President Donald Trump threatened Japan with “reciprocal tariffs” during Prime Minister Shigeru Ishiba’s February 7, 2025, White House visit, demanding immediate action to slash the $68 billion U.S. trade deficit.
The warning targeted Japan’s auto sector—which accounts for 75% of the imbalance—and signaled Trump’s broader plan to levy tariffs on Canada, Mexico, and the EU.
Japan countered with pledges: Toyota and Isuzu announced new U.S. plants, SoftBank committed $100 billion for AI infrastructure, and LNG import deals aimed to offset deficits.
Yet beneath these gestures lies a deeper vulnerability—Japan’s reliance on U.S. security guarantees limits its ability to push back. Japan hosts 55,000 U.S. troops under the 1960 Mutual Security Treaty, a cornerstone of regional deterrence against China and North Korea.
The Pentagon’s nuclear umbrella and Aegis missile systems shield Japan, which spends $2 billion annually to host American bases. Despite a record $55.1 billion defense budget for 2025—a 9.4% hike—experts like Grant Newsham argue that Japan’s military remains “stunted.”
This is due to decades of U.S. dependence. Article 9 of its pacifist constitution restricts offensive capabilities, forcing alignment with U.S. priorities. Economically, Japan wields leverage as America’s top foreign investor ($675 billion cumulative) and employer of 1.5 million U.S. workers.
Economic Impact and Strategic Dilemmas
Tariffs could devastate: 25% auto levies might cost Japan $20 billion yearly, echoing Trump’s 2018 steel tariffs. But Japan’s $295 billion trade with China complicates decoupling from U.S. tech export demands.
Ishiba’s weak minority government, polling at 28% approval, seeks stability through concessions like accelerated LNG deals and factory openings. Historically, U.S.-Japan trade tensions flare but resolve through incrementalism.
The 2020 pact cut U.S. farm tariffs but excluded autos, leaving a 2.5% U.S. car tariff in Japan. Trump’s fixation on deficits—the U.S. global trade gap hit $1.21 trillion in 2024—suggests Japan’s concessions may delay tariffs but not erase structural imbalances.
With Trump poised to announce tariffs next week, Japan’s dilemma crystallizes: economic clout versus security subordination. As one analyst notes, “Japan hangs separately without the U.S.—but together, they might just hang on.”
