Trump’s Trade Investment Funds Remain in Limbo
President Donald Trump has touted investment funds from the European Union, Japan, and South Korea as a critical piece of his plan to revive American manufacturing.
However, several months after their announcement, details are scarce and questions abound about the investments, which are supposed to total $1.5 trillion.
Most of the trade community is waiting to see actual projects announced before concluding that there’s anything to these commitments, said Tim Meyer, an international business law and trade professor at Duke University.
Enforcement Mechanism Unclear
The White House has one enforcement mechanism at its disposal, but it’s unclear how it will work.
Meanwhile, senior Republican senators in Congress are trying to figure out how the investment funds will operate.
They just don’t have enough information about it, said Oklahoma Sen. James Lankford.
Similarities to Past Chinese Pledge
Meyer drew a parallel to a past Chinese pledge to step up U.S. soybean purchases in Trump’s first term as part of its “Phase One” trade agreement.
Those purchases never fully reached the specified targets, and current Chinese orders for American soybeans are also well below the commitments laid out in the interim agreement.
It’s one thing for foreign governments and businesses to make offhand comments to the White House about investments, said Jessica Riedl, a budget expert at the Brookings Institution.
U.S. Sovereign Wealth Fund
Treasury Secretary Scott Bessent presented the funds as a step toward establishing a U.S. sovereign wealth fund, a state-controlled investment vehicle common in the Middle East and certain European countries.
The funds would come from private firms that the E.U. doesn’t control, and the money would be channeled towards “strategic sectors,” per an E.U. communique.
The two sides still haven’t inked a final deal, but a South Korean initiative has led to some domestic breakthroughs.
Profit-Sharing Agreement
The Japanese government is still hammering out a profit-sharing agreement with the U.S. that ensures its companies can benefit from the investment spending.
The Trump administration’s rhetoric around the success of its trade deals has been punctured by hyperbole, said Riedl.
Current administration claims of $18 trillion of total new investment from companies and foreign governments was almost two-thirds the size of annual U.S. economic output.
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