Like a feeling of déjà vu. This December 16, in Donald Trump’s sumptuous residence in Mar-a-Lago, Florida, the boss of the Japanese conglomerate SoftBank, Masayoshi Son, stands alongside the president-elect. Red tie, all smiles, gestures of complicity with his host, he announces an investment of some 100 billion euros in the United States for the next four years. The prize: at least 100,000 jobs, and enough to largely support the artificial intelligence sector.
Eight years earlier, the scene bears a striking resemblance. Red tie, already, for Masayoshi Son, and even proximity to Donald Trump. This time in the golden decor of the Trump Tower lobby. The Japanese billionaire reveals his plan to allocate $50 billion to activities in the United States. In the years that followed, his Vision Fund investment fund would support several American giants, with varying degrees of success, from Uber to WeWork. “Son is a risk-taker; he speaks a language that Trump understands,” notes Shihoko Goto, director of the Indo-Pacific program at the Wilson Center.
First investor
SoftBank is not alone in believing in Uncle Sam. Since 2009, Japanese investments in the United States have tripled, propelling the country to the rank of leading foreign investor. In 2022, Japanese companies employed nearly a million Americans. Among them, a subsidiary of the Hitachi group recently announced investing $155 million to increase its production capacity in the United States. Rakuten, the Japanese equivalent of Amazon, joined forces with the American Ebay last May. Companies in the automotive sector are also rushing to the gate: already present in the United States, Toyota unveiled a factory project in North Carolina at the beginning of December, while Honda is working on an electric vehicle “hub” project in the Ohio.
Ties between the two countries have not always been so peaceful. In the 1980s, Japanese cars, tape recorders, and semiconductors overwhelmed America. So much so that the Archipelago became the bête noire of Washington which, in 1987, imposed 100% customs duties on certain products. “In response to these trade frictions, Japan wanted to place itself inside the wall of protectionism. The relationship transformed from a model based on exports to real investment in the United States, which “has stopped growing since then,” notes Matthew Goodman, researcher specializing in Japan at the Council of Foreign Relations. The signing of a trade agreement in 2019, followed by a partnership on critical materials and semiconductors in 2023, gave new impetus to this cooperation.
For Kenneth Weinstein, director of the Japanese chair at the conservative think tank Hudson Institute, the country of the Rising Sun is today “the number 1 ally of the United States”. Its strengths in cutting-edge technologies are key for America, allowing it to counter China, explains this expert, who was appointed ambassador to Japan in March 2020… without, however, being able to take up his post, because of Covid.
Anticipate the blow
Japan’s trade surplus with the United States has not disappeared, Tokyo is well aware of this. Especially with the return of Donald Trump to the White House, which revives fears of an increase in customs tariffs. “Trump is displaying a more aggressive political will than during his first term, with the idea of universal customs duties, which add to the risk of targeted taxes against Japan due to its trade surplus,” observes Marcos Carias, North America economist at Coface.
This time, economic players are taking the lead. “Japanese companies are courting Donald Trump by increasing their investments in the United States. This allows them to show their confidence in the American economy, but also to protect themselves against possible customs tariffs,” explains Kenneth Weinstein from Tokyo . Two birds with one stone. For his part, the 47th president welcomes these commitments with open arms. He even encourages them, thanks to a clever mix of promises of tax cuts and deregulation. The icing on the cake: his plan to speed up regulatory procedures for companies that invest more than a billion dollars in the economy.
Japan has other ways of reassuring its American friend, for example increasing its purchases of agricultural products, defense equipment or even liquefied natural gas (LNG), indicates Matthew Goodman. LNG is in fact a pillar of cooperation, since Japan’s island situation forces it to import the majority of its energy needs. “With the end of certain contracts with Qatar and the deep uncertainty over the evolution of their domestic demand, the Japanese will be happy to buy more American LNG, which is flexible. Especially since Donald Trump plans to authorize new liquefaction units, which Joe Biden had put on hold,” indicates Anne-Sophie Corbeau, researcher at the Center on Global Energy Policy.
Negotiation will therefore be essential to keep this partnership afloat. However, the change of the American interlocutor in Tokyo risks making the task more complex. In November 2016, following the victory of the Republican candidate, Japanese Prime Minister Shinzo Abe visited the United States. With a well-chosen gift for the new president: a golden golf club. “Shinzo Abe expected that it would be difficult to come to terms with Trump’s vision on trade, security issues and alliances,” explains Matthew Goodman. In the years that followed, the two men took many selfies and played golf.
“Shinzo Abe was the one who understood Donald Trump best”
This time, however, the exchanges are not as fluid. “The Japanese government has tried hard to obtain a meeting with Donald Trump since his re-election, without success. It preferred to meet the widow of Shinzo Abe and Masayoshi Son,” notes Shihoko Goto. For Kenneth Weinstein, “Shinzo Abe was the one who understood Donald Trump best. They rebuilt the Japanese-American alliance together. With the new Prime Minister Shigeru Ishiba, it will surely not be true love but the basis for a cordial relationship are there.”
Finally, there remains the thorny issue of the takeover of the steel group US Steel by the Japanese Nippon Steel. An acquisition that risks coming to an end, since Donald Trump is opposed to it, as is Joe Biden. “In Tokyo, it is difficult to understand why this transaction will be blocked, especially since Nippon Steel already has activities in the United States and this acquisition does not pose credible national security problems,” wonders Matthew Goodman. This could discourage Japanese investment in the long term.” While waiting to discover what fate Donald Trump has in store for it, Japan is refining its arguments. Because the negotiation risks conditioning the friendship between the two countries.
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