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(Bloomberg) — Japan plans to invest $36 billion in US oil, gas and critical mineral projects, the first tranche of its $550 billion commitment under the trade agreement it struck with President Donald Trump.
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“Our MASSIVE Trade Deal with Japan has just launched!” Trump posted Tuesday on social media. “The scale of these projects are so large, and could not be done without one very special word, TARIFFS.”
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The most significant investment is a natural gas facility in Ohio that’s expected to generate 9.2 gigawatts of power, according to a statement from Commerce Secretary Howard Lutnick, a massive project which Trump described as “the largest in History.”
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Japan is expected to invest $33 billion in the gas plant, which will be led by SoftBank Group Corp. subsidiary SB Energy, the Wall Street Journal reported, citing anonymous Commerce Department officials.
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If the plant operates at full capacity, it would be the equivalent of nine nuclear reactors or roughly the amount of power consumed by about 7.4 million homes on the largest US grid operated by PJM Interconnection LLC.
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Earlier: US, Japan Zero In on Energy and Chips for $550 Billion Fund
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The second project is a deepwater crude export facility in the Gulf of Mexico, according to Lutnick. Trump earlier in his social media post offered a different description, saying the investment would cover a liquefied natural gas facility off the coast of Texas.
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A spokesman from Sentinel Midstream said the Texas GulfLink facility under development is a crude oil export project.
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Japan is also expected to invest in a synthetic industrial diamond manufacturing facility, which Trump’s post indicated would be located in Georgia. The diamonds are a “critical input for advanced industrial and technological production,” Lutnick said. The Journal reported that project would receive a $600 million investment and would involve Element Six, a subsidiary of De Beers.
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The long-awaited announcement marks a step forward for the trade and economic pact that Trump announced with Japan last year. It comes weeks before Japan’s Prime Minister Sanae Takaichi is set to meet with Trump in Washington.
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The selection comes after a joint panel first met in December to consider projects, which are ultimately selected by Trump himself based on recommendations from an investment committee he established, along with input from Japanese officials.
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The fund is meant to spur a wave of Japanese investment in key US industries and was a central pillar of the tariff deal, under which the US president agreed to set levies at 15% on Japanese products and lower the duty for automobiles, a critical driver for Japan’s economy.
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Implementation of the agreement is likely to be a top agenda item during the meeting between Trump and Takaichi in Washington expected to take place March 19.
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Lutnick and Japanese Trade Minister Ryosei Akazawa met in Washington last week to hash out the details of the first tranche of investments. Akazawa said he doesn’t expect projects backed by the $550 billion fund to be high-risk, high-return, signaling the Japanese are seeking initiatives with safe returns, rather than less-certain investments.
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