Japan has planned to invest $36 billion in US oil, gas, and mineral projects as the first part of its $550 billion commitment under the trade agreement finalised with Donald Trump
Bloomberg- Japan plans to invest up to $36 billion in US oil, gas, and crucial mineral projects, the first segment of its $550 billion commitment under the trade agreement finalised with President Donald Trump.
Trump has posted on social media that “our huge trade deal has just launched”. The scale of these projects is too large and could not be possible without Tariffs.
Prime Minister Sanae Takaichi has also stated that these projects are designed to develop resilient supply chains via cooperation across areas, including energy, artificial intelligence, and minerals that are crucial for economic security.
She further added that this initiative is coherent with the broader objective of encouraging mutual benefits between the United States and Japan, guaranteeing economic growth and security.
The recent statement issued by the US Commerce Secretary Howard Lutnick indicated that this project is classified as one of the largest projects in history by President Donald Trump. He also informed that the most important investment is the natural gas facility in Ohio that is anticipated to generate 9.2 gigawatts of power.
The investment of $33 billion by Japan will be led by SoftBank Group Corporation, a subsidiary of SB Energy, as indicated by a US Commerce Department Fact Sheet. Since SoftBank is listed by Japan’s Ministry of Economy, Trade, and Industry to participate in the project.
Japan’s trade minister, Ryosei Akazawa, revealed that other Japanese companies, including Hitachi Ltd and Toshiba Corp, have also expressed interest in being involved in the gas project.
In case the plant operates at full capacity, it would be equivalent to nine nuclear reactors or comparable to the power consumed by 7.4 million homes on the largest US grid operated by PJM Interconnection LLC.
Lutnick indicates that the second project is a deepwater crude export facility in the Gulf of Mexico.
Sentinel Midstream will be the operator of the Texas GulfLink export terminal, which has a $2-billion-dollar investment and is anticipated to produce approximately $30 billion of annual US crude exports once fully operational, per the fact sheet of the Commerce Department.
Japan will also contribute to a synthetic diamond facility where the diamonds will be “critical raw material for advancing industrial/technology.” As mentioned in the President’s post regarding the Georgia diamond facility, Gary Lutnick stated this facility is a high-pressure, high-temperature synthetic diamond grit facility and will receive $600 million dollars of investment in the project and will have, as a principal partner, Element Six, a De Beers subsidiary.
Industrial manufacturers utilize diamond grit in many applications, including semiconductor manufacturing, automotive applications, and energy generation, due to diamond’s extreme hardness.
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According to Japanese Chief Cabinet Secretary Minoru Kihara, during Wednesday’s press conference, he announced that “Both countries are working closely to finalize all specifics and begin these endeavors as quickly as possible.”
These projects’ announcement has been awaited for several years and is part of the larger trade and economic agreement that was announced by Trump last year with Japan. The announcement comes a few weeks prior to the scheduled meeting between Takaichi and Trump in Washington DC.
The purpose of this fund is to encourage new investment from Japan into specific industries within the United States, and is critical to the tariff agreement signed between Japan and the US where the President agreed to both impose a 15% tariff on imported Japanese goods, and reduce the tariff on vehicles imported from Japan, both of which are key components of the Japanese economy.
Total funding was $36 billion, which represents more than 50% of Japan’s net foreign investments into the US expected in 2025, based on data provided by the Japanese Financial Authority.
The implementation of this agreement is high on the agenda for the meeting between Trump and Takaichi that is scheduled in Washington on March 19.
According to Lutnick’s statement from Tuesday, Japan will be supplying capital towards building infrastructure within the U.S., while Japan will receive an investment return from its investment, and the U.S. will be acquiring strategic assets, increasing its industrial capacity, and expanding energy dominance.
The initial investment for this power plant is timely, as there is soaring demand for energy supplies, especially considering that the artificial intelligence industry is driving up the price of securing energy supplies.
During President Trump’s visit to Japan last year two countries identified possible projects, ranging from $350 million up to $100 billion, which could potentially occur within the framework established during that visit related to energy, artificial intelligence, and key minerals with SoftBank, Westinghouse, and Toshiba Corp., among others.
Financing of the projects is expected to be led by government-backed institutions such as the Japan Bank for International Cooperation and the National Export and Investment Insurance Corporation.
While no specific dollar amount has yet been committed by either country at this point as it relates to direct investment, Akazawa indicated last year that only 1-2% of the $550 billion identified for this type of investment would be direct investments, with the majority being through loans or loan guarantees.
