Lutnick says U.S. will share profits until $550B recouped

Commerce Secretary Howard Lutnick said Thursday that the U.S. will equally share profits with Japan from projects funded by the Asian country through its tariff deal until the initial investment is recouped.

Tokyo agreed to earmark $550 billion for investment in American-based projects selected by the U.S. government as part of a deal finalized last week. President Donald Trump said Japan will now face 15% baseline tariffs and some sector-specific levies under the two countries’ deal.

Lutnick said the U.S. will initially split profits equally on projects funded through Japan’s investment. Once Japan earns back its $550 billion, the profit breakdown will shift to the U.S. receiving 90% and Tokyo taking the remaining 10%, Lutnick said.

 “After that, it’s 90/10, in favor of America,” Lutnick said Thursday on CNBC’s “Squawk on the Street.”

Lutnick said an investment committee will suggest projects to fund through Japan’s cash pile.

After receiving Trump’s approval, the U.S. will hire construction workers and send a “capital call” to Japan, he said, acknowledging that Japan has to “blow up their balance sheet” and borrow money to fund the projects.

But Lutnick said it shouldn’t ultimately cost Japanese taxpayers anything in the long run, assuming they get the invested money back from the projects. On top of that, Japanese consumers will benefit from a lower tariff rate, he said.

“For their country’s perspective, it’s a good deal,” Lutnick said.

The U.S., meanwhile, gets funds to prop up domestic manufacturing, facilitating projects such as nuclear power plants, he said. Lutnick also pointed to antibiotics as a domestic manufacturing priority.

Lutnick’s comments come as many of Trump’s tariffs hang in legal limbo. The Supreme Court has agreed to hear an appeal of a lower court ruling on a fast timeline. That decision found many of the president’s most severe levies were illegal.

Oral arguments are scheduled for the first week of November.