Editor’s Note
This article highlights a significant development in U.S.-Japan economic cooperation, identifying synthetic diamond production as a frontrunner for major bilateral investment under a new tariff agreement.
According to the Nihon Keizai Shimbun (Nikkei) on the 29th, the plan for synthetic diamond production in the United States has been confirmed as a leading candidate for the first case of investment and financing under the Japan-US tariff agreement, which involves a scale of $550 billion. It was also reported that a power transmission and distribution equipment project involving Hitachi Ltd. (6501 JP) is included in the strong candidate group.
According to negotiation sources, synthetic diamond is a core material from an economic security perspective, widely used for industrial purposes such as semiconductor manufacturing. Currently, China accounts for the majority of global production. As the Chinese government added certain synthetic diamonds to its export control list in 2025, challenges have emerged for stable procurement by Japan and the United States.
The fact sheet on investment in the US released by the Japanese government in 2025 specifies, as a project under consideration by Element Six Holdings, the “construction of a facility for manufacturing diamond abrasive particles using high pressure and high temperature.” The document includes the statement ‘involvement of Japanese suppliers and off-takers is under consideration,’ and the total project scale reaches $500 million. A plan for Japanese companies to participate as product buyers is also being considered.
Hitachi Ltd.’s power transmission and distribution equipment project is also mentioned as a major candidate. The fact sheet states it involves “supply of power infrastructure including transmission equipment, substation equipment, and transformers for data centers, and strengthening of the supply chain.”
The Japanese government negotiated demanding the removal of new tariffs imposed by the Trump administration and agreed to tariff reductions in July 2025. In return, Japan promised $550 billion in investment and financing to the United States. Economy, Trade and Industry Minister Ryomasa Akazawa stated the policy is to aim for an announcement regarding the first US investment/financing case by this spring. Nikkei reported that there is also a possibility that multiple projects could be simultaneously selected as the first case.