Trump Hails Japan’s First Batch of U.S. Investments

The U.S. government outlined planned Japanese investments in the United States of tens of billions of dollars within the framework of a trade agreement concluded last year.

In a statement late Tuesday evening, U.S. Commerce Secretary Howard Lutnick reported that Japan will provide capital for three projects. The projects: a natural gas plant in Ohio, a crude oil export terminal along the U.S. Gulf Coast. The projects represent a commitment of 36 billion dollars and are expected to create thousands of jobs, Mr. Lutnick noted.

Energy Issues

Energy and manufacturing projects are the first phase of funding within the trade framework agreed upon in July, according to which Tokyo promised 550 billion dollars in funding for U.S.-based projects. In exchange, the Trump administration agreed to implement a general 15 percent tariff on Japanese exports—a respite from the more aggressive levies it had threatened.

For months, U.S. officials pressured their Japanese counterparts to move forward with concrete investment plans. For members of the Trump administration, especially for Mr. Lutnick, the goal was to maintain momentum after President Trump’s visit to Japan in October.

For their part, Japanese officials sought to demonstrate progress ahead of Prime Minister Sanae Takaichi’s planned visit to the United States in March. In the elections last week, her party won a victory by a huge margin, and Mr. Trump congratulated the Prime Minister.

According to two people familiar with the plans, around the time of Ms. Takaichi’s visit to the United States, Japanese officials are considering making several additional investment announcements.

Japan seeks to stay out of Mr. Trump’s crosshairs. Japan is already feeling the economic consequences of a prolonged diplomatic dispute with China, Japan’s largest trading partner. Last month, Mr. Trump threatened to raise tariffs for South Korea.

Tariffs

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Japan “understood that obvious progress was needed,” said William Chou, an expert on Japan issues and a senior fellow at the Hudson Institute, a think tank. “The atmosphere between Trump and Takaichi is good, so why risk the unknown?”

In a social media post on Tuesday, Mr. Trump welcomed the investments. “America is building again,” he wrote, adding that the projects “could not have been realized without one very special word—tariffs.”

Japanese companies will also benefit by supplying equipment for the projects and related facilities, he added.

Almost all the costs in the first round of investments are planned for the construction of a natural gas power plant in Portsmouth, Ohio. According to U.S. and Japanese officials, the 33 billion dollar facility is expected to become the largest gas power plant in the world. Japanese companies that have expressed interest in supplying the facility: Toshiba, Hitachi, Mitsubishi Electric, and SoftBank Group.

Post-Visit

In the months since Mr. Trump’s visit to Tokyo, progress on how the 550 billion dollars will be used has been fitful. In Japan, debates took place regarding how to mobilize such enormous amounts of capital. Questions arose regarding the plan to use the Japan Bank for International Cooperation.

Mr. Akazawa, who previously led Japan’s tariff negotiations with the United States, consistently presented the investments as “win-win.” However, other sentiments prevail in some business and government financial circles. The projects are often described as “strategic, but not bankable.”

Japan’s investment decisions were also complicated by a forthcoming Supreme Court decision, expected in the coming months, regarding whether Mr. Trump exceeded his powers. He used a 1970s law known as the International Emergency Economic Powers Act to impose tariffs on dozens of U.S. trading partners.

For Japan and many other countries, the threat of tariffs was a key motivator for providing promises regarding investments in the United States. This remains true even as officials, including Japanese ones, seek to portray the investment decisions as purely strategic.

“Would they do this under normal conditions? Probably not,” said Mr. Boling. But for Japan, keeping U.S.-Japan trade relations in good shape is a clear priority, he added. Strategic or not, he said, “there are other more compelling reasons to do this.”

Hisako Ueno and Tony Romm contributed to the report.

River Akira Davis covers events in Japan for The Times, including its economy and business, and is based in Tokyo.