Japan expects only 1% to 2% of $550 billion US fund to be investment
At the same time, Tokyo would save roughly 10 trillion yen (S$87 billion) through lower tariff rates in its deal with America, he said.
The US$550 billion investment framework will be a combination of investments, loans and loan guarantees provided by financial institutions backed by the Japanese government, Akazawa said on public broadcaster NHK on Saturday (Jul 26) night. Of the total, investment would be worth 1 per cent or 2 per cent and the US and Japan would split the profits of that investment at a ratio of 90-10, he said. Japan had originally proposed a 50-50 ratio, he added.
The fund is a centrepiece of the deal announced by the two sides that will impose 15 per cent tariffs on Japanese cars and other goods. But the details given by Akazawa suggest the Japanese may end up giving up much less than at first glance. The comments come as officials from countries with deals with the US sift through the terms to explain to the public what they entail.
'It's not that US$550 billion in cash will be sent to the US,' Akazawa said. 'By letting the US have 90 per cent of the profits rather than 50 per cent, I think Japan's loss will be at most a couple of tens of billions of yen. People are saying various things, such as 'You sold out Japan', but they are wrong.'
For the loans provided through the programme, Japan will simply be collecting the interest payments, and for the loan guarantees, if nothing happens, Japan will also be just collecting fees, Akazawa said. 'For that part, Japan's just making money,' he said.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Sign Up
Sign Up
Akazawa also clarified that the investment programme will not be only supporting Japanese and US firms. As a potential example, he cited a Taiwanese semiconductor firm building a factory in the US.
'We'd like to put the US$550 billion in place during President Trump's term,' Akazawa added.
Further details of the implementation of the US-Japan deal remain unclear, including when the new tariff rates would take effect and when the new investment vehicle would kick off. There's been no joint document signed by both sides for the deal, although the White House has published a fact sheet.
'If you say something like, 'Let's create a joint document,' they will say, 'We will lower tariffs after the document is created,'' Akazawa said. In order not to lose time, 'we will demand that they issue an executive order to lower tariffs as soon as possible, regardless of a document'.
Last week, Akazawa said that he expects universal tariffs on Japan's shipments to be lowered to 15 per cent on Aug 1, while he said he wanted the car tariffs to be cut to 15 per cent as soon as possible without specifying a date.
The Trump administration has touted the deal with Japan as a potential model for others. On Sunday, the US and European Union agreed on a deal that will see the bloc face 15 per cent tariffs on most of its exports, with the EU pledging to invest US$600 billion in the US. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNA
2 hours ago
- CNA
Malaysia businesses respond to latest Trump tariff announcement
Businesses in Malaysia remain cautious despite the decision by the US to reduce tariffs on Malaysian imports. But the reduction at least helps the overall cost competitiveness of Malaysian-manufactured goods in the US market. Businesses and manufacturers are also bracing for higher operating costs and potential price hikes. Afifah Ariffin reports.
CNA
4 hours ago
- CNA
Gaia Series 97: "Miracle Wheat" - Japanese people changing the world
This week's episode explores Japan's rice crisis and the global race for wheat resilience in a warming world. In this thought-provoking episode, viewers are presented with the harsh realities of Japan's rice shortage and the global wheat crisis, framed through the lens of scientific innovation and human resolve. The programme offers not only a critical look at the dwindling domestic rice supply, but also a deeply personal journey through the life and legacy of Professor Hisashi Tsujimoto, who has dedicated more than four decades to developing wheat resilient to extreme heat and drought. The story begins with the 'Reiwa Rice Crisis', a term coined to describe the surge in rice prices in Japan. At the 2025 FABEX Tokyo food trade show, the demand for rice-based products underscores the national concern. 'Prices nearly doubled in just one year,' the narrator states, as the camera pans across long queues and signs limiting customers to 'one bag per person'. Shinmei Co Ltd, one of the country's leading rice wholesalers, plays a prominent role. Its president, Mitsuo Fujio, who also serves on the Ministry of Agriculture, Forestry and Fisheries Food Department Council, warns, 'If the population continues to grow, they say we'll need 1.7 times more food than we have now.' He adds, 'The battle for food has already begun.' Decades of rice-reduction policies have taken a toll. Over the last 50 years, the number of rice farmers in Japan has dropped by 80 percent, and production has fallen 40 per cent from 12.53 million tonnes in 1970 to just 7.76 million tonnes in 2020. To meet demand, imports of foreign rice have surged, but consumer confidence in domestic rice continues to erode. As Japan grapples with this crisis, the focus shifts to wheat. Approximately 2.5 billion people worldwide rely on it as a staple, but its price remains volatile, affected by climate events and geopolitical tensions such as the war in Ukraine. 'Even a small rise in the price of wheat can be life or death for people in developing nations,' the narrator explains. At the heart of this global struggle is Professor Hisashi Tsujimoto, 66, a specialist in wheat breeding. 'Wheat is often called a strategic crop, but to prevent it from being used that way, I believe we must ensure a stable, sufficient supply,' he says. At the Tottori University Arid Land Research Centre, where summer temperatures can reach 60°C, Tsujimoto breeds wheat to endure the planet's harshest climates. His methods are painstaking. Each year he makes over 300 crossbreeds, manually transferring pollen between varieties. 'Both bread wheat and macaroni wheat are heat-tolerant,' he explains. 'I'm combining the heat-resistance genes into a single plant, to create a super heat-resistant variety.' These experiments are critical, especially since Japan's wheat self-sufficiency is only 16 per cent. Tsujimoto's field research took him to Sudan over a decade ago. Out of 1,000 wheat varieties he tested, six adapted well to the local environment. His local counterpart, Mr Izzat, led the final stages of research with national hopes pinned on success. But in 2023, civil war broke out. Guerrilla forces looted the research facility and destroyed the seeds. Despite the devastation, hope was rekindled when a Moroccan university extended an invitation for joint research. Wheat from Tottori was once again bound for Africa. In August 2024, Tsujimoto arrived in Morocco, only to be confronted by even more severe conditions than in Sudan. The local irrigation channels had been dry for years. 'There's absolutely zero water,' he observes. 'Seeing it in person makes me want to take action. It really motivates me to do something.' He travelled to Arad Village, where 740 residents live amid withered olive groves. There, he introduced drought-resistant wheat to local farmers. 'Would you all like to try growing drought-resistant wheat?' he asks. One villager responds, 'Of course.' Tsujimoto explains the wheat can 'save water by 30 per cent'. The gratitude of the villagers was evident. A local elder prepared couscous and traditional bread, including batbout and baghrir. 'Wheat truly takes centre stage at the table,' the episode's narrator observes. Back in Tottori, the Daisen Wheat Project is trying to restore local wheat production, which had nearly vanished by the 1990s. Inspired by Tsujimoto, the project now yields 300 tonnes a year. Schoolchildren in Yonago enjoy bread made from this local wheat, although it only appears once a week on their lunch menu. 'But if it's gone, we can't share those memories. One less thing to remember,' says one local. At Tottori University, younger scientists are carrying the baton forward. Associate Professors Sakuma and Ishii, both 39, are researching ways to increase wheat yield and even developing a hybrid of wheat and rice called 'Rice Wheat'. 'We're developing a plant never before seen in the world,' says Ishii. In April 2025, Tsujimoto returned to Morocco where 120 varieties of wheat had been sown. Farmers from Arad Village gathered to evaluate the trial plots. One variety in particular caught their attention. 'It's growing green and healthy with barely any water,' a farmer notes. Tsujimoto names it 'The Children of Arad Village'.
Business Times
9 hours ago
- Business Times
World economies reel from Trump's tariffs punch
[WASHINGTON] Global markets reeled on Friday (Aug 1) after US President Donald Trump's tariffs barrage against nearly all US trading partners as governments looked down the barrel of a seven-day deadline before higher duties take effect. Trump announced late Thursday that dozens of economies, including the European Union, will face new tariff rates of between 10 and 41 per cent. However, implementation will be on Aug 7 rather than on Friday as previously announced, the White House said. This gives governments a window to rush to strike deals with Washington, setting more favourable conditions. Neighbouring Canada, one of the biggest US trade partners, was hit with 35 per cent levies, up from 25 per cent, effective Friday, but with wide-ranging, current exemptions remaining in place. The tariffs are a demonstration of raw economic power that Trump sees putting US exporters in a stronger position, while encouraging domestic manufacturing by keeping out foreign imports. But the muscular approach has raised fears of inflation and other economic fallout in the world's biggest economy. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Stock markets in Hong Kong, London and New York slumped as they digested the turmoil, while weak US employment data added to worries. Trump's actions come as debate rages over how best to steer the US economy, with the US Federal Reserve this week deciding to keep interest rates unchanged, despite massive political pressure from the White House to cut. Data Friday showed US job growth missing expectations for July, while unemployment ticked up to 4.2 per cent from 4.1 per cent. On Wall Street, the S&P 500 dropped 1.6 per cent, while the Nasdaq tumbled 2.2 per cent. Political goals Trump raised duties on around 70 economies, from a current 10 per cent level imposed in April when he unleashed 'reciprocal' tariffs, citing unfair trade practices. The new, steeper levels listed in an executive order vary by trading partner. Any goods 'transshipped' through other jurisdictions to avoid US duties would be hit with an additional 40 per cent tariff, the order said. But Trump's duties also have a distinctly political flavour, with the president using separate tariffs to pressure Brazil to drop the trial of his far-right ally, former president Jair Bolsonaro. He also warned of trade consequences for Canada, which faces a different set of duties, after Prime Minister Mark Carney announced plans to recognise a Palestinian state at the UN General Assembly in September. In targeting Canada, the White House cited its failure to 'cooperate in curbing the ongoing flood of fentanyl and other illicit drugs', although Canada is not a major source of illegal narcotics. By contrast, Trump gave more time to Mexico, delaying for 90 days a threat to increase its tariffs from 25 to 30 per cent. But exemptions remain for a wide range of Canadian and Mexican goods entering the United States under an existing North American trade pact. Carney said that his government was 'disappointed' with the latest rates hike but noted that with exclusions, the US average tariff on Canadian goods remains one of the lowest among US trading partners. 'Tears up' rule book With questions hanging over the effectiveness of bilateral trade deals struck, including with the EU and Japan, the outcome of Trump's overall plan remains uncertain. 'No doubt about it, the executive order and related agreements concluded over the past few months tears up the trade rule book that has governed international trade since World War II,' said Wendy Cutler, senior vice president of the Asia Society Policy Institute. On Friday, Trump said that he would consider distributing a tariff 'dividend' to Americans. Notably excluded from Friday's drama was China, which is in the midst of negotiations with the United States. Washington and Beijing at one point brought tit-for-tat tariffs to triple-digit levels, but have agreed to temporarily lower these duties and are working to extend their truce. Those who managed to strike deals with Washington to avert steeper threatened levies included Vietnam, Japan, Indonesia, the Philippines, South Korea and the European Union. Among other tariff levels adjusted in Trump's latest order, Switzerland now faces a higher 39 per cent duty. AFP
