Japan braces for Trump's pressure on defense costs, trade

Japan's government and ruling party are bracing for potential pressure from former U.S. President Donald Trump, particularly concerning the cost of stationing U.S. forces in Japan and increased defense spending. With the U.S. midterm elections approaching in November, there is a growing expectation that "America First" policies could lead to demands for Japan to shoulder more financial responsibility.

A senior official within Japan's Liberal Democratic Party noted the precedent set during Trump's first term, when allies faced both security and economic pressure ahead of the 2018 midterms. "It seems to have started again," the official commented, indicating a sense of déjà vu.

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It seems to have started again.

The most anticipated demand is an increase in Japan's contribution to the cost of U.S. forces stationed in Japan, with new cost-sharing agreement negotiations set to conclude by year-end. A defense ministry official suggested it would be prudent to prepare for such demands. The U.S. is also closely watching Japan's moves to increase defense spending, with Tokyo reportedly considering raising its defense budget target from the current 2% of GDP to 3-3.5% as part of a revision of its key security documents later this year. Trump himself has called for allies to spend around 3.5% of their GDP on defense.

Economic pressure points could include demands for Japan to raise interest rates to combat the weak yen and accelerate investments in the U.S. While Japan committed to investing $550 billion in the U.S., only about 20% of that amount has been allocated to specific projects, potentially drawing criticism from the U.S. side. A potential U.S.-Japan summit during the upcoming UN General Assembly in New York could see Trump directly conveying these demands.

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It would be better to prepare for some increase in demands.