(Bloomberg) – Japan plans to invest $36 billion in US oil, gas and critical mineral projects, the first tranche of its $550 billion commitment under the trade agreement it struck with President Donald Trump.

“Our MASSIVE Trade Deal with Japan has just launched!” Trump posted Tuesday on social media. “The scale of these projects are so large, and could not be done without one very special word, TARIFFS.”

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The most significant investment is a natural gas facility in Ohio that’s expected to generate 9.2 gigawatts of power, according to a statement from Commerce Secretary Howard Lutnick, a massive project which Trump described as “the largest in History.”

Japan is expected to invest $33 billion in the gas plant, which will be led by SoftBank Group Corp. subsidiary SB Energy, the Wall Street Journal reported, citing anonymous Commerce Department officials.

If the plant operates at full capacity, it would be the equivalent of nine nuclear reactors or roughly the amount of power consumed by about 7.4 million homes on the largest US grid operated by PJM Interconnection LLC.

Earlier: US, Japan Zero In on Energy and Chips for $550 Billion Fund

The second project is a deepwater crude export facility in the Gulf of Mexico, according to Lutnick. Trump earlier in his social media post offered a different description, saying the investment would cover a liquefied natural gas facility off the coast of Texas.

Japan is also expected to invest in a synthetic industrial diamond manufacturing facility, which Trump’s post indicated would be located in Georgia. The diamonds are a “critical input for advanced industrial and technological production,” Lutnick said. The Journal reported that project would receive a $600 million investment and would involve Element Six, a subsidiary of De Beers.

The long-awaited announcement marks a step forward for the trade and economic pact that Trump announced with Japan last year. It comes weeks before Japan’s Prime Minister Sanae Takaichi is set to meet with Trump in Washington.

The selection comes after a joint panel first met in December to consider projects, which are ultimately selected by Trump himself based on recommendations from an investment committee he established, along with input from Japanese officials.

The fund is meant to spur a wave of Japanese investment in key US industries and was a central pillar of the tariff deal, under which the US president agreed to set levies at 15% on Japanese products and lower the duty for automobiles, a critical driver for Japan’s economy.

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Implementation of the agreement is likely to be a top agenda item during the meeting between Trump and Takaichi in Washington expected to take place March 19.

Lutnick and Japanese Trade Minister Ryosei Akazawa met in Washington last week to hash out the details of the first tranche of investments. Akazawa said he doesn’t expect projects backed by the $550 billion fund to be high-risk, high-return, signaling the Japanese are seeking initiatives with safe returns, rather than less-certain investments.

“Japan is providing the capital. The infrastructure is being built in the United States. The proceeds are structured so Japan earns its return, and America gains strategic assets, expanded industrial capacity, and strengthened energy dominance,” Lutnick said in his Tuesday statement.

The initial investment in a power generation facility is timely. Soaring demand from new data centers, especially to chase the artificial intelligence boom, have raised the cost of ensuring adequate energy supplies.

The two nations identified potential projects ranging from $350 million to as much as $100 billion during Trump’s visit to Japan last year. That framework included energy, artificial intelligence and critical minerals investments involving SoftBank, Westinghouse, Toshiba Corp., among other companies.

The government-owned Japan Bank for International Cooperation and Nippon Export and Investment Insurance are expected to play leading roles in financing the projects. It’s not yet clear how much money will be committed in the form of direct investment. Akazawa said last year that only 1-2% of the $550 billion mechanism would consist of cash investments, with the majority coming from loans and loan guarantees.

After a selection is made, Japan has 45 business days to fund the effort, according to an agreement between the countries.

If Japan elects not to fund a project, the US could claw back certain revenues or reimpose tariffs, according to the agreement. That could risk significantly higher duties on Japanese imports into the US. Trump threatened to raise tariffs to 25%, then scaled that back to 15% after Japan agreed to boost investment in the US through the $550 billion fund.

Trump has grumbled about the pace of implementation of a similar deal with South Korea, a key competitor with Japan on auto manufacturing, and threatened to hike tariffs once again. That saga underscores the link between the investment pledges and the tariff changes that accompanied them.

The announcement follows a historic electoral victory for Takaichi earlier this month. She has vowed to prioritize strong ties with the US. Trump has praised Takaichi, wishing her “great success” in her “Conservative, Peace Through Strength Agenda.”

–With assistance from Laura Davison and Naureen S. Malik.

(Updates to add details on Ohio project)

Japan to Invest $36 Billion in US Projects Under Trump Deal

Japan to Invest $36 Billion in US Projects Under Trump Deal

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