Japan has unveiled a $36bn investment plan under the US Japan critical minerals agreement, committing funds to oil, gas, and strategic materials projects across the United States.
Donald Trump and Sanae Takaichi, Japan’s prime minister, announced the initiative in Tokyo, highlighting a Portsmouth, Ohio, power plant as the largest natural gas-fired facility in US history.
“These projects mark a decisive step in securing our energy independence,” Trump said, adding that Japanese capital will fund the investments while America gains industrial capacity and strategic assets.
The US Japan critical minerals agreement arrives amid rising tensions between Tokyo and Beijing over Taiwan, reflecting both countries’ desire to reduce dependence on Chinese raw materials for critical high-tech industries.
Howard Lutnick, US commerce secretary, said the planned industrial diamond site ensures the United States can fully produce synthetic diamonds domestically, which are vital for semiconductors, oil refining, and advanced manufacturing.
The agreement also includes a deepwater crude oil export facility off Texas, designed to provide reliable domestic energy while offering strategic returns to Japanese investors in a mutually beneficial partnership.
China dominates the global rare earths and critical minerals market, controlling mining and processing for technologies essential across industries. This market power has allowed Beijing to impose export restrictions during diplomatic disputes.
Trump framed the US Japan critical minerals agreement as a way to “end our foolish dependence on foreign sources,” signaling that the administration sees China’s supply control as a national vulnerability.
The $36bn investment is the first phase of Japan’s $550bn pledged under a broader US trade deal, which also included US tariff reductions on Japanese exports such as automobiles and machinery.
Takaichi stressed the projects’ strategic importance, noting they would enhance economic security and strengthen Japanese-American ties while diversifying supply chains away from China’s influence.
The Portsmouth plant will generate 9.2 gigawatts of electricity annually, operated by SB Energy, a SoftBank Group subsidiary. This scale is intended to secure energy independence while allowing Japanese investors to earn returns.
The synthetic diamond site in Georgia, valued at approximately $600m, ensures domestic production of grit used in industrial, semiconductor, and defense applications, reducing vulnerabilities to Chinese export restrictions.
China has recently limited rare earth exports to Japan over the Taiwan dispute. The US Japan critical minerals agreement is partly a response to these supply challenges, according to trade analysts monitoring the region.
Trump’s approach combines tariffs and targeted investments. Economists warn such policies may increase inflation, but the administration argues they are necessary to secure long-term industrial and technological independence.
Japan’s January exports rose nearly 17%, in part due to strong shipments to China. The US Japan critical minerals agreement shows that Tokyo is diversifying its trade and supply chains while maintaining existing markets.
The deepwater oil facility in Texas complements the energy strategy, ensuring stable crude supplies for the US and Japan, enhancing resilience in energy markets, and reducing dependence on volatile foreign sources.
The US Japan critical minerals agreement is designed to support technological innovation. By securing critical materials like synthetic diamonds domestically, both countries can advance high-tech industries without relying on China.
“This partnership strengthens security, resilience, and competitiveness,” Takaichi said. She emphasized that economic collaboration also bolsters both nations’ positions in the Indo-Pacific region amid regional geopolitical challenges.
The Trump administration highlighted the need to reduce reliance on China following last year’s partial trade deal with Xi Jinping, which eased tensions temporarily but left supply chain vulnerabilities unresolved.
US-Japan cooperation now spans energy, industrial manufacturing, and high-tech research. The US Japan critical minerals agreement signals a long-term strategic alliance designed to balance global markets dominated by China.
Experts say the agreement sets a precedent for other countries seeking alternatives to China’s rare earths dominance, emphasizing supply chain diversification and national security in critical industries.
Investors anticipate potential benefits from combining Japanese capital and US infrastructure, creating jobs, enhancing domestic capabilities, and strengthening both countries’ economic and technological independence.
Trump credited tariffs as essential for enabling the scale of these projects. “None of this could have happened without one very special word, tariffs,” he said, highlighting trade policy as a lever for strategic investment.
The $36bn rollout under the US Japan critical minerals agreement will be closely monitored internationally, with potential implications for global trade, energy markets, and critical mineral supply chains worldwide.
The initiative represents a multifaceted approach, linking energy independence, industrial security, and economic strategy, signaling both nations’ commitment to reducing dependence on China’s market power in critical minerals.
By combining capital, infrastructure, and domestic production, the US Japan critical minerals agreement strengthens economic security, ensures technological competitiveness, and creates a model for future international strategic collaborations.
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The agreement is viewed as a strategic pivot, demonstrating that industrialized nations can secure key materials, expand domestic capacity, and challenge monopolistic control in vital sectors, particularly rare earths controlled by China.
Overall, the US Japan critical minerals agreement marks a decisive step in global supply chain diversification, energy independence, and high-tech industrial advancement, highlighting the growing economic partnership between the two nations.
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