Human Security Centre Human Rights and International Security Research
23 May, 2025
By Luke Austin – Junior Fellow
The re-election of Donald Trump has caused shockwaves within traditional US allies. Much attention has been directed towards the contemporary European security architecture, especially following the unprecedentedly chaotic meeting between Trump and president of Ukraine Volodomyr Zelenskyy in February. This meeting and its aftermath have pointed towards a strengthening of European support for Ukraine amidst what appears to be a withdrawal of US support.
More recently, on the widely dubbed “Liberation Day” on 2 April, Trump announced wide-reaching and widely varying tariffs to be levied against various states. These initially ranged from a baseline of 10% for the UK and numerous other states to 49% for Cambodia. Initially faced with a tariff of 24% and a 25% tariff on imported vehicles, a number of immediate negative economic shifts were recorded: Japan’s Nikkei 225 stock market index plummeted by 0.7%, with Honda, Subaru and Toyota all losing anywhere between 2% and 3.5% of their respective stock index. The longer-term economic effects of the combined tariffs were also outlined as constituting a drop in Japan’s GDP of approximately 0.8% which would in turn combine with Japan’s low annual GDP growth rate of 0.5% to potentially cause an economic recession. Japan was among the first states to attempt negotiating these new tariffs with Trump, with Ishiba having urged Trump to reconsider his “Liberation Day” decision.
As reflected in Japanese publications such as the Yomiuri Shimbun, Trump’s April 9 decision to suspend the extended tariffs and maintain the base tariff of 10% was met with much relief in Japan. This relief was further reflected in the rapid rise of Japanese and multiple other Asian stock markets. Japanese Finance Minister Katsunobu Katō has ruled out using Japan’s extensive US Treasury holdings as leverage to achieve concessions from the US, making it clear that this substantial portion of Japan’s foreign reserves are not in any way intended for foreign policy, but exclusively monetary policy purposes.
Instead of retaliating like the People’s Republic of China (PRC), which was subjected to tariffs as early as February alongside Mexico and Canada due to Trump holding them responsible for national emergencies in the US involving fentanyl and illegal immigration, Japan avoided retaliation and paved the way for negotiation. In contrast, the US and the PRC are currently engaged in a trade war. Having already introduced tariffs against Chinese goods of 34% on ‘Liberation Day’ in addition to a pre-existing 20% tariff, the PRC responded in kind with reciprocal tariffs on American exports to China of 34% before applying an additional 50%. Eventually, these retaliatory tariffs reached 125% by 11 April in exchange for US tariffs against the PRC reaching 145%.
This is not the first time Japan and the US have encountered issues in their bilateral trade. Many still remember their trade frictions in between the 1970s and 1990s: the US trade deficit with Japan and the ensuing trade friction had huge implications for the US, particularly for the US automotive industry in large northern cities such as Detroit. Over the next four decades Detroit witnessed surging crime, drug use, a stagnation of economic activity and a rapid decline in population. On a related note, the opioid crisis in the US has devastated urban areas and rural communities across the country. With the trade deficit reaching a high in 1986, the semiconductor industry was also affected due to Japan’s dominant position, with US semiconductor industries being forced to outsource manufacturing to South Korea and Taiwan whilst focusing more on research and development (R&D) avenues. The trade friction with Japan also combined with US foreign policy misadventures and wider economic decline juxtaposed against the economic blossoming in the 1950s and 1960s to form what the late former US president Jimmy Carter termed a ’crisis of confidence’ and heightened anti-Japanese sentiment.
The prospects for Ishiba’s prime ministership are also subject to considerable doubt. His already-low public approval ratings have dropped further following a scandal in March involving the distribution of gift vouchers to lawmakers belonging to Ishiba’s Liberal Democratic Party (LDP). His approval ratings and public persona have also been tainted by a series of gaffes, including at the November APEC summit where he is deemed to have acted inappropriately by not standing when shaking hands with other delegation members, paying more attention to his smartphone than the event proceedings and refraining from engaging with other participants. To make matters worse for Ishiba, Constitutional Democratic Party (CDP) leader and former Prime Minister Yoshihiko Noda advocated for a motion of no confidence against Ishiba over the gift voucher scandal, also encouraging him to testify before the Ethics Committee.
An election for the Japanese Diet’s House of Councillors is due to be held by July. Even if the LDP remains in power, then its leadership will likely change due to Ishiba’s current unpopularity. If Ishiba is replaced by a ‘doveish’ candidate, then we could perhaps witness some tensions with the second Trump administration in the case of disagreements over national defence expenditure which has complicated Trump’s relationship with Japan. In contrast, should a ‘hawkish’ candidate succeed Ishiba, then there may be an avoidance of these security-related disputes but potentially heightened tensions over economic relations, including trade imbalances and Japan’s massive national debt. Three scenarios have been outlined for the Japanese government to come following the July election. First, Ishiba manages to maintain his prime ministership by somehow forming a coalition with the CDP and other opposition parties. Second, Noda forms a new government with the CDP at its centre. Third, and somewhat less probable, the Democratic Party for the People (DPP) forms a new government with Yūichirō Tamaki as leader. More recent developments point to a possible fourth scenario involving the possible election of Sanae Takaichi, who enjoys the overwhelming backing of the Japanese corporate world due to their dissatisfaction with Ishiba’s handling of the economy. Takaichi holds a reputation as an ultraconservative candidate, and so her election would notably rattle cages amongst Japan’s neighbours with whom its own historical relations have proven highly controversial.
Despite the trade frictions of the last century’s latter half, US-Japan relations developed considerably after the end of the Cold War as reconciliation was not only facilitated by eventual positive economic changes in both countries, but also complemented by ever-closer security ties. Ishiba’s response to the chaotic Trump-Zelenskyy meeting in February was considered to be much more muted and ambiguous compared to those voiced by representatives of other allies of the US and Ukraine. This could on the one hand be interpreted as an effort to avoid alienating the US, Ukraine or the EU. On the other hand, Japan’s assistance to Ukraine has largely comprised non-lethal forms such as protective equipment and support for recovery and reconstruction in addition to considerable flows of humanitarian aid. This was facilitated by the reallocation of frozen Russian assets in Japan, which had in turn levied sanctions against Russia since the latter’s annexation of Crimea in 2014.
This continued support for Ukraine and recent success in renegotiating some of Trump’s tariffs further indicate a willingness to find compromise between the US and the EU. Japan has occupied an increasingly important place within the East Asian security order since the end of the Cold War, and its redevelopment of substantial military capabilities remains a testament to this shift. Even if the US were to withdraw from this regional security order as it appears to be willing to do so from Europe under the second Trump administration, there is still increasing interest from the EU and its regional allies such as the UK in securing a Free and Open Indo-Pacific. While the EU, the UK and other regional allies are preoccupied with ending the Russo-Ukrainian war in Ukraine’s favour, it is still necessary for them to maintain and bolster a presence in the Indo-Pacific region due to its vital significance for global security and fill whatever vacuum would be left in the region by a US withdrawal. The signing of two EU Security and Defence Partnerships with Japan and South Korea in November 2024 strongly implies this to be the case.
An account affiliated with Chinese state media on the social media platform Weibo at the end of March asserted that trilateral agreements between Japan, South Korea and the PRC had been made to jointly counter upcoming US tariffs. However, this should by no means be interpreted as an effort to pursue an alternative political order geared towards a new security framework. Japan and South Korea are still very much geopolitically aligned with the US and the EU through longstanding, permanent agreements that would require years to dismantle even before the arduous task of organising new security alliances. In response to the Weibo statement, South Korea has already described it as an exaggeration.
While the PRC has distanced itself from Russia in recent years and has had longer-standing disagreements over leadership of regional organisations such as the Shanghai Cooperation Organisation (SCO), the PRC is along with North Korea and Iran very much aligned more towards Russia geopolitically and economically. Whilst Japan has lent considerable support to Ukraine, the PRC has provided Russia with vital assistance in evading sanctions imposed by much of the international community and providing an alternative market for Russian goods and services following the loss of the European market.
In the case of future geopolitical conflict between the US and PRC in the region, Japan and South Korea would find themselves firmly on the latter’s side. While there was a slump in PRC-North Korean bilateral relations in 2017, they underwent a period of recovery and so the PRC could potentially attract North Korean support through the 1961 Treaty of Friendship, Cooperation and Mutual Assistance. One only must observe the example of Germany: its previous relationship with Russia before the February 2022 invasion of Ukraine was characterised by an extensive energy trade and mutual permeation of formal and informal political networks extending back to the start of Willy Brandt’s chancellorship in 1969. Over the next fifty years this relationship would be further characterised by not only increased bilateral trade and cultural exchange, but also Germany becoming relatively accepting of Russian military aggression in what it perceives to be its own sphere of influence tied to the pursuit of great power status, as demonstrated in Ukraine and Georgia. From the German perspective, this was justified from the eventually disproved notion of Einbindung (“binding”) that greater economic interdependence would lead to political transformation in Russia. However, despite all these efforts, Germany found itself supporting Ukraine militarily as well as in humanitarian terms due to a post-invasion re-evaluation of actual security threats as opposed to perceived security threats – perhaps the clearest declaration of this shift is former chancellor Olaf Scholz’s Zeitenwende speech delivered days after the invasion. This serves as merely one example, albeit a drastic one of how economic interdependence does not necessarily change security obligations and geopolitical alignments.
The same could be said for Japan and South Korea: the economic importance of China for each of them would not necessarily lead to either state entering a military alliance with China at the expense of their pre-existing arrangements with partners such as the US, the EU, Australia and others. This is not only connected to their competing geopolitical ambitions and being located on opposite security fault lines as realists would argue from rigid assumptions about rationality and state behaviour, but also their historical animosity rooted in more complex processes pertaining to contestation of national identity, historical trauma and collective memory largely emanating from Japan’s conduct against its neighbours during the Second World War and preceding period of imperial expansionism during the Meiji era. These normative factors are afforded more importance by constructivists in particular. The dispute surrounding tariffs appears close to being resolved from the US perspective, while from the Japanese perspective it appears that much remains to be done. Japan’s senior tariff negotiator Ryōsei Akazawa has commented pessimistically over the prospects of negotiations with the US, excluding the possibility of a swift resolution and possibly implying lingering Japanese dissatisfaction with whatever progress has been made. This stark contrast with Trump’s claims of ‘Big Progress!’ made on social media further betrays a difference in perceptions which could further complicate the negotiations.
A more realistic approach navigates between pessimism and optimism: the tariff negotiations could provide an opportunity to reconfigure the US-Japan Security Alliance, upgrading economic cooperation alongside mapping out new opportunities for security cooperation amidst a regional security architecture increasingly contested by growing competition from the PRC. It has been suggested that Japan should follow a series of steps to mitigate the implications of this new trade friction: set realistic expectations which factor in Trump’s ‘Make America Great Again’ approach as well as to make use of and expand pre-existing multilateral formats such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Regional Comprehensive Economic Partnership (RCEP). For the time being, the Japanese government has announced a package of emergency measures including increased corporate financing and household subsidies to soften the economic impact of Trump’s tariffs. Ishiba has already embarked upon a tour to Southeast Asia to negotiate with regional partners such as Vietnam and the Philippines. If negotiations terminate positively, then this approach is feasible. If not, then whilst Japan will not necessarily align itself geopolitically with the PRC, there is the risk that their economic interdependence will increase to the point that Japan becomes dangerously vulnerable to geopolitical shocks, as was the case with Germany and Russia in the leadup to the latter’s invasion of Ukraine.
Image: Japanese Prime Minister Ishiba walks with American President Donald (cropped) (Source: Prime Minister’s Office of Japan via Government of Japan Standard Terms of Use (Ver.2.0))
