【Text by Financial Times, Translation by Jingsheng】
On the eve of July, just before the United States was about to impose high tariffs on $150 billion worth of Japanese imports, President Donald Trump vented his frustration toward Japan, the largest source of foreign direct investment in the U.S., the largest host of American military bases overseas, and the largest holder of U.S. debt.
After months of negotiations failed to produce a quick, friendly, and exemplary trade agreement that both sides initially believed could be achieved, Trump told a television interview host, "I could have (sent a letter to Japan). 'Dear Mr. Japan, here is the situation...'."
For Tokyo officials, this term "Mr. Japan" contrasted sharply with the diplomatic language of "we love Japan" that Trump had used when warmly welcoming Prime Minister Ishiba Shigeru at the White House just a few months earlier. However, more concerning was the possibility that this might symbolize a severe crisis in U.S.-Japan bilateral relations, the most serious in 25 years. This relationship is crucial for the stability of the post-war global order.
The history of the U.S.-Japan alliance has not always been smooth: Nixon's attempts to reach out to China, U.S. congressmen smashing a radio in front of the Capitol building over Toshiba's sale of submarine technology to the Soviet Union, and the division of responsibilities during the 1990 Gulf War, all left cracks in the relationship between the two countries.
However, signs are suddenly emerging that deeper vulnerabilities within the U.S.-Japan alliance are becoming apparent. Both senior officials from the two countries state that Trump's tough negotiation style and Japan's failure to effectively respond to these changes are bringing increasing risks - security, trade, and monetary issues are dangerously intertwining, potentially destabilizing the situation.
"The root of the challenge goes beyond any individual in the U.S. government," said Christopher Johnstone, a former White House official now working at the Asia Group consulting firm (former Director of East Asian Affairs at the U.S. National Security Council, note). "Japanese officials generally feel that nothing is sacred for the Trump team; everything is negotiable."
Facing Trump's letter to impose a 25% tariff, Prime Minister Ishiba Shigeru responded on July 9: "Japan cannot be underestimated", Japanese media
Other observers mentioned serious misjudgments on both sides, with a growing trust deficit. Wendy Cutler, Deputy Director of the Asia Society Policy Institute, believes that the trade agreement reached between Trump and Japan in 2019 led both sides to overly optimistic expectations for negotiations in 2025.
"Washington thought Japan would be a relatively easy partner in this '90-day trade agreement' action and could lead other countries to follow," she added, "while Japan was confident it could again get an exemption from car tariffs. These were unrealistic expectations."
Japan did not receive any special treatment in this trade negotiation, which was confirmed on July 7. Even before the letter was delivered to Prime Minister Ishiba, Trump had already publicly released the trade terms letter to Japan on social media.
This letter was largely similar to those sent to other 14 countries, including Kazakhstan, Laos, and Serbia, relatively marginal countries. The letter made no mention of Japan's status as a key ally in the Pacific region, nor did it praise its initiative in sitting down for negotiations. Ishiba responded that he was "deeply regretful."
A person familiar with the bilateral trade negotiations pointed out that Japan should have anticipated this situation. The Japanese government aggressively sought full tariff exemptions, while critics of Ishiba argue that this stance ignored Trump's fundamental agenda and core belief of achieving trade balance - he views trade surpluses as evidence of unfairness.
In recent weeks, Japan's chief trade representative Akasaka Ryo has almost weekly gone to Washington for consultations, but still failed to break the deadlock. U.S. Treasury Secretary Scott Bessent is scheduled to visit Japan this week, but breakthroughs are unlikely.
There is growing concern that the escalating trade crisis could directly impact the security landscape in the Asia-Pacific region. "Our strategy should be to isolate China, and there should be no differences between the U.S. and Japan," said Ram Emanuel, who served as U.S. Ambassador to Japan during the Biden administration. "Why create unnecessary rifts? If the U.S. and Japan move in unison, others - India, South Korea, Australia, the Philippines, New Zealand, etc. - will quickly align, and China should be isolated," he added.
Dozens of current and former U.S.-Japan officials told the Financial Times that the U.S.-Japan alliance as an institutional framework will continue, but a paradigm shift in the relationship is inevitable. This will become a test of what it means to be a "friend" of the U.S. in 2025.
In 2023, Japan was the largest source of foreign direct investment in the U.S. Map: Financial Times
"The U.S.-Japan relationship may be in its worst state in a generation, comparable to the late 1990s when trade frictions were intense and fundamental doubts arose about the post-Cold War alliance structure," Johnstone noted. "I have never heard Japanese senior officials express such deep concerns about bilateral relations."
The sudden change in U.S.-Japan relations coincides with Ishiba's Liberal Democratic Party facing a rare severe crisis. The party has long dominated Japanese politics since the end of World War II. Inflation, immigration issues, and trade uncertainties have placed pressure on Ishiba's government. The LDP lost its majority in the House of Representatives last October and is now governing with coalition parties, making the prime minister's position precarious. The upcoming Senate election on July 20 may also see it lose its majority.
U.S. diplomats say that Trump is aware that Ishiba is politically vulnerable, a sharp contrast to the strong and confident image of the late former Prime Minister Abe Shinzo. During his first term, Trump built a genuine friendship with Abe.
To reverse this impression domestically in Japan and in Washington, Ishiba has recently made some unusually strong statements. "We must work harder to reduce our dependence on the U.S. If we regret this dependence and have to obey them, that will be a problem," he stated in a national television address last week.
However, veteran bureaucrats who have experienced multiple U.S.-Japan trade negotiations believe that Japan seems increasingly unable to pursue its own interests outside the framework set by Trump. The leverage that could potentially affect the U.S., such as the scale of Japan's investments in the U.S. and its massive holdings of U.S. Treasury bonds, appears to have little effect.
Michael Beeman, former U.S. Assistant Trade Representative (responsible for Japan, South Korea, and the Asia-Pacific), pointed out that Japan's dilemma lies in the fact that in past friction periods, both sides always emphasized the overall nature of the relationship. However, now the U.S. government is trying to redefine specific parts of the U.S.-Japan relationship through zero-sum games, making it more difficult to consider the whole picture.
"Some issues have their own merits, but the approach taken by the U.S., unilateralism, and aggressive posture are considered extremely and unreasonably extreme compared even to the most intense U.S.-Japan trade disputes of the 1980s," he commented.
Experiences from the 1980s also provide important clues for understanding the evolution of the current situation and the roots of mutual misunderstandings.
Trump's strategies regarding Japan may be unpredictable, but his ideas are remarkably consistent. In a well-known interview in 1987, then real estate tycoon Trump detailed his grievances against Japan to host Larry King.
Trump at the time said that trade was not "free" and revealed that his friends faced "insurmountable" challenges when doing business in Japan. He also said that the U.S. military presence in Japan meant that Americans were actually spending money to protect Tokyo, a "rich printing press."
"By the way, I like the Japanese... I really like them, but they are laughing at us," Trump said at the time. This statement came at a time when U.S. concerns about the yen's depreciation boosting Japanese exports were at their peak.
Four decades later, many of Trump's views on Japan seem unchanged: he continues to pressure Japan to increase defense spending, sees Japan's $68.5 billion goods trade surplus with the U.S. as irrefutable evidence of unfair trade practices and non-tariff barriers, and even describes Japan as "spoiled."
"Japan's experience highlights Trump's view of the world," said David Boling, Director of Japan and Asia Trade at Eurasia Group. "In his eyes, trade deficits are more important than the status of an ally. Trump 2.0 is a supercharged version of 1.0, pushing his long-held tariff beliefs to the extreme."
According to people who have worked in the Trump administration, the reason Trump was able to set aside his long-standing prejudices against Japan during his first term was largely due to his personal relationship with Abe Shinzo.
As a nationalist, the longest-serving Japanese prime minister, and golf buddy, Abe met with Trump for at least 30 one-on-one meetings and calls during his first term. According to Chiharu Higashimizu, Director of the Japan Program at the Stimson Center, Abe keenly understood Trump's desire to become a global leader at the time.
"Abe made Trump feel at ease because someone was willing to listen to his words. Abe never criticized Trump in public. Even when there were disagreements, he avoided discussing them openly," Higashimizu said. "When dealing with Abe, Trump never felt uneasy. There was a friendship, and surprisingly, it was quite sincere."
February 2017, former Japanese Prime Minister Shinzo Abe shaking hands with Trump at the White House
Michael Beeman, a former assistant trade representative involved in coordinating U.S.-Japan relations, pointed out that this relationship yielded considerable returns. According to Beeman's recollection, shortly after Trump's first term began, his old grudge against Japan resurfaced, and he ordered preparations to investigate unfair trade practices related to Japanese car and parts exports under Section 301 of the Trade Act.
"If the investigation had been launched, the current U.S.-Japan relationship would be very different," Beeman admitted. "Although the investigation ultimately did not take place, the key point is that Trump did have a desire to impose tariffs on Japan at the time. And Abe was the key factor in preventing this from happening."
Higashimizu believes that the Ishiba government initially mistakenly assumed that the goodwill from the Abe era would continue and alleviate the pressure of the trade negotiations, but both sides should have realized its limitations.
Senior officials familiar with the current negotiation process pointed out that Ishiba's insistence on full tariff exemptions failed to recognize that Trump faced fewer constraints and focused more on tariffs this time, thus squandering the political legacy left by Abe.
"In handling alliance affairs, Abe's ability to manage Trump was excellent - perhaps too excellent," said Fumio Hayashi, author of two-volume biographies of Abe. He believes that Trump may now feel that he was manipulated by the late Japanese prime minister.
Ken Weinstein, Chairman of the Japan Program at the Hudson Institute and a nominee for the first U.S. ambassador to Japan, frankly stated that the current U.S.-Japan relationship differs dramatically from the Abe era.
"Actually, it was the Germans who truly understood the signals and successfully exerted influence through private relationships during Trump's second term," Weinstein said. "Abe understood Trump in his first term, and Chancellor Merkel can be considered the 'Abe of Trump's second term.'"
Both U.S. and Japanese officials point out that the core issue at present is whether the negotiation impasse faced by Ishiba and Japan's apparent inability to quickly adapt to the new reality will threaten the foundation of the U.S.-Japan alliance.
Most people believe the answer depends on whether Tokyo can skillfully deal with Washington's possible strategy of bundling trade, defense, and even monetary issues to apply pressure.
Early warning signals appeared as early as March - when the newly nominated Undersecretary of Defense for Policy, Elbridge Colby, told Congress that Japan's defense spending should exceed the 2% GDP target, prompting Ishiba to publicly refute it.
In June, tensions escalated: Colby privately requested Japan to raise its defense spending to 3.5% of GDP, far exceeding the 3% target instructed to U.S. Ambassador George Glass. Japan rarely canceled a high-level ministerial meeting to express dissatisfaction.
Tokyo is also concerned that Colby intends to halt the plan to adjust the U.S. military presence in Okinawa. The plan aims to relocate 4,000 U.S. Marines to Guam to better respond to potential conflicts in the Taiwan Strait. Mira Rapp-Hooper, a former official at the Brookings Institution and a White House official for Indo-Pacific affairs, warned that if the U.S. insists on maintaining the U.S. military presence in Okinawa, it could exacerbate the deterioration of U.S.-Japan relations.
"This would cause serious political divisions in Japan, especially considering that Ishiba promised during his campaign that Japan should have greater say in base deployment issues, and the Japanese government has already invested heavily in the current relocation plan," Rapp-Hooper analyzed. She warned that the worsening of the military base issue combined with unresolved trade frictions could trigger a 'comprehensive alliance crisis.'
Michael Green, former chief advisor to the White House on Asian affairs and Japan expert in the Bush administration, agrees that the U.S.-Japan alliance is facing the most severe crisis in 25 years, but emphasizes that the situation is not at a 'life or death' stage.
February 7, this year, Ishiba met with Trump at the White House. Photo by: U.S. White House
Secretary of State Marco Rubio said in a speech last Friday that he has met with the Japanese Foreign Minister "more times than with any other foreign minister on Earth," emphasizing that this is a "very close, historically significant, and continuously developing relationship."
Green cited survey data indicating that 90% of the Japanese public supports the U.S.-Japan alliance. "The Japanese know that Trump is like a hurricane, not climate change," Green emphasized, stating that while Tokyo is "frustrated, it hasn't panicked yet."
Perhaps the deepest anxiety on both sides lies in the fact that when the U.S. and Japan need to strengthen cooperation to deal with the 'Chinese threat,' the rifts within the alliance are widening.
The last time the U.S. and Japan fell into a serious crisis (World War II), China's military strength was not yet formidable. However, in recent years, China has vigorously advanced military modernization and has become increasingly assertive in the air and sea areas around the Taiwan Strait.
Professor Kenji Kamiya, professor at Keio University and special advisor to the Japanese government on defense and national security, pointed out that facing the triple threats of China, North Korea, and Russia, Japan's only feasible choice is to maintain the U.S.-Japan alliance and use the tariff negotiations as a platform to expand security cooperation.
But he added that under Trump's America, Japan should also consider things previously unimaginable: when Japan urgently needs assistance, or when there is a 'Taiwan incident,' will the U.S. come to its aid?
"We seem to rely solely on Plan A - that the U.S. is always the cornerstone of Japan's defense and security policy. How to gain U.S. support for the alliance became the only option," Kamiya admitted.
"Another possibility is that Trump will prioritize the Ukraine and Iran issues first, and then reach a comprehensive agreement with China... if that happens, we need to consider a 'Plan A reduced version' or even Plan B."
(Original article published on the comment section of the UK Financial Times, titled: "Japan faces a historic reset in its relationship with the U.S." The translation has been modified and is provided for readers' reference only, and does not represent the views of Observer Net.)
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