Saudi Arabia Pledges to Invest $600 Billion in the US; Trump Says Make it $1 Trillion

Saudi Crown Prince Mohammed bin Salman told US President Donald Trump in a phone call Thursday that the Gulf nation will invest $600 billion in the United States over the next four years, Saudi state media reported.

Trump immediately went into rough-and-tumble Manhattan real estate negotiator mode and put pressure on the kingdom to up its offer. “I’ll be asking the crown prince, who’s a fantastic guy, to round it out to around $1 trillion,” he let the world know during a remote address to the World Economic Forum. 

That’s going to be a tall order even for bin Salman, whose kingdom faces a set of steep economic hurdles that aren’t getting any lower.

Breaking Their Budget

Saudi Arabia was one of Trump’s closest allies during his first term in office — earlier this week, he claimed that the country agreed to buy $450 billion worth of American goods after he paid a state visit in 2017.

His circle remained close with the kingdom while he was out of office, too: Affinity Partners, the investment firm led by Trump’s son-in-law Jared Kushner, received $2 billion in backing from the Public Investment Fund, the sovereign wealth vehicle controlled by bin Salman, in 2022. Liberty Strategic Capital, the private equity shop of Trump’s former Treasury Secretary Steven Mnuchin, got $1 billion.

But Saudi Arabia — which was a splashy investor in global technology and entertainment through the PFI for much of the past decade — has committed to shrink its foreign investments to focus on a group of much-ballyhooed megaprojects at home — like the (increasingly scaled back) $1.5 trillion futuristic planned city Neom. That means both bin Salman’s pledge and Trump’s request to increase it raise a simple question: how?

• Saudi’s gross domestic product in 2023 was $1 trillion, according to World Bank data, meaning the $600 billion pledge is worth more than half the country’s GDP. Saudi Arabia is facing a $27 billion budget shortfall this year because of softening energy prices — oil accounts for 40% of Saudi GDP — and the mountains of cash it’s spending on megaprojects, which include multiple tourist resorts. 
• Saudi Arabia is also set to host the 2029 Asian Winter Games, Expo 2030, and the 2034 World Cup, which will demand massive and time-sensitive infrastructure spending.

Words Move Markets: About those oil prices that the kingdom depends on for a massive chunk of revenues: Trump said he plans to ask Saudi Arabia and other OPEC nations to “bring down the cost of oil” (presumably by boosting production) and threatened to use tariffs to earn cooperation. The price of crude fell by 1% after his comments. Better find that $600 billion — er, $1 trillion — quick.