The US President Donald Trump is making American manufacturing great again, at least on paper, and in terms of long-term (spread over a decade) investment promises. Recently, the White House provided an extremely detailed list of commitments by large foreign and local companies, as well as by nations. In this two-part series, we examine the how, why, and what of these trends, and whether they are likely to rewrite the map of American reindustrialisation.
Looking at the national assurances, one can see that from Tokyo to Riyadh, Seoul to London, Governments are quietly repositioning themselves around Washington’s new economic push. As nations graduate to ideas, patents, copyrights, proprietary technologies, and climbing up the value hains, Trump’s second term is marked by a last century’s idea, ie, to equate industrial power and manufacturing prowess with national power. Nations, which were shocked into submission by the chaotic American tariff and trade pressures, adopted pragmatic rather than ideological routes.
Tot up the figures given by the White House on the future investment plans by the foreign countries, and it comes to a stupendous nearly $5 trillion. Of this, the three Middle East nations, United Arab Emirates, Qatar, Saudi Arabia, and Bahrain account for more than $3 trillion. Asian nations like Japan, South Korea, and Taiwan make up for the rest. However, each country comes armed with its calculations, a part of them quantitative, and most related to subjective elements like diplomacy, and geopolitics.
For example, on the face of it, Japan and South Korea seek global and national security, and preferential trade terms. Taiwan, which wishes to break away from China, Trump’s Enemy No. 1 today, hopes to garner political goodwill. Europe wishes to regroup together, and wants to fight America as a singular entity. Here, the hedge is against fragmentation. The Middle East states, who wish to become powerful influencers in a multi-polar world, feel that they can buy strategic influence in the world’s most stable market.
Among the Asian nations, Japan is playing on both sides of the table. Since World War II, its defence has been tied to the US’ aprons. The former does not wish to lose these ties. It looks at the proposed American investments to lock in supply-chain resilience. But it has begun to strengthen its domestic security efforts, and seek business partnerships in the neighbourhood, even with the age-old adversary, China, apart from India. It is diplomacy at the subtlest level. Join hands with the US to secure technology cooperation, and extend the hand to others to seek new markets for its companies.
South Korea has possibly realised that the era of exports-led growth is coming to an end, as the protectionism wave rises across the globe, and more so in America. It is time to set up production bases in other nations, rather than merely sell goods to them. As China begins to flex its economic muscles in the region, and other continents, South Korea wishes to have a counter. Hence, it hopes to demonstrate that it is an indispensable partner in America’s scheme of things.
Taiwan walks a more delicate line. By asking its leading company, one of the world’s largest chipmakers, to enter the US as an investor, the country buys goodwill and strategic cover to stall and block cross-strait tensions with China. It is an age-old deterrence mechanism. Only this time, it is money, rather than diplomacy, which is doing the talking. Washington obviously gets supply security, as well as a strong foothold in Asian geopolitics vis-à-vis China.
European investments in the US were always substantial. Under Trump, they have acquired a defensive tone. Europe is worried about the rise of Russia, and its territorial ambitions, as the Ukraine war demonstrates. It wants to wean away from dependence on Russian energy. It hopes to keep American engaged in NATO security. Moreover, investments in America enable its MNCs to further cement their presence and expansion in a highly-lucrative market. Germany seeks clean-tech manufacturing, France pharmaceutical and energy footprints, and the UK AI and fintech entry points.
While the relations between the US and Europe appear rosy, the leaders in the latter continent remain wary of Trump’s transactional style, and his preference for bilateral over multilateral deals. But, at present, there is no recourse. They need to fall in line, merely to buy time, or wait for Trump’s disorder to disappear due to court rulings in America, or his downfall in the next elections. For the European firms, in sectors like pharmaceutical, renewable energy, and aerospace, the US offers higher profitability.
Nowhere is the blend of business and diplomacy more visible than in the Middle East. For the Gulf monarchies, the investment rationale has several strands. First, the US market offers stable returns in hard currency. It is a means to diversify into non-oil revenues. It enables them to present themselves as modern, forward-looking economies. Since the Middle East nations are passive investors, as they do not have much technology or manufacturing skills to transfer, the money helps them to bolster their relevance and influence in a multi-polar world, where America will jostle with China, and engage in a love-hate relationship with Russia.
India does not feature prominently in the White House’s tally. But New Delhi, which is trying hard to get back into Trump’s good books, and ink a bilateral trade deal by the year-end, hopes to play an aggressive non-aligned game. It is a tricky play. Engage with America. Remain close friends with Russia. Sort out border issues with China, and woo the latter’s investments. Fan the America-related fears in Japan and Europe to gain some advantages.
China, by contrast, stands apart from the other nations. Until now, it has not bowed down to American pressures, or showed any signs of reverence. Washington too is wary of Beijing, and wants to deal with it in the end, after it has inked bilateral pacts with others, and established clear friends and enemies. The conflict between the two, which began as policy brinkmanship hardened into a battle of prestige. Both know that they need each other. Both have their spheres of influence. But both want the other to blink first.
However, there is some movement. Washington’s decision to force a sale of China’s TikTok’s US operations to large domestic tech investors, and Beijing’s agreement is an indicator. Behind the scenes, the Chinese capital continues to flow into America through Hong Kong-based intermediaries and offshore funds, although the scrutiny is tighter. Still, America, the world’s biggest consumer market, is learning to live without the Chinese supply chains. Indeed, it is hoping for these chains to be established locally.
For Washington, foreign commitments serve a dual purpose. They boost local manufacturing, and validate Trump’s policies. Every dollar that funds a chip fab, LNG terminal, or AI hub reinforces the narrative that America is becoming great again. It deepens the interdependence with the allies, making geopolitical alignments more resilient than formal treaties. Every job created by a Korean automaker or Japanese electronics group becomes another link in an economic alliance that is harder to unravel.