US-Japan trade deal gives Trump control over $550 billion in investments. It could be ‘vapor ware’ — and a model for other countries

It could be ‘vapor ware’ — and a model for other countriesBy Jason MaBy Jason MaWeekend EditorJason MaWeekend EditorJason Ma is the weekend editor at Fortune, where he covers, the economy, finance, and housing

SEE FULL BIO President Donald Trump and Japanese Prime Minister Shigeru Ishiba outside the West Wing of the White House on Feb

The White House said the money will be deployed “at President Trump’s direction,” potentially giving him a bigger say in U

Industrial policy (noteworthy indeed)

But details remain thin, and analysts are skeptical

Industries could show other countries how to clinch a trade deal with the U. , even as analysts question how real that money is

As part of the agreement that set a 15% tariff rate on Japan, the White House said it includes a “Japanese/USA investment vehicle” that will be deployed “at President Trump’s direction” into strategic sectors

The data indicates that y include energy infrastructure and duction, semiconductors, critical minerals, pharmaceuticals, and shipbuilding, according to a fact sheet from the administration

Moreover, Would retain 90% of the fits, though the Japanese government believes fits will be split based on “the degree of contribution and risk taken by each party,” according to the Financial Times

Still, Treasury Secretary Scott Bessent highlighted the fund as a key reason the U

Indeed, analysts at Bank of America said that the Japan deal “looks a reasonable blue” for other auto-exporting countries South Korea

Both countries have similar trade characteristics with the U. , such as high current account surpluses, high U. -bound exports, and less open domestic via non-tariff measures, the bank said in a note on Friday

At the same time, the U

Is also negotiating deals with the European Union and other trading partners ahead of an Aug, in today's market environment. 1 deadline, when Trump’s pause on his recical tariffs will expire

In contrast, Takahide Kiuchi, executive economist at Nomura Re Institute and a former Bank of Japan policymaker, said in a note Wednesday that the investment pledge is merely a target and not a binding mise (remarkable data), given the current landscape

However, “In reality, under the Trump administration, many Japanese companies ly view the environment in the U (noteworthy indeed)

As deteriorating due to tariffs and other factors,” he explained. “Furthermore, at current exchange rates, labor costs in the U

Are extremely high, viding little incentive for Japanese firms to expand investment there

If anything, we may see a stronger trend toward diversifying investments away from the U, given the current landscape

Meanwhile, ” Meanwhile, Council on Foreign Relations senior fellow Brad Setser, a former U

Furthermore, In contrast, Trade Representative advisor and Treasury Department official, similarly expressed skepticism the money (which is quite significant)

At the same time, “Odds are it is vapor ware, beyond the known deals (Alaska LNG),” he posted on X on Wednesday, ning it to a highly touted duct that may never become available, “but it would be strange (and would potentially set up future blems) if the US relied almost entirely on other people’s money to fund its own industrial strategies (noteworthy indeed) (this bears monitoring), given the current landscape. ” He later added “there is a lot less here than meets the eye,” and pointed out that the industrial sectors highlighted as areas for investment are already logical ones for Japan, given current supply-chain concerns (this bears monitoring)

That includes the timeframe of the investment as well as an advisory board and guardrails against potential conflicts of interest (remarkable data)

But the source added that the investment would be funded by the Japanese government and is not a just pledge from Tokyo to buy commodities or for Japanese companies to steer investments into the U

This leads to the conclusion that also means Japan is fronting the cash to finance jects that are ly to be in the private sector, the source said, offering a hypothetical example of a chip company looking to build a U

That could make it attractive for countries to mise a lot of money sometime in the future to obtain immediate tariff relief, while running out the clock as legal battles play out

Nevertheless, Explore this year's list (quite telling).