President Trump has been offered an extraordinary proposal by Japan to create a $400 billion investment fund that he could decide where to invest, with half of the profits flowing to the U.S. government. This proposal represents a significant expansion by the president over domestic investment, which pleased Trump. He set about renegotiating some of the terms, crossing out numbers and scribbling on a placemat-size visual aid brought to the meeting by Howard Lutnick, the commerce secretary. In the end, Trump upped the ante and announced that Japan, already the country’s largest foreign investor, would create a fund of $550 billion to invest in the United States, with the U.S. government receiving 90 percent of the profits.
The announcement has raised significant questions about whether that investment will materialize and how the president will decide where to direct the funds. However, the provision appears to be the key way that Japan, which was reluctant to open its agricultural markets to U.S. exports and insistent on lowering Mr. Trump’s tariffs on cars, was able to persuade the president to agree to a trade deal. It is also another novel approach to economic policymaking by Mr. Trump, who has smashed Washington’s conventional wisdom on trade and taken an expansive view of the control presidents should have over the economy.
Karoline Leavitt, the White House press secretary, described the investment as the “centerpiece” of the trade deal with Japan. She said the funds would be spent “at President Trump’s discretion and direction into key industries such as energy, semiconductors, critical minerals, pharmaceuticals and shipbuilding.” For other countries that did not negotiate, the United States would impose “a straight simple tariff” of 15 to 50 percent.
The announcement of the Japan deal came one month after the Trump administration announced another unusual deal with Japan, in which the government agreed to sell U.S. Steel to Japan’s Nippon Steel, but reserved a “golden share” for Mr. Trump, one that allowed him to veto some company decisions.
