US says update coming this week on Japan’s $705b investment

TOKYO - The United States will make an announcement this week on Japan’s US$550 billion (S$705 billion) investment in the US, Commerce Secretary Howard Lutnick said, as a top Japanese trade envoy is reportedly planning to visit Washington to formalise the deal.

“The Japanese agreement, which we’re going to announce later this week, that’s US$550 billion at the hand of Donald Trump,” he told the Ingraham Angle show on Fox News on Aug 25.

The Japanese funds could be used for the manufacturing of products such as semiconductors, antibiotics or rare earths in the US, Mr Lutnick added.

Tokyo’s top trade negotiator Ryosei Akazawa plans to visit the US this week to craft a written confirmation on the financial details of the package, such as the split of investment returns between the US and Japan, a government source close to the negotiations told Reuters.

Washington and Tokyo agreed in July to

set a reduced 15 per cent tariff on Japanese goods

in exchange for a US$550 billion package of US-bound investment through government-backed loans and guarantees, but details of the package remain obscure.

While Trump has touted the package as “our money to invest” and said the US would retain 90 per cent of the profits earned, Japanese officials have stressed that the investments will be determined based on whether they will also benefit Japan.

SoftBank Group’s US$2 billion investment in Intel announced last week was not part of the package at the moment, a Japanese government source has said.

Mr Akazawa, speaking at a regular Aug 26 briefing, said his next US trip was not decided and declined to comment on Mr Lutnick’s remarks. Tokyo will keep pressing Washington to implement the deal to cut US tariffs on Japanese goods soon, he added.

While the US side urged Japan to have a written agreement on the investment plans, Japan hopes to make the document not strongly legally-binding and demand a presidential order to cut tariffs on Japanese goods soon, the Nikkei business daily reported on Aug 26.

The lack of a signed document on the US-Japan trade agreement had created confusion in Tokyo about tariff rates until Mr Lutnick and US Treasury Secretary Scott Bessent clarified earlier in August that Japanese goods are exempt from overlapping levies.

Mr Lutnick and Mr Bessent also promised, during Mr Akazawa’s previous visit on Aug 7, that Mr Trump will issue another presidential order to lower tariffs on Japanese cars to 15 per cent from 27.5 per cent but did not specify when.

Japanese Prime Minister Shigeru Ishiba has said Tokyo did not seek a written trade agreement with Washington because it wanted a swift resolution and to ensure Mr Trump’s tariffs on key Japanese exports such as autos were lowered quickly.

Mr Ishiba’s support rate has surged in recent polls thanks in part to the trade deal, even after his ruling coalition lost its majority in an upper house election in July. REUTERS