Trump Secured Billions in Investment from Asia. Here’s How to Make Them Count.

President Trump’s recent tour of Asia saw him lock in nearly $1 trillion in investment deals, including $350 billion from South Korea and $550 billion from Japan. Both deals include pledges to invest in shipbuilding, a core Trump administration priority, and they add to previous commitments from French shipping company CMA CGM.

Billions of new investment dollars make for good headlines, but the quality of those investments matters more than the quantity. The U.S. economy isn’t lacking for capital. It’s lacking in the manufacturing expertise needed to make America’s industries viable and competitive. Korean investment can help, but the White House must encourage strong partnerships that capitalize on Korea’s knowledge and technology.

Plans for Korea’s proposed $350 billion are still being sketched out. Consistent with a core White House priority, $150 billion will be directed toward rebuilding America’s ailing shipbuilding industry. This $150 billion likely includes the $5 billion Hanwha pledged to invest in the Hanwha Philly Shipyard, as well as planned joint investment between HD Hyundai and Cerberus, and similar investment cooperation between Vigor Marine and Samsung Heavy Industries.

The remaining $200 billion appears to be a fund South Korea will raise by using cash-flows from its foreign assets and selling debt in the offshore markets. Once cash is raised, the fund could make use of many different instruments, including loans or direct equity investment. Commerce Secretary Howard Lutnick will lead an investment committee to identify suitable projects.

$350 billion is a lot of money. But not all foreign investment dollars are created equal. Acquisitions and equity investments have a higher likelihood of adding long-term value to the U.S. economy than loans and guarantees. The reason is incentives. When investors have an ownership stake, they are incentivized to ensure success, not just collect interest. This is especially valuable when the investors have special skills that apply to their investment. Hanwha’s pledge to invest $5 billion in the Philadelphia shipyard is a good example. As one of the world’s largest shipbuilders, Hanwha can bring design, management, and production expertise to the yard. This is more than a simple injection of cash. Direct involvement promises greater efficiency, helping modernize a U.S. industry that has struggled to meet the demands of the Navy.

Economists call this “smart money.” It means using experienced, capable foreign partners to make investments more efficient. And smart money doesn’t crowd out American business, it expands the market by bringing new ideas and approaches to industries in desperate need of rehabilitation. Direct, expertise-driven investment from partners such as Korea can reverse decades of decline in shipyard infrastructure, parts supplies, and the skilled maritime labor force.

Past indications suggest that most of the Korea deal probably won’t be smart-money equity investments made by Korean companies. The remainder will likely take the form of loans and guarantees–many of them from the Korean government. Allocated poorly, loans and guarantees risk becoming “dumb money” investments that don’t generate the same positive returns for Korean backers or for the U.S. economy.

Loans present two challenges.

First, they need to be directed to the right things to have an impact. Yet loans by government entities that have no expertise in what they are investing in runs the risk of funding political priorities or pet projects rather than commercially sound ventures.

Second, loans imply less direct engagement by the investor. Lenders typically don’t have the incentive to bring their management know-how, production processes, or specialized technical skills to the factory floor. Loans provide necessary liquidity, but they are a passive contribution that fails to generate the knowledge and technology transfers that expand the U.S. economy.

The balance between smart and dumb money applies to President Trump’s other agreements as well. The $550 billion deal with Japan has similar potential to add real value to U.S. industries. The $2 billion for copper smelting and $3 billion for ammonia plants both promise to capitalize on Japan’s competitiveness in these areas, with companies such as Sumitomo Metals, which could provide invaluable process knowledge to a struggling U.S. operation. Yet this deal is also rumored to consist largely of passive loans and grants, raising the same questions as those related to Korea’s investments.

The U.S. needs foreign capital of all types. But restoring critical U.S. manufacturing isn’t just a question of how many zeroes are written on the check. It’s about promoting smart investments that translate those zeroes into sustained economic capability. The administration must prioritize investors who are willing to roll up their sleeves and bring their know-how, not just their cash.