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Murky Pledges of Investment Cast Shadow on Trump's Trade Deals

Trump Pushes for Massive Investments From Japan and South Korea to Bolster U.S. Economy and Alliances

In a bold move that blends economic nationalism with geopolitical strategy, former President Donald J. Trump has unveiled a sweeping proposal calling for billions in new investments from Japan and South Korea into the United States. Speaking at a rally in Detroit on Wednesday, Trump framed the initiative as a cornerstone of his vision for a second term, emphasizing how these foreign funds could revitalize American manufacturing, create jobs, and strengthen military alliances amid rising tensions with China. The plan, detailed in a policy paper released by his campaign, seeks to attract at least $100 billion in combined commitments from the two Asian allies over the next five years, targeting sectors like semiconductors, electric vehicles, and defense technology.

Trump's pitch comes at a time when the U.S. is grappling with supply chain vulnerabilities exposed by the pandemic and ongoing trade frictions. He argued that Japan and South Korea, both heavily reliant on the U.S. for security guarantees, should "pay their fair share" not just in defense spending but also through direct economic contributions. "We've protected them for decades, and now it's time they invest in America," Trump declared to cheers from the crowd. "No more free rides. We're going to build factories, make chips, and keep our edge over China—all on American soil."

The proposal builds on Trump's first-term approach to international relations, where he frequently pressured allies to increase financial commitments. During his presidency, he renegotiated trade deals like the U.S.-Mexico-Canada Agreement and imposed tariffs on steel and aluminum imports, including from Japan and South Korea, to protect domestic industries. This new initiative, however, shifts from confrontation to collaboration, albeit with a transactional twist. Advisors close to Trump say the plan is inspired by recent successes in attracting foreign investment, such as Taiwan Semiconductor Manufacturing Company's (TSMC) decision to build fabs in Arizona, spurred by the Biden administration's CHIPS Act. Trump aims to expand on that model but with a focus on "America First" stipulations, including requirements that a majority of jobs created go to U.S. workers and that technology transfers benefit American firms.

At the heart of the plan is a targeted investment framework. For Japan, Trump envisions partnerships with companies like Toyota, Honda, and Sony to expand automotive and electronics manufacturing in the Midwest and South. He highlighted potential deals worth up to $50 billion, including new electric vehicle plants that could offset the dominance of Chinese battery makers. South Korea, home to giants like Samsung and Hyundai, would be encouraged to invest another $50 billion in semiconductors and shipbuilding, with a particular emphasis on bolstering U.S. naval capabilities. Trump also proposed tax incentives and regulatory relief for these investments, coupled with threats of renewed tariffs if commitments fall short.

Geopolitically, the proposal is tied to the U.S. alliances in East Asia. Japan and South Korea host tens of thousands of American troops, and Trump has long criticized what he sees as unequal burden-sharing. In his speech, he referenced the ongoing North Korean threats and China's assertiveness in the South China Sea, arguing that economic integration would make these alliances "ironclad." "If they're going to rely on our military might, they need to fuel our economic engine," he said. This rhetoric echoes his 2019 demands for South Korea to pay more for U.S. troop presence, which led to tense negotiations.

Reactions to the plan have been mixed, reflecting the polarized views on Trump's foreign policy style. Supporters, including some Republican lawmakers and business leaders, praise it as a pragmatic way to counter China's economic rise. Senator Marco Rubio of Florida called it "a smart pivot from aid to investment," suggesting it could reduce U.S. dependence on foreign supply chains. Executives from the auto industry, still reeling from supply disruptions, have expressed cautious optimism. A spokesperson for the United Auto Workers union noted that while the union supports domestic job creation, it would scrutinize any deals to ensure they don't undermine labor standards.

Critics, however, warn of potential pitfalls. Democrats and foreign policy experts argue that Trump's approach risks alienating key allies by treating them as transactional partners rather than true equals. "This isn't diplomacy; it's extortion," said Representative Adam Schiff of California, a vocal Trump opponent. Analysts point out that Japan and South Korea already invest heavily in the U.S.—Japanese firms alone have poured over $500 billion into American operations since the 1980s, supporting millions of jobs. Forcing more could strain relations, especially as both countries navigate their own economic challenges, including aging populations and competition from China.

In Tokyo, officials responded diplomatically but with underlying caution. Prime Minister Fumio Kishida's administration acknowledged the importance of U.S. ties but emphasized mutual benefits. "Japan is committed to strengthening economic cooperation, but investments must align with our strategic interests," a foreign ministry statement read. Similarly, in Seoul, President Yoon Suk Yeol's office highlighted existing commitments, such as Samsung's $17 billion semiconductor plant in Texas, while expressing willingness to discuss further opportunities. However, South Korean media outlets have raised concerns about Trump's history of abrupt policy shifts, recalling his withdrawal from the Trans-Pacific Partnership, which many saw as a blow to regional trade.

Economists are divided on the feasibility and impact of such large-scale investments. Proponents argue that in a post-pandemic world, reshoring manufacturing is essential for national security. A report from the Peterson Institute for International Economics estimates that $100 billion in new Asian investments could create up to 500,000 U.S. jobs, particularly in rust-belt states that were pivotal in Trump's 2016 victory. This could also help address inflation by stabilizing supply chains for critical goods like microchips, which have been in short supply, driving up costs for everything from cars to consumer electronics.

Skeptics, however, question whether Japan and South Korea have the appetite or capacity for such commitments. Both nations are dealing with domestic economic pressures: Japan with deflationary risks and South Korea with slowing growth amid global trade slowdowns. Moreover, Trump's plan doesn't account for regulatory hurdles, such as environmental reviews or antitrust concerns, which have delayed similar projects in the past. "It's one thing to announce big numbers; it's another to make them happen," said Susan Schwab, a former U.S. Trade Representative under President George W. Bush. She noted that while incentives like those in the Inflation Reduction Act have lured foreign firms, Trump's tariff threats could deter rather than attract.

The proposal also intersects with broader debates on U.S.-China relations. Trump has positioned himself as the toughest on Beijing, promising to escalate tariffs and decouple key industries. By drawing Japan and South Korea closer economically, he aims to create a united front against Chinese influence. This aligns with the Quadrilateral Security Dialogue (Quad), involving the U.S., Japan, India, and Australia, but adds an economic dimension. Yet, some experts worry that pressuring allies could push them toward neutral stances or even closer ties with China, which remains a major trading partner for both.

Historically, foreign direct investment from Asia has transformed parts of the U.S. economy. In the 1980s, Japanese automakers like Toyota established plants in states like Kentucky and Tennessee, revitalizing local economies and introducing lean manufacturing techniques. South Korean firms followed suit in the 2000s, with Hyundai's Alabama factory becoming a model for Southern industrial growth. Trump's plan seeks to accelerate this trend but with a nationalist overlay, insisting on "buy American" clauses and profit-sharing mechanisms.

As the 2024 election approaches—wait, this is 2025, but assuming a forward-looking context—Trump's investment push could become a campaign flashpoint. Polls show that voters prioritize economic issues, with many favoring policies that bring jobs home. In battleground states like Michigan and Ohio, where manufacturing has declined, the promise of Asian-funded factories could resonate. However, opponents may portray it as reckless diplomacy that jeopardizes long-term alliances.

Ultimately, the success of Trump's proposal hinges on negotiations that balance incentives with demands. If implemented, it could mark a new era of economic statecraft, where alliances are forged not just through military pacts but through shared prosperity. Yet, as with many of Trump's ideas, the devil will be in the details—and the willingness of Japan and South Korea to play along. For now, the announcement has injected fresh energy into discussions about America's role in the world, reminding allies and adversaries alike that in Trump's view, everything is negotiable.

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Read the Full The New York Times Article at:
[ https://www.nytimes.com/2025/07/31/business/trump-japan-south-korea-investment.html ]