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The US and Japan have unveiled the first three industrial projects in America to receive financing under a $550bn deal struck last year that protected Japanese companies from the worst of President Donald Trump’s tariffs.
The plans, worth a combined $36bn, followed months of negotiations and marked the first step in Japan’s commitment to act as chief financier for projects in critical sectors of the US economy.
The biggest of the projects is a $33bn, 9.2 gigawatt natural gas power plant in Ohio, led by Japan’s SoftBank Group, which Trump described on his Truth Social platform on Tuesday as the “largest in history”.
The other two are a $2.1bn deepwater crude oil export facility in Texas to be operated by Dallas-based energy infrastructure group Sentinel Midstream and a $600mn synthetic industrial diamond factory in Georgia led by Element Six, a subsidiary of De Beers.
Japan’s Prime Minister Sanae Takaichi wrote on social media that the investments would strengthen the US-Japan alliance, adding that they are “are expected to bring increased sales and business expansion for Japanese companies through the supply of related equipment”.
The announcement came hours before Takaichi was sworn back in to office following her landslide election win early this month.
Under the trade deal signed in July, Japan pledged to invest in, provide loans or offer state-backed loan guarantees for $550bn of projects in the US by 2029, the end of Trump’s second term.
In exchange, Trump agreed to reduce tariffs on Japanese exports, which would have hit Japan’s all-important automotive industry especially hard, from 25 per cent to 15 per cent.
“The scale of these projects are so large, and could not be done without one very special word, TARIFFS,” Trump said.
The terms of the deal grant Trump ultimate decision-making power over which projects will be approved for Japanese investment and impose a 45-day deadline between the announcement of the projects and Japan’s obligation to meet funding demands.
Should Japan delay or decide not to invest in the projects, it faces punishment in the form of raised tariffs or “catch-up” payments.
Industrial groups Toshiba, Hitachi and Mitsubishi Electric are interested in supplying goods to the gas-fired power plant, while steel companies Nippon Steel and JFE Steel and shipping group Mitsui OSK Lines could supply the oil export terminal, according to Japan’s economy ministry. Diamond tool manufacturers are also potential beneficiaries, it said.
“This truly represents the promotion of mutual benefits between Japan and the US — a win-win relationship,” said Ryosei Akazawa, Japan’s economy minister, who brokered the $550bn fund with US commerce secretary Howard Lutnick.
Since the basic deal was struck, Japan and the US have been locked in negotiations over the mechanisms of the investments and the candidate projects.
“Japan is providing the capital. The infrastructure is being built in the United States. The proceeds are structured so Japan earns its return, and America gains strategic assets, expanded industrial capacity, and strengthened energy dominance,” Lutnick said in a statement.
Japanese officials have said the projects need to be financed by state lender Japan Bank for International Cooperation and commercial banks backed by Nexi, the export credit agency, to count towards the $550bn target.
Neither country has said whether the projects would be fully financed by Japanese state-owned financial institutions, nor specified the breakdown between funds directly lent by JBIC and those from private banks backed by guarantees. One person familiar with the talks said negotiations were continuing.
Two people close to the negotiations said SoftBank founder Masayoshi Son, who is close to Lutnick, had been “central” to progress in the talks between the governments.
Son has long hoped to use the $550bn scheme to help fund Project Crystal Land, an AI and robotics complex in Arizona, which he is gearing up to launch formally, according to people familiar with the matter. He has also expanded his vision of the project to include other US states in order to secure the necessary energy infrastructure.
