Japan’s ruling Liberal Democratic Party secured a commanding victory in the recent lower-house election, handing Prime Minister Sanae Takaichi a legislative supermajority and a moment to press Tokyo’s economic and strategic agenda. In Washington, President Donald Trump publicly congratulated Takaichi, but private displeasure has erupted over what U.S. officials describe as sluggish progress on a planned $550 billion package of Japanese investment and financing into the United States.
The headline bilateral deal, reached in principle in July 2025, envisaged large-scale Japanese capital flowing into U.S. projects in exchange for lower U.S. tariffs. Washington had identified an initial “first wave” of projects — including liquefied gas-fired power plants, an oil terminal, and industrial-scale synthetic diamond production — with a total expected value of more than ¥6 trillion. That timetable has repeatedly slipped: a deadline of end-2025 was moved to January 2026 and then to the end of February, prompting growing impatience in the White House.
According to U.S. sources cited by Japanese media, Trump privately suspects deliberate foot-dragging. The president is said to fear Tokyo may be waiting for a U.S. Supreme Court ruling on the legality of his tariff policy; if the court strikes the tariffs down, Japanese officials might back away from the investment package. The impasse has amplified mistrust inside a relationship that, publicly, is being loudly celebrated.
Tokyo has a different read. Japanese strategists argue that delivering the first-to-commit, large-scale investment would make the United States politically indebted to Japan and secure Washington’s strategic commitment at a time Tokyo sees rising risks in the Indo-Pacific. Prime Minister Takaichi’s March visit to Washington, billed as the start of a “new chapter” in the alliance, is expected to carry concrete offerings: a proposal for joint development of rare-earth-bearing sediment near Minamitorishima and formalizing the initial tranche of U.S.-bound investments.
The rare-earth proposal is particularly significant. Minamitorishima sits roughly 2,000 kilometres southeast of Tokyo and Tokyo agencies say trial extraction could begin by February 2027 if diplomatic and technical hurdles are cleared. Japanese leaders frame this as both an industrial opportunity and a strategic move to reduce dependence on Chinese supply chains for critical minerals — a step that would bind Japanese resources to American processing and capital.
Beyond minerals, the investment package touches energy, infrastructure and high-tech supply chains. Japanese corporates such as SoftBank are reportedly lined up to power AI data centres from Japanese-financed gas-fired plants in the United States. At the same time, Trump’s team is preparing to demand more from Tokyo: higher Japanese defence spending, expanded access for U.S. agricultural exports such as rice, and even proposals to mobilize ¥10 trillion of Japanese capital into U.S. nuclear construction.
The dynamic exposes the transactional logic of the U.S. posture. Washington’s readiness to support a Takaichi administration — including rare preparatory coordination by U.S. financial regulators on yen stabilization — has come with explicit expectations of quid pro quo. For Tokyo, the calculus is to convert economic largesse into security guarantees and political cover for a more robust regional posture. For Washington, Japan’s money is a tool to secure industrial and strategic advantage without ceding leadership.
For Beijing and regional actors, the unfolding bargain will matter. A committed U.S.-Japan bloc that ties Japanese capital to American infrastructure and to supply-chain alternatives for critical minerals accelerates the decoupling of high-tech value chains. That could increase regional factionalism, complicate market flows, and raise the stakes for maritime and diplomatic competition in Asia. How the March summit resolves the trust gap — by delivering visible projects or by hardening American demands — will shape the alliance and the region’s economic geography for years to come.