Trump’s Asia trade deals reap small slice of cash

{"text":[[{"start":7.713,"text":"The US has received only a fraction of the investment pledged to American industry by Japan, South Korea and Taiwan in deals to avert punitive tariffs on their economies in the wake of Donald Trump’s “liberation day”."}],[{"start":20.18,"text":"The Asian nations have made available $37.5bn of the $1.4tn, or 2.7 per cent, in financing and foreign direct investment under memoranda of understanding signed in 2025 and 2026, according to analysis by fDi Intelligence, an FT publication, based on publicly available data."}],[{"start":41.28,"text":"The figures highlight the difficulty faced by US trading partners as they attempt to unlock money to funnel into American projects. The rejection of Trump and his administration in the US midterms also adds to uncertainty over the president’s already unpredictable tariff policies."}],[{"start":56.34,"text":"The overall pledge levels “never seemed plausible”, says Peter Harrell, a former senior economics official in Joe Biden’s White House, although he stressed $37.5bn was still a “meaningful amount of money”."}],[{"start":69.74,"text":"Progress on the ground has been equally slow. Other than investments by Taiwanese electronics companies, mostly to grow their existing US footprint, the one new project that started in May had its licence revoked later in the year."}],[{"start":81.98,"text":"The MoUs are key concessions that the three Asian countries granted the US to limit the impact of “liberation day” tariffs, which ranged from 24 per cent to 35 per cent on imported goods."}],[{"start":null,"text":""}],[{"start":92.46,"text":"Although the White House has struck deals with many other countries, which have committed to invest in the US, the three Asian nations have mechanisms and timelines for their programmes that make them traceable."}],[{"start":102.78,"text":"Japan has agreed to seven projects worth $130bn, or about 23.5 per cent of its $550bn trade and investment programme, fDi Intelligence analysis shows. So far, state-owned development bank JBIC and state export credit agency NEXI have mobilised $10.96bn in credit and credit guarantees to fund them."}],[{"start":125.82,"text":"South Korea has agreed to three initial investment projects, which could reach $196bn, as part of its $350bn initiative. The Korea-US Strategic Investment Corporation (KUIC), a dedicated state-backed institution set up to manage the programme, provided the first of the financing, $2.4bn for “Project Star”, a $22bn gas-fired power plant in Texas, when the bilateral investment deal was announced in September."}],[{"start":154.05,"text":"The US administration wants another $10bn by the end of the year to build eight nuclear reactors across the country. The South Korean government capped KUIC’s annual disbursement capacity at $20bn."}],[{"start":166.04,"text":"The deal with Taiwan asks Taipei to provide guarantees to support credit lines of up to $250bn. So far, public and private financial institutions have set up a $1.37bn credit backstop, or guarantee fund, to unlock investment, which the country’s planning agency, the National Development Council, considers enough to stimulate about $55bn in corporate financing. To date, no project has been approved under the guarantee fund scheme."}],[{"start":193.54,"text":"In addition, Taiwanese semiconductor and technology enterprises are expected to make new, direct investments also totalling $250bn. Across all sectors, they have already invested $24.1bn in the US between January and September this year, up by 630 per cent from a year earlier, according to figures from the country’s Department of Investment Review. Chipmaker TSMC alone accounted for $20bn."}],[{"start":219.9,"text":"Some of these projects have tested the limits of the investment frameworks. South Korea negotiated specific provisions in its MoU to make sure that projects are “commercially reasonable”."}],[{"start":229.74,"text":"“Under these terms, Korea might think they have more say in picking investments than the US administration really wants them to,” says Nils Wollesen Osterberg, fellow and economic policy associate at the Korea Economic Institute of America."}],[{"start":243.7,"text":"These differences were underlined when Seoul and Washington jointly announced the first three projects worth $196bn. President Trump touted the “colossal” package of investment in a press conference with commerce secretary Howard Lutnick on September 30. A few days later, South Korean finance minister Lee Hyoung Il conceded that only “Project Star” had been approved, with the other two under review."}],[{"start":264.98,"text":"Japan too hit a roadblock with one of its projects. Prime Minister Sanae Takaichi agreed in March to fund a $40bn co-operation between US energy equipment manufacturing company GE Vernova and Japanese conglomerate Hitachi to build small nuclear reactors in Tennessee and Alabama. But concerns over liabilities of the Japanese lenders in a potential nuclear accident have reportedly slowed final approval of the funds on Tokyo’s side. To date, neither JBIC nor NEXI has provided any financing for the initiative."}],[{"start":297.72,"text":"With only a fraction of the necessary capital available, progress on the ground has been slow. Of all the announced projects, the Gulflink Deepwater Port in Brazoria County, Texas, which has Japanese backing, is the only one that has started construction."}],[{"start":311.82,"text":"But a US federal court of appeals revoked the project licence in August after it broke ground in May. The court argued that Gulflink’s proposed pipeline, approved by the transportation secretary in 2025, would intersect with the pipeline of another proposed deepwater port in the area, which an existing law explicitly forbids."}],[{"start":null,"text":""}],[{"start":330.58,"text":"Despite the delays, US companies involved in the projects have been upbeat. Returns are “essentially infinite”, says Michael Dunne, chief financial officer of NextEra, a Florida-based energy company working on two projects with Japan and on one with South Korea."}],[{"start":344.98,"text":"Others, however, have doubts about the benefits of the initiatives."}],[{"start":348.54,"text":"“I expect them to boost construction jobs in the short term but create fewer jobs in the long run,” says Gregory Auclair, senior statistician and research fellow at the DC-based Peterson Institute for International Economics. He points to the limited long-term job creation typically associated with energy projects, which account for most of the planned investments."}],[{"start":369.46,"text":"“New capacity [is] seemingly being dictated by government interests rather than customer demand,” Matt Bryson, an analyst at financial services group Wedbush, said of one of the deals with Japan involving the building of two chip plants in New York state in a critical note published in October."}],[{"start":385.9,"text":"Senator Tammy Baldwin and Congressman Ro Khanna, picking up on some of the concerns, introduced a bill calling for the establishment of a Foreign Investment Review Authority to make sure the projects are transparent and benefit the US economy."}],[{"start":399.5,"text":"But despite the slow progress and the Democrats’ midterm sweep, US trading partners could be wary of angering Trump and reigniting a trade war. “As much as they might resent these investments, they will continue to talk the sweet game with the US,” says Adnan Mazarei, senior fellow at the Peterson Institute for International Economics."}],[{"start":424.34,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1794466472_1580.mp3"}