“Our MASSIVE Trade Deal with Japan has just launched!” Trump posted Tuesday on social media. “The scale of these projects are so large, and could not be done without one very special word, TARIFFS.”
Japanese Prime Minister Sanae Takaichi said the projects were designed to build resilient supply chains through cooperation in areas crucial for economic security, including critical minerals, energy and artificial intelligence (AI).
“We believe this initiative is fully aligned with its core objectives: promoting mutual benefits between Japan and the United States, ensuring economic security, and fostering economic growth,” she wrote.
The most significant investment is a natural gas facility in Ohio that’s expected to generate 9.2 gigawatts of power, according to a statement from US Commerce Secretary Howard Lutnick, a massive project which Trump described as “the largest in History”.
Japan is expected to invest US$33 billion in the gas plant, which will be led by SoftBank Group Corp subsidiary SB Energy, according a Trump administration official.
If the plant operates at full capacity, it would be the equivalent of nine nuclear reactors or roughly the amount of power consumed by about 7.4 million homes on the largest US grid operated by PJM Interconnection LLC.
The second project is a deepwater crude export facility in the Gulf of Mexico, according to Lutnick. The US$2.1 billion investment into the Texas GulfLink export terminal will be operated by Sentinel Midstream and is expected to generate as much as US$30 billion in annual US crude exports when operating at full capacity, the administration official said.
Trump’s initial social media post about the project sowed some confusion, describing the investment as a liquefied natural gas facility.
Japan is also expected to invest in a synthetic industrial diamond manufacturing facility, which Trump’s post indicated would be located in Georgia. The diamonds are a “critical input for advanced industrial and technological production,” Lutnick said. The project will receive a US$600 million investment and involves Element Six, a subsidiary of De Beers, according to the administration official.
The fund is meant to spur a wave of Japanese investment in key US industries and was a central pillar of the tariff deal, under which the US president agreed to set levies at 15% on Japanese products and lower the duty for automobiles, a critical driver for Japan’s economy.
Implementation of the agreement is likely to be a top agenda item during the meeting between Trump and Takaichi in Washington, expected to take place March 19.
Lutnick and Japanese Trade Minister Ryosei Akazawa met in Washington last week to hash out the details of the first tranche of investments. Akazawa said he doesn’t expect projects backed by the US$550 billion fund to be high-risk, high-return, signalling the Japanese are seeking initiatives with safe returns, rather than less-certain investments.
Source: Theedgemalaysia
