President Trump has closed a very one-sided trade deal with Japan that just happens to give him an immense amount of power.
Under the terms of the trade deal, Japan is expected to invest $550 billion in the United States in order to avoid the lofty retaliatory tariffs that Trump has set for it. Additionally, Japan has also agreed to let Trump decide where those billions go. The unpublished memo was signed by both countries on Wednesday, according to The Financial Times.
Trump initially levied 25 percent tariffs against Japan. He’ll now lower them to 15 percent, as long as Japan invests that $550 billion in his preferred projects before the 45-day deadline he’s imposed. If it doesn’t, the tariffs go back up to 25 percent.
Assuming the deal is made, the U.S. and Japan would split whatever profit is generated from the deal until Japan pays off the investment. Then the U.S. will take 90 percent of the profit from that point.
This aligns with the recent trend of cash investments from some of our oldest allies in exchange for tariff protection deals. South Korea and the European Union have promised to invest massive amounts of funds, and U.S. chipmakers Nvidia and AMD plan to give the government a portion of the profit generated by their sales in China.
The Japan trade deal comes as a federal appeals court this week dealt Trump a serious blow, ruling that the vast majority of his tariffs were illegal.
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