‘Unprecedented’ investment fund seals deal for Japan and expands Trump’s influence

President Donald Trump speaks to reporters at Joint Base Andrews in Maryland after participating in the inaugural Pennsylvania Energy and Innovation summit in Pittsburgh, July 15, 2025. President Trump will get to decide where to invest Japanese money and the United States will keep 90 percent of the profits, the White House said. (Doug Mills/The New York Times)

By Ana Swanson

Last week, Ryosei Akazawa, the Japanese trade negotiator, sat across from President Donald Trump’s desk in the Oval Office, clustered alongside the U.S. secretaries of Treasury, commerce and state, trying to persuade the president to back off from the punishing tariff rates he had threatened on Japan.

As a carrot, American and Japanese negotiators offered Trump an extraordinary proposal: Japan would create a $400 billion investment fund that Trump himself could decide where to invest, with half of the profits flowing to the U.S. government.

The fund represented a significant expansion by the president over domestic investment, an idea that 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% 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. But 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 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 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, on Wednesday 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.”

Speaking at an artificial intelligence event Wednesday, Trump referred to the fund as a “signing bonus,” and claimed that Japan was willing to pay up front for the privilege of negotiating with the United States.

For other countries that did not negotiate, he said, the United States would impose “a straight simple tariff” of 15% to 50%.

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 Trump, one that allowed him to veto some company decisions.

Douglas Irwin, a trade historian at Dartmouth College, called the move to set up the investment fund, like the golden share plan, “unprecedented.” He said that previous presidents had encouraged other countries to increase their foreign investments in the United States, but had not, to his knowledge, demanded to have those investments made at their own direction.

Three people familiar with the negotiations said that the idea for the Japanese investment fund stemmed from Lutnick, who also helped to negotiate the stake in Nippon. Lutnick proposed the rough arrangements for a fund to the president in January, after hearing that Japan was unlikely to open its markets to the degree Trump wanted, an administration official familiar with the talks said.

Trump was not satisfied with the initial structure proposed to him at the beginning of the year. But the idea of obtaining funds that could be invested in sectors critical to national security, like pharmaceuticals and minerals, while also making money to pay off U.S. debt, appealed to him, the official said.

The agreement was hammered out in a series of meetings between American and Japanese officials, including eight visits to Washington by Akazawa, and video calls with Lutnick that ran late into the night.

The official said that the president would get the final say in the investments and that profits would go to the U.S. Treasury and could be used to pay down federal debt. The United States could see some returns in a year, he projected. Some projects could include investments in new American factories that would be leased back to the companies.

The Commerce Department would be in charge of execution, with Lutnick’s newly created “investment accelerator” playing a key role, another administration official said. Another person familiar with the plans said that the mechanics still needed to be determined.

The exact details were not clear, but the fund’s total appeared to include equity, loans and loan guarantees.

Lutnick, a Wall Street bond broker and newcomer to Washington, has seemed particularly interested in novel ways to shore up government finances. He has backed Trump’s plan of selling citizenship to wealthy foreigners with a “gold card,” and talked about the government’s taking a cut from patents and innovations, as well as playing a key role in the president’s trade and tariff negotiations alongside Jamieson Greer, the U.S. trade representative, and Treasury Secretary Scott Bessent.

The U.S. government’s confidence in its ability to acquire critical products has been shaken in recent months, as China has clamped down on global supplies of rare earth minerals and magnets, forcing some U.S. manufacturers to shut down production lines.

Trump has imposed or is planning to impose tariffs on semiconductors, critical minerals, pharmaceuticals and shipbuilding that he says will help bolster domestic manufacturing. But government funding could provide an additional incentive for companies to build new American factories.

“This is the single-largest foreign investment commitment ever secured by any country and will generate hundreds of thousands of U.S. jobs, expand domestic manufacturing and secure American prosperity for generations,” the White House said in a fact sheet released Wednesday. The fact sheet said that the money could go to modernizing the energy grid, expanding semiconductor research, mining and refining critical minerals, and other uses.

But some trade experts have pointed out that such investments could take years to appear, or questioned whether they will ultimately materialize.

Jonathan Rouner, the international head of mergers and acquisitions at Nomura, a Japanese financial services group, said that a rush of foreign direct investment as a result of the trade deal seemed unlikely.

“These investments take years of planning and require a basic level of certainty about future trade policies, which is currently in short supply,” he said, but noted that Japanese investment in the United States continued to increase.

Veronique de Rugy, a research fellow at the Mercatus Center, called the promises “vague” and said they were “the kind of fantastical claims better suited for a campaign rally than a serious trade announcement.”

De Rugy added that foreign companies had invested in the United States for decades, but what was new about this arrangement was “the overt linkage” between trade negotiations and “steering capital to politically favored projects.”

“It suggests a vision of economic policy where the president plays matchmaker between foreign investors and domestic industries based on political priorities,” she said. “That’s not just unseemly — it erodes the very idea of a free-market economy.”