Trump’s $18 Trillion Fantasy

To be sure, Trump’s many threats and tariff reductions will doubtless induce some amount of new investment in the United States. The real question, however, is just how much—especially on net and as compared to recent history. At this stage, the short answer to that question is “nobody knows, and we won’t know for years.” In the meantime, however, it’s already clear that we’re getting nowhere near the number Trump keeps using. Put another way, Trump’s right that $18 trillion in new investment is “unfathomable,” but that’s because it’s completely—and impossibly—untrue.

Breaking Down That ‘18 Trillion’

Before we get to that, let’s quickly put that $18 trillion in historical context. According to the U.S. Bureau of Economic Analysis, the United States saw around $4 trillion in total private nonresidential investment and $150 billion in new foreign direct investment (FDI) in 2024. Trump doesn’t tell us where he got that $1 trillion Biden-era number, but it appears to be new FDI, which peaked under Biden in 2021 at about $350 billion and declined thereafter:

A broader measure of FDI, from the Federal Reserve, hit almost $320 billion at the end of 2024 and totaled more than $1.2 trillion over Biden’s four-year term. So, $18 trillion in new FDI would indeed be amazing. Even if we consider total domestic investment and spread it out over Trump’s entire second term, however, that amount of additional business spending would be an earth-shattering event, equating to double-digit gains in GDP growth each year.

Unfortunately for the president, the number is mostly fake.

My Cato Institute colleague Alan Reynolds works his way through the figures and finds several basic errors. First, he looks at the Fed’s 2025 foreign investment data and finds no evidence of a significant uptick. In fact, FDI “grew 23% more rapidly during the Biden years, 2021–24, than it did in the first three quarters of 2025.”

Broader domestic investment figures were similarly unspectacular last year, particularly in the manufacturing sector that Trump is targeting: “growth of US fixed investment in plant and equipment was relatively weak last year. … Real investment has been rapidly falling in manufacturing structures (factories)—the opposite of the President’s familiar justification for high and erratic tariffs on imported manufactured goods (to ‘rebuild American manufacturing’).”

The obvious rebuttal to these figures is that Trump’s investment figures are prospective—meaning they represent investments to come, not spending that has already happened. And that’s a fine point, given the announcements’ timing. Yet here, too, there are plenty of problems. For starters, the only actual evidence the White House has offered of a tariff-fueled “Trump Effect” on domestic investment is a list of 132 “private and foreign investment” announcements it claims was “made possible by President Trump’s leadership.” But even that totals just $9.6 trillion—a little more than half of what Trump keeps claiming.

This hefty sum, moreover, is also wildly exaggerated. A Bloomberg analysis of the White House’s “investment” list shows that about $2.6 trillion isn’t investment at all. Instead, it’s routine U.S. business expenses (e.g., worker training) or vague commitments to purchase U.S. goods. Some of those commitments, moreover, relate to military equipment that foreign governments (e.g., Saudi Arabia) already wanted to buy. Others, such as India’s promises to stop buying Russian oil and start buying U.S. liquid natural gas, might never happen for practical and geopolitical reasons. Others still—as is the case of the EU’s purchase promises—simply can’t happen because government officials in these places don’t have the authority to control private firms’ purchasing decisions.

The remaining $7 trillion on the White House list is split evenly between U.S. firms and overseas governments and companies, but there are big red flags here, too. “Most of the biggest investment plans,” Reynolds explains, came from large multinational corporations—Apple, Meta, Nvidia, Microsoft, Google, Micron, IBM, Eli Lilly, Pfizer, Merck, Johnson &Johnson, and AbbVie—that were already investing heavily in the United States and had already planned even more spending in the future, long before any tariff-induced “Trump Effect.”

As we discussed last year, companies routinely repackage already-committed spending to curry favor with a new president, and various reports indicate that many of the “Trump Effect” investments fit that bill. Here in North Carolina, for example, several major pharmaceutical investments have been planned for years now, thanks in large part to the GLP‑1 drug frenzy. Bloomberg’s analysis also finds that about 83 percent of the corporate investment pledges ($2.9 trillion of the total $3.5 trillion) listed by the White House are related to artificial intelligence and the huge data-center buildout. That spending is most definitely real and consequential, but it just as definitely wasn’t caused by Trump’s tariff threats. In fact, as economist Joey Politano keeps reminding us, the U.S. AI boom has been fueled in large part by imported goods and, ironically, longstanding tariff exemptions:

Thus, Bloomberg’s Shawn Donnan opines, the U.S. is “experiencing a potentially epochal and so far largely tariff-free technological revolution in artificial intelligence. … Perhaps the lesson is that innovation works best when it’s tariff-free.” Perhaps!

Meanwhile, many of the corporate investment promises plausibly driven by Trump’s protectionism will simply never happen. The New York Times reports, for example, that French shipping giant CMA CGM promised $20 billion to revitalize the moribund U.S. maritime sector, but “only a fraction of its promised funds have made it to America” and the firm has shown “little sign” that it will actually fulfill its pledge. In a darkly comic turn, the Times reports that U.S. protectionism has been a big impediment to CMA CGM meeting its obligation: Last year the company looked into ordering American-made container ships and putting 20 additional vessels under the American maritime flag, but high costs—owed in large part to the good ol’ Jones Act and current tariffs on production inputs like steel—made such moves impossible. Thus, “since March, CMA CGM has put just one additional ship in its American-flagged fleet.”

Promises are easy; fulfilling them in a financially sound manner is more difficult.

This leaves about $3.5 trillion in foreign pledges to invest in the United States, only $128 billion of which was—at the time of Bloomberg’s analysis—committed to specific projects:

The rest was split between “not yet specified” ($2.5 trillion) and vague promises of future “investment funds” ($900 billion), and here too there are reasons to think that much of it will never be deployed. Perhaps the biggest barrier is simply math. According to a January Peterson Institute for International Economics analysis, for example, approximately 80 percent of the total amount of foreign investment pledges came from just three Gulf countries—the United Arab Emirates, Saudi Arabia, and Qatar—that, based on the size of their economies and available investment funds, almost certainly can’t afford to spend what they’ve promised:

Other hurdles will slow or even stop investments from the countries that could theoretically afford what they’ve promised Trump. As Reynolds notes, for example, not only can’t EU officials compel private firms to make the U.S. investments its negotiators promised Trump, but they also can’t “promise to tax or borrow money from their own taxpayers to invest in US private companies.” South Korea, meanwhile, has promised $350 billion in investment, but the new Korean investment fund must first get approved by the country’s parliament. “Even if the special bill is passed,” a Korean official further explained, “it will take an additional three months for implementation after preparations such as the enactment of subordinate laws.” Korean officials have also been adamant that any actual disbursement of funds wouldn’t occur for another several months and only if it would not destabilize Korea’s currency and economy—a tall task given that the risk has already materialized.

In most cases, the Financial Times’ Alan Beattie explains, foreign governments are moving slowly and have left things intentionally vague because “they’re planning to renege on as much as they can, or at least decide at a later date how much of the letter or spirit of the agreements with the US they will maintain.” This is a move trade expert Sam Lowe has dubbed “strategic under-implementation,” i.e., the governments “agree to just enough to secure tariff relief, and quietly defer the bits that hurt.” This strategy is a rational and expected response to dealmaking done at gunpoint by a guy who cares more about a press release than hard economic data. And it’s particularly rational when, per Peterson’s analysis, all these investment deals “lack clear enforcement mechanisms.” In other words, the only thing ensuring that coerced foreign investments happen is Trump’s threat of higher tariffs—a threat that will expire in mid-2028 at the latest.

Of all the government deals and pledges, it seems only Japan is really on the hook because of the specificity of its deal’s terms and the nation’s geopolitical relationship with the United States. It’s thus no surprise that Trump just announced a few initial projects funded by “Japan.” Even those investments, however, come with big asterisks: The $36 billion total is less than 7 percent of Japan’s $550 billion pledge; “[i]t’s not yet clear how much money will be committed in the form of direct investment” versus loans or other vehicles; the transactions aren’t yet finalized; and the Japanese might slow down or back out if the Supreme Court nixes Trump’s emergency tariffs in the coming days—a decision every government is eagerly awaiting.

As Compared to What?

Surely, not all the investments that companies and governments have promised are stale or fake, but the above analysis shows that many of them are. As the Peterson report rightly notes, a “full-fledged assessment” of these investment deals requires data on the transactions and their effects (good and bad) that we don’t yet have and—given the timeline—probably won’t have for years.

A comprehensive review would also need to consider the resources (capital, labor, materials, etc.) any forced investments take away from other possible projects, as well as what might have happened to investment in the U.S. without all of Trump’s tariffs and threats. As economist John Cochran recently noted in this regard, some of the administration’s efforts to remove “regulatory and legal barriers to making the investment or making a profit on it in the US” are worthwhile and may have encouraged new spending in key sectors without “bludgeon[ing] other countries with tariffs to get the investment.” He also cautions that “government-directed investment from other governments is not usually known for its focus on efficiency,” raising the risk that some of these investments become yet another U.S. industrial policy boondoggle. Influential writer and energy entrepreneur Austin Vernon seemingly concurs in his recent deep dive on the future of U.S. manufacturing, warning that tariffs (and industrial policy) will encourage the wrong type of manufacturing, reduce total output, and also divert finite policy attention away from things like regulatory reform that actually can move the investment needle in the direction we want.

Finally, a comprehensive review of the “Trump Effect” also will need to consider how Trump’s tariffs and threats may have discouraged other investments—or prodded full-on divestment—due to the higher costs and uncertainty that accompany them. As I just wrote for Bloomberg, there are increasing signs—in global trade flows, foreign investment data, and new trade agreements—that companies and governments are slowly diversifying away from the increasingly unreliable United States. “German firms,” to take one example, “have resumed investments in China and paused expansions at US affiliates, due at least in part to Trump’s trade policies.” And right after that column was published, we learned that the EU has opened formal talks to join the 12-nation Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)—one of many non‑U.S. trade deals that governments are trying to conclude in order to offset American protectionism and bul​ly​ing​.As we’ve discussed, the United States has long been the world leader in attracting foreign investment, including in manufacturing and especially from Europe, Japan, South Korea, the U.K., and other nations that have recently promised new investments at tariff gunpoint. We weren’t getting trillions each year, but it was hundreds of billions—and, because the transactions were guided by factors other than brute force geopolitics (and domestic political grandstanding), the U.S. economy was better for it. Whether the historical trend continues in the years ahead will be an important way to judge the ultimate success of the “Trump Effect,” regardless of the ridiculous numbers behind it.

Chart(s) of the Week

U.S. EV writedowns top $50 billion:

Physician, heal thyself:

More tariff paperwork costs: