Trump is all but certain to be the Republican nominee in the November election versus US President Joe Biden, the Democratic Party standard-bearer. Trump is already telegraphing that a Trump 2.0 White House would make his previous tenure seem like a minor inconvenience for Beijing.
Japan would feel these shock waves early and often as its biggest trading partner confronts a new Trumpian onslaught. It hardly helps that Japan, Asia’s second-largest economy, approaches the US election cycle at a moment of domestic weakness.
The “Japan is back” narrative making global headlines pertains largely to a roaring stock market. The Nikkei 225 Stock Average is testing all-time highs thanks to ultraloose monetary policy, a weak yen and moves to strengthen corporate governance during the last decade.
Trouble is, this policy mix is ripped from the pages of 1980s-like “trickle-down economics”. It started under Shinzo Abe, the former prime minister who was among Trump’s biggest boosters in geopolitical circles. Yet 11-plus years on, the spoils aren’t reaching most workers or catalysing big increases in innovation and research and development.
The yen’s steep drop in just the last five years left Japan uniquely vulnerable to the post-pandemic global inflation surge. All this helps explain why Japan only barely skirted recession in late 2023.
Not surprisingly, current Prime Minister Fumio Kishida is struggling to keep his government’s approval rating from sliding further, having ended 2023 at a low point – 17 per cent, according to the Jiji press poll. Now, Kishida’s Liberal Democratic Party (LDP) has limited latitude to make bold moves to restart economic reforms as China’s slowdown deepens.
This backdrop makes Trump’s possible return just about the last thing Tokyo needs. As Trump’s poll numbers suggest a tight race versus Biden, a new phrase has been added to Japan’s political lexicon: hobotora, which means “likely Trump”. That’s in addition to moshitora, or “if Trump”.
Top-line fears include a new trade war that slams Asian growth, being bullied to pay to keep US troops on Japanese soil, weakened support for Taiwan, Washington again enabling North Korea’s nuclear exploits and the highest degree of uncertainty about US relations in decades.
In early March, Kishida’s Chief Cabinet Secretary Yoshimasa Hayashi said “our country is watching the presidential election campaign with great interest”. Attempts so far have met with limited success, with LDP vice-president Taro Aso trying in vain to secure an audience with Trump in January.
Shigeo Yamada, the newish US ambassador, has been tasked with building ties with Team Trump. Reuters reports that Tokyo is even teeing up Abe’s one-time interpreter, Sunao Takao, to help engage the Trump gang. Takao was present for many Abe-Trump chats and golf outings.
This smacks of desperation, partly because the political establishment here indulges in the myth that Abe was some highly attuned Trump whisperer. The reality is far more complicated.
Abe was the first world leader to hustle to Trump Tower in New York in November 2016 to congratulate – and flatter – the president-elect. Yet many shuddered to think Trump effectively had only three true allies: Russian President Vladimir Putin, North Korean supreme leader Kim Jong-un and Abe. Ditto for the humiliating news that Abe nominated Trump for a Nobel Peace Prize.
Yet Abe’s efforts failed to score Tokyo a reprieve from tariffs. Trump ignored Abe’s pleadings to stay in the Trans-Pacific Partnership, a trade deal vital to countering China. He tried to shake down Japan for huge annual payments to maintain US bases. Trump’s “love” for Kim left Abe with some explaining to do with Japanese nationalists.
Why China can rest easy if Trump is re-elected US president
Why China can rest easy if Trump is re-elected US president
Those might seem like the good old days once Trump’s revenge tour makes its way to Asia. For all Japan’s fears, none looms larger than being abandoned by transaction-obsessed Trump World. For all Trump’s anti-China histrionics, what’s to keep him from making a grand trade bargain with Beijing at the expense of Japan, South Korea and Taiwan?
Japan has reason to worry even if Trump loses. Trump is already setting the stage to argue that the 2024 election was also stolen from him. This has Washington fearing another insurrection like the one Trump inspired on January 6, 2021. It should have holders of US government securities on edge, especially Tokyo which sits on more than US$1.1 trillion of them.
When Fitch Ratings removed America’s AAA status last August, it cited political polarisation reflected partly by January 6 for the decision. Should related threats prompt Moody’s to revoke Washington’s last top rating, Japan’s export-led economy risks getting trumped like few others.
William Pesek is a Tokyo-based journalist and author of “Japanization: What the World Can Learn from Japan’s Lost Decades”
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