First US Investment Project: Securing and Solidifying Profit for Japan

The Japanese and U.S. governments have decided on Japan's first lending and investment project in the U.S., which, as discussed during tariff negotiations, will total up to $550 billion.

Three of the projects, which include natural gas power generation, establishment of crude oil exportation facilities and construction of artificial diamond manufacturing capabilities, are supposedly planned to total $36 billion.

On Feb. 18, Japanese Prime Minister Sanae Takaichi posted on X, “In order to ensure smooth implementation in the early stages, there will be continuous rigorous cooperation between Japan and the U.S. As stated, the Japanese side cannot merely remain the one who supplies the money; in order to achieve profit for both countries, we hope that the U.S. and Japanese governments will coordinate and move forward on ventures."

According to this three-project agreement, the U.S. is expecting the work to lead to a strengthened industrial base. Japan is expected to expand its businesses through enterprises that supply related equipment. The Japanese government has officially announced that multiple Japanese businesses, such as SoftBank Group and Nippon Steel, have indicated an interest in the work.

We hope that this will not be limited to business expansion, but that it will also strengthen economic and energy security, and, by extension, the allied relationship between the two countries.

If the development of crude oil exportation facilities progresses, Japan can expect to expand the procurement of crude oil from the U.S. China dominates the production of artificial diamonds, essential to the manufacturing of automobile parts and semiconductors; it holds 90% of the world's share of man-made diamonds. U.S.-Japanese cooperation on establishing a production base could also lead to reduced dependence on China.

During last July's tariff agreements, in exchange for U.S. President Donald Trump's administration reducing the high tariffs it had introduced, Japan promised to invest and lend a large sum of money to the U.S. However, in the rush for an agreement, the remaining details were not written in any document, and the time frame for the tariff reduction, as well as the framework for the lending and investments, have generated confusion.

At a time of the promotion of business, the U.S. must aim for ample mutual communication in order to prevent such disorder as the work proceeds.

According to a joint memo shared between the U.S. and Japanese governments last September, until Japan recoups its investment, both countries will split profits from the investment at 50% each, and after that, the U.S. will reap 90%. If the investment is a loss, the citizens will ultimately bear the burden, so attention must also be paid to profitability.

Strengthening the supply chain through U.S.-Japan joint enterprise is also key to opposing China. Investment in the U.S. must not stop only with the stated purpose of reducing tariffs; we hope that a fortified U.S.-Japan collaborative relationship will be fully leveraged.