund will focus on infrastructure projects capable of securing stable revenue rather than high-risk investments. In fact, looking at the fund's structure, the share of direct cash injected by the Japanese government is only about 1%–2% of the total. Instead, it chose to draw in private capital through loans or guarantees provided by the Japan Bank for International Cooperation and Nippon Export and Investment Insurance. This is a Japan-style response strategy to meet U.S. investment targets while reducing the fiscal risks borne by Japan's financial sector.
However, the conditions for carrying out the investment that the United States demands are also very stringent. Under the bilateral agreement, if President Trump selects a specific investment project, the Japanese side must complete disbursement within 45 business days. If Japan refuses to invest or delays execution, the United States can immediately restore the tariff or claw back investment revenue. For the Japanese government, once it has made the promise, it is bound by a structural shackle that makes it difficult to reject U.S. demands. Minister Akazawa met with Minister Lutnick in Washington to discuss ways to share project risks, but the gap between the two sides is still said to be significant.
In the process of pressing Japan, President Trump also showed shrewdness by using Korea as a pressure card. On Jan. 26, he raised the auto tariff on Korea from 15% to 25%, noting that the pace of implementing the investment agreement was falling short of expectations. Some interpreted this as a warning to Japan that if it does not put up the promised funds on time, retaliatory tariffs could be imposed at any time. It is a tactic to extract more investment and faster execution by alternately pressuring Korea and Japan, which compete in the auto market. The Korean government, too, is in an urgent situation where it must review the status of implementing investments in the United States in response to President Trump's public expression of dissatisfaction.