Tech Diplomacy and Trump: The Softbank Way

When Softbank founder and CEO Masayoshi Son met with U.S. President-elect Donald Trump at Mar-a-Lago in December, he made clear that the Japanese government was not involved in securing his meeting. Given that a Japanese government official has yet to meet with Trump despite concerted efforts to make it happen, Son’s response was hardly surprising.

The price tag to make one of the most sought-after meetings in the world today happen is sizeable. The Japanese tech investment group is now committed to providing $100 billion over the next four years to boost artificial intelligence (AI) and related infrastructure in the United States. The investment is also expected to create around 100,000 U.S. jobs.

While precise details of what projects the Softbank money will fund are yet to be revealed, Son will undoubtedly be a key player in forging relations between Japan and the United States moving forward.

For one, Son is a self-made tech billionaire like many of Trump’s recent close advisers. Having started the Softbank telecom group the year after graduating from UC Berkeley in 1981, he has come to define a new wave of maverick Japanese entrepreneurs. His $100 billion Vision Fund, which was created in 2017 as an investment vehicle to promote emerging technologies including AI, has been seen as particularly daring. The fund invested in 88 companies, including WeWork, but the investments have not panned out as planned. Indeed, there has been considerable speculation about the heavy cost of Softbank’s tech bets, and Son’s resulting sizable personal debt.

Son’s latest gamble is his commitment to Trump, but it may well be the kind of risk-taking that entices the rest of Japan to follow suit. The government of Japan, like all other advanced economies, is wary of Trump’s trade agenda and the prospect of hefty tariffs being imposed by the United States. While Japan has not been targeted specifically for new tariffs, there is growing speculation that Japanese goods especially in the automobile sector may come under attack, as the U.S. president-elect eyes the persistent U.S. trade deficit toward Japan.

Tokyo has been eager to arrange a meeting between Prime Minister Ishiba Shigeru and Trump before his inauguration in January, but the overtures have been declined.

Still, even if a meeting were to be arranged, just how much that could influence Trump is unclear. After all, Canadian Prime Minister Justin Trudeau tried to preempt Trump’s  plans to levy 25 percent on all imports from Canada as well as Mexico unless action is taken to stop the flow of illegal drugs as well as illegal immigrants by appealing to him in person with a visit to Mar-a-Lago at short notice. Whether or not the visit has altered Trump’s plans remains to be seen, but it is unlikely that the incoming administration will alter its determination to bring the United States into a trade surplus with friends and foes alike.

Where there is scope for new relations with Washington under Trump is in crafting new deals. The SoftBank CEO’s pledge to invest in the United States has been heralded by the president-elect as a win for the country. At the same time, Son’s unconventional approach to doing business by Japanese standards may well resonate with his counterparts in the United States and give him an edge in delivering on his U.S. investment vision. Certainly, Son is more likely to be able to connect and engage with key Trump advisers including Elon Musk compared to a traditional Japanese CEO who was approved by an established board and appointed for a fixed term.

Son’s success, meanwhile, could ultimately pave the way for a breakthrough in U.S. economic relations with Japan, helping the country to become a trusted partner to develop new technologies more broadly. On the other hand, should Son’s endeavors not meet expectations, there is a risk of Japan-U.S. relations taking a hit as well.