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There were several moments during Howard Lutnick and Ryosei Akazawa’s celebratory joint video statement last week where you wondered if Japan’s chief trade negotiator was speaking of his own free will.
“You . . . think about what was good for Japan. I really felt so . . . You are a very nice guy for me and also for the Japanese people and Japan,” said Akazawa, praising the successful conclusion of trade talks and beaming at the US commerce secretary as a hostage with Stockholm syndrome might.
Other nations must learn and practice Akazawa’s exact expression: the great grimace of friendship with the US, version 2.0.
The awkward on-camera to-and-fro between the men followed months of negotiations which began with Japan, as America’s best friend in Asia, hoping it could secure zero tariffs before being made to feel grateful it was only hit with a 15 per cent levy. The glint of gaslight was in Lutnick’s eye when he described this unprecedented handicapping of free trade as “tremendously beneficial to Japan”.
But the real crux of the deal was Japan’s $550bn investment commitment to “advance economic and security interests in the US”. Japan has agreed to disburse this by January 19 2029 — notionally the final day of Trump’s presidency. The import of the deal is immense, but the publicly available information on key elements is sparse.
Such details as there are have been set out in a seven-page, grammatically faltering memorandum of understanding between the US and Japan — a document seen by the FT but which US government officials, astonishingly, say is only available to a handful of people in both the state and commerce departments. Japan requested something in writing, and this is what the small cabal around Lutnick appears to have come up with. Japan is not releasing the memorandum until the US side does the same and, as one Tokyo-based official puts it, the mechanics of making it public have broken down.
The MOU sets out an arrangement which, on one reading, reeks of coercion: a sovereign nation forced to funnel private and public-sector investment to a much richer one under a structure unashamedly directed by the US president. Once Japan recoups its investment, it then reaps only 10 per cent of the cash flows from the project, to America’s 90 per cent. Yes, Japan has nominal input via a consultative committee into which projects are chosen, but there are no Japanese on the more powerful investment committee and it’s Trump who makes the ultimate call. Yes, Japan can elect not to fund an investment, but if it does so the US may impose new tariffs on Japan “at the rate determined by the President”.
Japan, tenuously, has ways to spin this as a win. It knows that Japanese companies want to invest in the US and that these investments will be compounded and guaranteed by its government-backed lenders. If that was the price of lower tariffs, it may as well be something that might have happened anyway. But a gloating Lutnick, appearing separately on CNBC, denied Japan even the right to make that case at home. Japan, he said, had sought to “buy down” its tariff rate with a deal that he described as “off the rails” and the most fun he had working for this president. Trump, he said, had “complete discretion” over Japan’s investments and would decide where and how he wanted Japanese capital spent in America.
Akazawa, back in Tokyo and without the constraint of sitting at Lutnick’s side, told reporters that, according to the terms of the memorandum, the “complete discretion” bit was wrong. We’ll see.
But the precise contents are arguably less momentous than the nature of the document itself. The point is that its one-sidedness, continued unpublished life in the shadows and the widely variable interpretations this allows represent a miserable charter of what it means to be friends with the US in 2025. At home, Trump is perfecting ways to circumvent Congress; in dealings with America’s allies, his people are also circumventing the normal channels. This MOU, in its invisibility and construction-by-cabal, is a useful blueprint of that process in the early stages.
Japan, thinking that the old rules of friendship applied and that it had handled Trump astutely in the past, entered negotiations imagining that the underlying deal was the intended destination. What it found was a counterpart using the language of dealmaking as cover for the complete retooling of amity in the service of individual aggrandisement.
