US Commerce Secretary Howard Lutnick has said that Japan’s $550 billion investment package will target American infrastructure, much of which is related to data centers.

Lutnick told Nikkei that the investment framework would see Japan invest in “power, pipelines… things that are fundamental to national security and have virtually no risk.”

This is in line with the White House’s statement on the July 22 deal, which stated that the funds would target “the revitalization of America’s strategic industrial base.”

Of particular note to the data center industry at the time were the commitments made to energy infrastructure and production, with a focus on natural gas, advanced fuels, and grid modernization; semiconductor manufacturing and research; and critical minerals mining, processing, and refining.

Lutnick also said more than half of the investment may be directed towards electricity and energy development, adding that the Japanese companies would provide gas turbines, transformers, and cooling systems to help expand American electricity generation capacity amidst a surge in data center demand.

The deal also saw Japan purchase and commit to purchasing more American goods, including foodstuffs, energy, aircraft, defense equipment, automobiles, and industrial goods.

The US will also retain 90 percent of the profits from Japan’s investment.

Lutnick is in Japan with President Trump, who is visiting the nation as part of a broader Asia tour.

The two countries have maintained relatively warm relations amidst America’s new tariff regime. The July 22 deal set Japan’s tariff rate at 15 percent, which was a significant decrease from the 25 percent rate announced by President Trump prior to the deal. The tariff on Japan is also low compared to some of its Asian neighbours, including Taiwan (20 percent), Thailand (19 percent), and the Philippines (19 percent).

But Lutnick also told Nikkei that levies on Japanese semiconductors would remain at 15 percent. Tariffs are typically paid by the importer, not the exporter.

Lutnick’s comments are emblematic of the US Government’s attempts to expand and modernize the country’s electrical grid in order to accommodate ballooning data center demand, with a report by S&P Global published earlier this month estimating that data centers in the US would require three times as much grid-based power by 2030 as they did last year.

These attempts include a potential reform proposal made by the Government last week to the Federal Energy Regulatory Commission, calling on it to expedite electricity connections for data centers of a certain capacity by limiting the duration of the review process to 60 days. The connection process can take up to ten years in some jurisdictions.