Japan has disclosed that only 1 to 2% of the much-publicized $550 billion trade deal with the United States represents real, direct investments. The vast majority of the sum will be delivered in the form of loans and government guarantees, raising questions about the actual economic benefits for Japan.

🔹 Chief negotiator Rjosei Akazawa has sought to allay concerns, stating that despite the small share of capital investments, Japan stands to save around ¥10 trillion (approximately $68 billion) through tariff reductions. He added that interest payments from loans and guarantee fees would generate additional income.

Investment Structure and Controversial Profit Split

Akazawa clarified that the plan would operate primarily through loan guarantees and credit lines, with real investments making up only 1–2% of the total. Even more controversial is the profit-sharing agreement, which allocates 90% of the returns to the United States, leaving Japan with just 10%.

This marks a significant deviation from Tokyo’s original proposal of a 50:50 split. The imbalance has triggered public criticism, with many accusing the government of conceding too much to Washington. But Akazawa defended the decision:

“Yes, the U.S. gets 90%, but at worst, Japan might lose a few tens of billions of yen. People say ‘You sold out Japan,’ but they’re wrong.”

Could Taiwan Also Benefit?

Akazawa noted that companies outside Japan and the U.S. might also benefit from the initiative. For example, a Taiwanese semiconductor manufacturer planning to build a factory in the United States could gain support under the program.

Japan has designated JBIC and NEXI as the main institutions to finance the projects. However, the full timeline for tariff implementation and the investment facility’s rollout remains unclear. No joint agreement has been signed yet, although the White House has published an official factsheet. Akazawa warned that insisting on a formal document could delay progress, suggesting the U.S. might push for an executive order regardless.

Tariff Cuts Soon – But Not Across the Board

Last week, Akazawa announced that universal tariffs on Japanese exports would be cut to 15% starting August 1, though he did not specify whether this would include automotive tariffs. The Trump administration has been promoting the deal as a model for future trade partnerships—on Sunday, a similar agreement was reached with the EU, involving a 15% tariff cap and a $600 billion investment pledge.

Analysts Warn 15% Auto Tariff Still Too High

Although the U.S. has reduced tariffs on Japanese automobiles from 25% to 15%, analysts warn that the remaining rate may still hinder export growth. Stefan Angrick, Head of Japan and Frontier Market Economics at Moody's Analytics, said that while the reduction offers some relief, 15% remains far above baseline expectations and could hurt competitiveness.

Other economists pointed out that China continues to gain ground in the global auto market. They caution that high tariffs on Japanese cars could give Chinese manufacturers a competitive edge. Karl Brauer of iSeeCars even called Chinese-made vehicles the “biggest threat” to Japan’s auto industry and long-term economic outlook.

#Japan , #Geopolitics , #GlobalMarket , #TRUMP , #Tariffs

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