Japan's $550B US investment averts $67.72B tariffs 90% equity to U.S. for semiconductors

Japan’s top trade negotiator has signaled that the country’s $550 billion investment agreement with the U.S. could extend support to semiconductor projects in the U.S. by foreign firms, including those based in China Taiwan, if they align with Japanese supply chain needs. The deal, announced this week, allows Japan to avoid up to $67.72 billion in U.S. tariffs annually in exchange for the investment pledge, which will prioritize loans and guarantees over equity stakes [1]. Ryosei Akazawa, Japan’s Chief Trade Negotiator, confirmed that the initiative is not restricted to domestic or U.S. companies, stating that financing could aid a “Chinese Taiwanese chipmaker” building plants in the U.S., provided it utilizes Japanese components or caters to Japanese demand [2]. This flexibility underscores Japan’s broader strategy to stabilize its semiconductor supply chains amid geopolitical uncertainties and U.S. policy shifts under President Donald Trump [3].

The investment framework, to be channeled through state-backed entities like the Japan Bank for International Cooperation (JBIC) and Nippon Export and Investment Insurance (NEXI), will see only 1–2% allocated as equity, with the remainder in loans and guarantees [4]. Akazawa emphasized that Japan’s reduced profit share—allowing the U.S. to retain 90% of returns from equity investments—was a deliberate trade-off for tariff relief, which he described as a “minor price” to avoid annual losses of $67.72 billion in export duties [5]. The initiative’s scope and speed, coupled with Japan’s focus on critical industries like semiconductors, highlight its commitment to reshaping global supply chains amid rising U.S.-China tensions [6].

The potential involvement of Chinese Taiwanese chipmakers, such as Taiwan Semiconductor Manufacturing Co. (TSMC), aligns with U.S. efforts to bolster domestic chip production. TSMC, a key supplier to U.S. tech firms, has already committed $100 billion to expand its U.S. operations, including three Arizona facilities [7]. Japan’s participation could accelerate this shift, as U.S. demand for advanced manufacturing capacity grows alongside concerns over supply chain vulnerabilities linked to China [8]. However, the exact criteria for eligibility remain undefined, and Akazawa declined to specify which companies might qualify [9].

Analysts note that Japan’s move reflects a strategic alignment with U.S. and allied nations to reduce reliance on China for critical technologies. By supporting foreign manufacturers with ties to Japan’s industrial needs, the country aims to diversify its supply chain risks while maintaining its role as a key supplier of components and equipment to the global semiconductor industry [10]. The agreement also signals Japan’s willingness to prioritize long-term economic security over short-term profit, a shift that could influence broader trade dynamics in Asia and North America [11].

Japan originally pushed to receive half of the profits from the deal but accepted a compromise allowing the U.S. to retain 90% of returns from equity investments, which constitute a small portion of the fund. Akazawa characterized this as a reasonable trade-off given the tariff savings and the urgency to deploy the $550 billion within the remainder of Trump’s term [12]. The government aims to finalize the entire package by 2025, creating a tight timeline for planning and disbursement. While no companies have officially applied for support, Akazawa’s remarks indicate Japan is prepared to back projects that enhance economic resilience, whether led by Japanese, U.S., or Chinese Taiwanese entities [13].

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Source:

[1] [Reuters](https://www.reuters.com/world/asia-pacific/japan-says-550-billion-package-trade-deal-could-finance-taiwanese-chipmaker-us-2025-07-26/)

[2] [Invezz](https://invezz.com/news/2025/07/26/japans-550b-investment-could-back-taiwan-chip-plants-in-us-says-trade-official/)

[3] [Invezz](https://invezz.com/news/2025/07/26/japans-550b-investment-could-back-taiwan-chip-plants-in-us-says-trade-official/)

[4] [Invezz](https://invezz.com/news/2025/07/26/japans-550b-investment-could-back-taiwan-chip-plants-in-us-says-trade-official/)

[5] [Invezz](https://invezz.com/news/2025/07/26/japans-550b-investment-could-back-taiwan-chip-plants-in-us-says-trade-official/)

[6] [Invezz](https://invezz.com/news/2025/07/26/japans-550b-investment-could-back-taiwan-chip-plants-in-us-says-trade-official/)

[7] [Invezz](https://invezz.com/news/2025/07/26/japans-550b-investment-could-back-taiwan-chip-plants-in-us-says-trade-official/)

[8] [Invezz](https://invezz.com/news/2025/07/26/japans-550b-investment-could-back-taiwan-chip-plants-in-us-says-trade-official/)

[9] [Invezz](https://invezz.com/news/2025/07/26/japans-550b-investment-could-back-taiwan-chip-plants-in-us-says-trade-official/)

[10] [Reuters](https://www.reuters.com/business/kkr-talks-buy-st-telemedia-global-data-centres-bloomberg-news-reports-2025-07-26/)

[11] [Yahoo Finance](https://finance.yahoo.com/news/live/trump-tariffs-live-updates-japan-says-550-billion-investment-in-us-could-finance-taiwanese-chipmaker-trump-says-eu-deal-50-50-200619983.html)

[12] [Invezz](https://invezz.com/news/2025/07/26/japans-550b-investment-could-back-taiwan-chip-plants-in-us-says-trade-official/)

[13] [Invezz](https://invezz.com/news/2025/07/26/japans-550b-investment-could-back-taiwan-chip-plants-in-us-says-trade-official/)