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US and Japan Explore Massive Tech and Infrastructure Investment Fund

The United States and Japan are in early discussions to establish a joint sovereign wealth fund, potentially worth $300 billion, aimed at boosting tech and infrastructure projects across the U.S. SoftBank’s Masayoshi Son, a key figure in the talks, has been engaging with the Trump administration, including Treasury Secretary Scott Bessent, and Japanese Prime Minister Shigeru Ishiba. The fund, which could be co-owned by the U.S. Treasury and Japan’s Ministry of Finance, aims to channel hundreds of billions into AI infrastructure, data centers, and energy projects, with Oracle and OpenAI as potential partners.

A New Model for Bilateral Investment

Unlike traditional models relying on tax revenue from private firms, this fund would directly invest in profitable ventures, delivering returns to both governments. Bessent sees it as a way to generate revenue without raising taxes, while Japan seeks safeguards against U.S. policy volatility. The fund might also allow limited partners and citizens from both nations to invest. Discussions have included military cooperation, such as U.S. warship repairs in Japan and collaboration on icebreaker tech for Arctic trade routes, with further talks expected at the G7 summit in Canada in June 2025.

Strategic and Economic Context

The proposal emerges amid broader U.S.-Japan trade negotiations, where Japan pushes for zero tariffs, but the U.S. insists on a 10% minimum. Recent trade tensions, including Japan’s record $61.9 billion sale of U.S. Treasuries in Q3 2024 to fund domestic stimulus, highlight the stakes. Ishiba’s ¥39 trillion ($250 billion) stimulus package focuses on domestic needs, while Son’s involvement—fresh off the $500 billion Stargate project—underscores the scale of ambition. Posts on X reflect optimism about the fund’s potential to drive AI and tech innovation, though some users question its feasibility given geopolitical risks.

Challenges and Implications

The plan faces hurdles, including regulatory scrutiny over foreign investment and Japan’s historical caution toward crypto-friendly policies, as seen in Ishiba’s reluctance to lower crypto taxes. While the fund could strengthen U.S.-Japan economic ties and counter China’s influence, its success hinges on navigating political and financial complexities. If realized, it could reshape global tech investment, but the lack of concrete details leaves its future uncertain.