WASHINGTON — President Donald Trump has strong-armed many of America\u2019s biggest trading partners into pledging trillions of dollars of investment in the United States. But a study out Tuesday raises doubts about whether the money will actually materialize and questions how it would be spent if it did. <\/p>\n
\u201cHow realistic are these commitments?\u2019\u2019 write Gregory Auclair and Adnan Mazarei of the Peterson Institute for International Economics, a nonpartisan think tank that supports free trade. \u201cThe short answer is that they are clouded with uncertainty.\u2019\u2019<\/p>\n
They looked at more than $5 trillion in investment commitments made last year by the European Union, Japan, South Korea, Taiwan, Switzerland, Liechtenstein and the Persian Gulf states of Saudi Arabia, Qatar, Bahrain and the United Arab Emirates.<\/p>\n
Trump used the threat of punitive tariffs \u2013 import taxes \u2013 to pry concessions out of those trading partners, including the investment pledges.<\/p>\n
The White House has published an even higher investment figure – $9.6 trillion<\/a> \u2013 that includes public and private investment commitments from other countries. Trump himself, never one to undersell his achievements, has put the number far higher — $17 billion or $18 billion<\/a> — though Auclair and Mazarei note that \u201cthe basis for his claim is not clear.\u2019\u2019<\/p>\n All the numbers are huge. Total private investment in the United States was most recently running at a $5.4 trillion annual pace. In 2024, the last year for which figures are available, total foreign direct investment in the United States amounted to $151 billion. Direct investment includes money sunk into such things as factories and offices but not financial investments like stocks and bonds.<\/p>\n \u201cThe pledged amounts are large,\u2019\u2019 Auclair and Mazarei write, \u201cbut their time horizon varies, and the metrics for measuring and thus verifying the pledges are generally unclear.\u2019\u2019 They note, for example, that the European Union\u2019s pledge to invest $600 billion in the United States \u201ccarries no legally binding commitment.\u2019\u2019<\/p>\n The report also finds that some countries would strain to meet their pledges. For the Gulf countries, \u201cthe commitments are large relative to their financial resources,\u201d the researchers write.<\/p>\n \u201cSaudi Arabia appears capable of meeting its targets, with some difficulty.\u2019\u2019 The United Arab Emirates and Qatar would find it even harder and might have to finance the investments by borrowing. \u201cIn all three cases, the commitments are nonbinding, and investments from these countries could fall well below headline numbers,\u2019\u2019 they write.<\/p>\n Moreover, \u201cthese agreements have been reached under duress,\u2019\u2019 Mazarei, a former deputy director of the International Monetary Fund, said in an interview. \u201cIt\u2019s not necessarily being done willingly.\u2019\u2019<\/p>\n So trading partners could look for ways to escape their commitments \u2013 especially if the Supreme Court strikes down<\/a> the tariffs Trump used to negotiate the one-sided agreements. A ruling is expected as early as February. \u201cOther countries may find a way to wiggle out,\u2019\u2019 Mazarei said.<\/p>\n