ISTANBUL

US Treasury Secretary Scott Bessent said Wednesday that Japan secured a favorable 15% tariff rate by proposing an innovative financing mechanism involving equity credit guarantees for major US projects.

"The Japanese proposed a very innovative solution," Bessent told Bloomberg TV. "They came to us with the idea of a Japan-US partnership where they are going to provide equity credit guarantees and funding for major projects in the US."

He emphasized Japan's unique approach distinguished it from standard trade negotiations. "So, they got the 15% rate because they were willing to provide this innovative financing mechanism," he said.

US President Donald Trump announced Tuesday that Japan will invest $550 billion in the US, with America receiving 90% of profits under a "massive" trade deal.

Explaining the "innovative financing mechanism," US Commerce Secretary Howard Lutnick said Japan will finance American-chosen projects while the US will retain operational control and receive 90% of the profits.

"The Japanese are going to give America the ability to choose the projects, decide the projects, and execute the projects," Lutnick told Bloomberg TV.

He cited pharmaceuticals as an example. "The president says, let's go make antibiotics in America. The Japanese will finance the project ... and the profits will be split 90% to the taxpayers, the United States of America, and 10% to the Japanese," he said.

The arrangement involves "equity loans and loan guarantees" beyond simple guarantees, said Lutnick. Japan serves as "the financer" and "banker" but not the operator, with American companies running the facilities, he added.

EU has not yet presented innovation

The EU has not yet matched Japan's creative approach despite ongoing negotiations in Washington, according to Bessent.

Asked whether Brussels has come up with anything innovative, he replied: "Not yet. But again, talks are going better than they had been. I think that we are making good progress with the EU."

The EU faces a 30% tariff rate starting Aug. 1 unless a breakthrough emerges. Brussels has prepared €100 billion ($117 billion) in retaliatory tariffs if negotiations fail.

"I think it's a negotiating tactic, and it's what I would do if I were in their place," Bessent said, regarding EU preparations.

China discussions broaden beyond trade

When questioned about his upcoming Stockholm meetings with Chinese officials and whether those discussions would continue around rare earths and export controls, Bessent indicated broader talks ahead.

"I think we are in a very good place with China now, and we can start moving on to bigger discussions," he said. "As I have said many times, there is the potential for a big, beautiful rebalancing between the US and China."

Topics will expand beyond traditional trade issues. "There are lots of other things we can talk about, whether it's them buying sanctioned Russian or Iranian oil, you know, a number of security things," he said.

Regarding an Aug. 12 deadline, Bessent suggested extending the arrangement. "I think that we could roll it forward, maybe in a 90-day increment. And I think the good news here is that we are back on track with the Chinese negotiations."

Asked whether regular meetings could include a Trump-Xi Jinping summit this fall, Bessent said he is aware of the Chinese president's invitation but does not know if the US leader has accepted.

"I'm not privy to the president's travel schedule beyond September ... nothing before Labor Day," he said, adding that the two leaders have a "fantastic relationship on a personal level."

Trump said Tuesday that he will "probably" meet with Xi in the "not too distant future.”