US-Japan trade deal gives Trump control over $550 billion. It could be ‘vapor ware’

As part of the agreement that defined a 15 % tariff rate on Japan, the White House said it includes a “Japanese/USA investment vehicle” that will be published “towards President Trump” in strategic sectors.

It includes the energy production and production infrastructure, semi -conductors, critical minerals, pharmaceutical preparations, and shipbuilding, according to the factory newspaper from the administration. The United States will retain 90 % of the profits, although the Japanese government believes that profits will be divided based on “the degree of contribution and the risks that each party holds,” he said, according to what he said, according to what he said. Financial times.

However, Treasury Secretary Scott Bessin highlighted the fund as a major reason that the United States and Japan managed to settle on a tax that was 25 % less than the Trump rate earlier.

“They got a 15 % average because they were ready to provide this innovative financing mechanism,” Bloomberg TV said on Wednesday.

In fact, analysts at Bank of America said that the Japan deal “looks like a reasonable plan” for other countries that issue cars such as South Korea.

The bank said in a memorandum on Friday that both countries have similar commercial characteristics with the United States, such as high running account surpluses, high exports in the United States, and less open local markets through improper measures.

But Wall Street has serious doubts that $ 550 billion will actually be achieved. Takahid Kiuchi, an executive economist at the Nomura Research Institute and a former policy maker at the Bank of Japan, said in a note on Wednesday that the investment pledge is just a goal and not a binding promise.

“In fact, under the Trump administration, many Japanese companies are likely to consider the US business environment as deterioration due to definitions and other factors,” he said. Moreover, in current exchange rates, toABOR costs in the United States are very high, providing a little incentive for Japanese companies to expand investment there. If there is anything, we may see a stronger direction towards diversifying investments away from the United States.

Meanwhile, his colleague in the Foreign Relations Council Brad Sider, a former adviser to the representative of the United States and the official of the Treasury, expressed similar doubts about money.

“The possibilities are that Vapor Ware, along with the well -known deals (ALASKA LNG),” was published on Wednesday on Wednesday, with an likeness to a very reached product that may never become available, “but it will be strange (and it is likely to have put future problems) if the United States is completely relied on the money of others to finance its industrial strategies.”

He later added, “There is much lower here than facing the eye,” and pointed out that the industrial sectors that were highlighted as investment areas are already logical to Japan, given the current supply chain fears.

A source familiar with the recognized issue luck Many details about $ 550 billion have not yet been done. This includes the time frame for investment, in addition to the Consultative Council and handrails against potential conflicts in interests.

But the source added that the investment will be funded by the Japanese government and not just a pledge from Tokyo to buy goods or Japanese companies to direct investments to the United States

This also means that Japan coincides with money to finance projects that are likely to be in the private sector, as the source said, which provides a virtual example of a company that looks forward to building an American factory.

Under this scenario, the investment vehicle can finance the factory building and rent it in condolences to the chips company, with 90 % of the rental revenues that go to the United States government.

A pledge of $ 550 billion also comes as a Trump tariff faces legal challenges, as a court hearing is scheduled to be held on Thursday on whether the president has authority under the Economic Forces law in international emergencies to impose large -scale duties.

This may make this attractive to countries to prepare a lot of money at some point in the future to obtain immediate relief for customs tariffs, while the watch is running out with legal battles.

Piper Sandler’s analysts concluded that Trump’s tariff is illegal and noted that the Japanese investment of $ 550 billion comes with little concrete details.

They wrote: “Our commercial partners and major multinationals know that Trump’s tariff is on a fragile legal basis.” “Therefore, we find it difficult to believe that many of them will make huge investments in the United States, so they will not have done otherwise in response to the definitions that may not last.”