A New ‘Deal Economy’
President Donald Trump’s tariff policy is about a lot more than raising import duties. They’re a lever, and the fulcrum is foreign investment. From chip plants in Arizona to battery factories in the Southeast, foreign companies are pledging billions in exchange for access to the world’s largest consumer market. This is the new “deal economy”—less about rates, more about commitments.
Critics say this is upside down. America, they argue, doesn’t need more capital. It needs more foreign demand. We’re not a developing country short on savings. Our corporations are awash in cash. And under the cold logic of the current-account identity, more foreign capital just means a bigger trade deficit.
It’s a sharp critique. But it misses the plot.
Not Just ‘More Capital’—Better Capital
The U.S. does not suffer from a capital shortage. What it suffers from is capital misallocation—a tidal wave of liquidity chasing financial arbitrage and speculative assets instead of production. The solution isn’t to shut out foreign capital. It’s to channel it toward productive, strategic capacity.
That’s what the Trump investment strategy is doing. These are not random inflows. They are greenfield projects, often linked to content requirements, hiring targets, and location incentives. They aren’t capital-for-capital’s sake. They are capital tethered to supply chain reanchoring and capacity expansion.
Yes, the current account is saving minus investment. That doesn’t mean investment can’t rise—so long as saving rises too. And that’s part of the broader program. Expanding household saving vehicles and normalizing Treasury issuance structure (longer tenors, less roll) both help raise domestic saving, even as strategic investment ramps up. The identity holds. Policy just moves the pieces.
Addressing the Acquisitions Red Herring
Skeptics often point out that most foreign direct investment is just acquisitions—not new plants or jobs. That’s true, and it’s exactly why Trump’s approach insists on greenfield or nothing. We’re not interested in foreign money reshuffling cap tables. We want factories, not buyouts.
Official statistics like BEA’s “new FDI” data understate what’s happening because they only count first-year outlays and don’t reflect reinvested earnings, multiyear construction, or projects built by U.S. firms under foreign joint ventures. That’s fine. Let the statisticians catch up. We’ll judge this policy by its results: steel in the ground, goods off the line, Americans on payrolls.
Investment Pledges with Teeth
The ghost of “Phase One” still haunts the U.S.–China debate. Beijing promised to buy hundreds of billions in U.S. goods and missed by a mile. That doesn’t mean investment diplomacy can’t work. It means you have to design it better.
Trump’s new deals should follow three principles:
- Greenfield or nothing. If it doesn’t build new capacity, it doesn’t count.
- Performance-based incentives. Tax breaks and access vest only when investment hits milestones: capex, domestic content, hiring.
- Snapbacks and clawbacks. Miss the targets? Tariffs return automatically. Incentives are pulled. No more free rides.
This is how you convert pledges into reality.
Demand and Investment, Not Demand or Investment
Another objection is that what we really need is foreign demand—not just more domestic supply. But this is a false choice. Investment doesn’t displace demand. Done right, it creates it.
A Korean battery plant in Georgia creates demand for domestic construction, steel, machinery, and services. It anchors supply chains and produces goods that are exported, sold to U.S. firms, or substituted for imports. In many cases, these investment deals include purchase schedules and order commitments, ensuring that demand materializes as the plant comes online.
This is not passive globalization. This is managed capitalism with a patriotic bent.
The old model said: take in capital, let the dollar rise, offshore the hard stuff, and let financial markets sort it out. The new model says: if foreign capital wants in, it has to build something real—and buy something real—here.
Yes, the critics are right about the accounting. But Trump is right about the direction. If you change the rules, you change the incentives. And if you change the incentives, you can change the structure of the U.S. economy—who builds, who works, and what gets made.
The money is welcome. But only if it comes with bricks, not just bonds.
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