How U.S. Policies Towards Japan Mutually Influence Each Other

Along with CTS, let's look back at the impact of US policy on Japan:

The reciprocal tariffs for international trade partners recently announced by US President Donald Trump have sent shockwaves through the Japanese and South Korean stock markets.

At the very start of the trading session this morning, April 3rd, on the Tokyo Stock Exchange, the Nikkei Stock Average plunged by nearly another 1,624 Yen, falling to 34,102 Yen. This marks the most significant single-session drop ever recorded. While a continued decline for the Nikkei had been anticipated since March 31st (when the index shed over 1,502 Yen compared to the previous weekend's close, dropping to 35,617 Yen), the speed and magnitude of the losses this morning exceeded all expert predictions.

Notably, an unprecedented surge in sell orders across numerous stocks, met with a stark lack of liquidity, delivered a major blow to the entire market, leaving no segment unaffected.

According to stock market analysts, the 24% reciprocal tariff imposed by the US on Japan is expected to trigger further negative consequences in the times ahead.

1. Introduction: The Enduring Significance of the U.S.-Japan Relationship

The U.S.-Japan alliance has long been regarded as the cornerstone of peace, security, and prosperity in the Indo-Pacific region for over six decades. This alliance transcends a mere military treaty; it is a manifestation of profound shared values and strategic interests, including the maintenance of regional stability in the Indo-Pacific, the preservation and promotion of political and economic freedoms, and the support for human rights and democratic institutions. Close cooperation between the two nations spans diverse domains, from security and economics to political and cultural affairs, forging a complex and dynamic relationship.

This report delves into an analysis of the intricate ways in which U.S. policies have influenced Japan across political, economic, and security spheres. Concurrently, it examines the reciprocal impact, exploring how Japanese policies and actions have affected the United States within the region. To fully comprehend this relationship, the report will consider the historical context, the evolution of security arrangements, economic interdependence, political and diplomatic collaboration, cultural and social dimensions, case studies of policy impact, and finally, the future trends and trajectory of this vital partnership. The objective is to provide a comprehensive analysis of the interplay between U.S. and Japanese policies, illuminating the mutual influences and the broader implications of this relationship for the region and the world.

2. Historical Foundations of U.S.-Japan Relations: A Century of Transformation

The relationship between the United States and Japan has undergone a profound transformation, evolving from limited initial interactions to a close and indispensable alliance. Early contacts occurred in the late 18th and early 19th centuries, primarily involving American whaling ships operating in the North Pacific seeking temporary anchorage. However, Japan under the Tokugawa Shogunate pursued a policy of seclusion (sakoku), rendering these interactions highly restricted. A significant turning point arrived in the mid-19th century with the Perry Expedition (1853-1854). Under Commodore Matthew Perry's command, the United States employed "gunboat diplomacy" to compel Japan to open its ports to trade and establish diplomatic relations. The Harris Treaty of 1858 further expanded commercial ties, established consulates, and granted American citizens various privileges, including extraterritorial rights and preferential tariffs. This event marked the end of Japan's centuries-long isolationist policy and ushered in a new era of engagement with the West.

During the early decades of the 20th century, U.S.-Japan relations were relatively amicable. The two nations resolved potential disputes and were even allies during World War I. However, the situation began to change in the 1930s with Japan's escalating expansionism in China. The United States responded by imposing economic sanctions, including cutting off supplies of oil and steel, aiming to curb Japan's military conquests. This U.S. action, while intended to deter Japanese militarism, contributed to escalating tensions and ultimately led to Japan's attack on Pearl Harbor in 1941, drawing the United States into World War II in the Pacific theater.

Following World War II, the United States played a leading role in the occupation and reconstruction of Japan from 1945 to 1952. Under the leadership of General Douglas MacArthur, the U.S. implemented far-reaching reforms in Japan's political, economic, and social systems, including demilitarization, promoting democratization, and drafting a new constitution in 1947, wherein Article 9 renounced war. This occupation had a profound and lasting impact on Japan, reshaping the nation's identity and development trajectory.

Transitioning into the Cold War era, U.S. policy towards Japan underwent a significant shift. The United States began to view Japan as a crucial ally in containing the spread of communism in Asia, particularly following the Korean War. To solidify this relationship, the U.S.-Japan Security Treaty was signed in 1951, alongside the Treaty of San Francisco which formally ended World War II. The Security Treaty allowed U.S. forces to remain stationed on Japanese territory after Japan regained sovereignty. Against this backdrop, Japanese Prime Minister Shigeru Yoshida proposed the Yoshida Doctrine, a post-war strategy wherein Japan would prioritize economic recovery and rely on the United States for its national security. This doctrine shaped Japan's defense policy for decades, enabling the country to focus its resources on economic growth under the U.S. security umbrella.

3. The Security Bedrock: U.S. Security Policy and its Impact on Japan

The U.S.-Japan Security Treaty, initially signed in 1951 and subsequently revised by the Treaty of Mutual Cooperation and Security in 1960, forms the bedrock of the security alliance between the two nations. The 1960 treaty significantly enhanced the reciprocal nature of the alliance. Article V stipulates that each party recognizes an armed attack against either party in the territories under the administration of Japan or in the Pacific area as an attack against both. In response, the United States is obligated to defend Japan in the event of an attack. Article VI grants the U.S. the right to maintain bases and armed forces in Japan to contribute to Japan's security and maintain international peace and security in the Far East. This military presence is a tangible aspect of the U.S. security commitment to Japan and a critical pillar of U.S. strategy in the Indo-Pacific region.

U.S. strategic objectives in the Indo-Pacific, particularly concerns regarding an increasingly assertive China and a nuclear-armed North Korea, have profoundly influenced Japan's defense policy and budget. The United States has consistently encouraged Japan to bolster its defense capabilities and assume a greater role in maintaining regional security. Japan has responded by gradually increasing its defense spending and acquiring new capabilities, such as Tomahawk land-attack cruise missiles. Japan is also undertaking reforms within the Japan Self-Defense Forces (JSDF) to enhance interoperability with U.S. forces and other allies, alongside establishing a permanent Joint Operations Command (JJOC) to improve operational effectiveness. These moves are generally welcomed by the U.S. and viewed as crucial steps in strengthening the alliance.

The joint military presence is a defining feature of the U.S.-Japan alliance. The U.S. maintains a significant military presence in Japan, with over 80 military installations and approximately 55,000 personnel stationed there. This presence includes units from all service branches and is equipped with advanced military assets, such as the USS Ronald Reagan carrier strike group and F-35 stealth fighters. This robust military posture serves as a crucial deterrent against potential aggression and demonstrates the unwavering U.S. commitment to Japan's defense and regional stability. To enhance coordination and interoperability, the U.S. and Japan conduct regular joint military exercises. These exercises, such as Exercise Keen Sword, are annual combined field training exercises designed to increase combat readiness and interoperability within the U.S.-Japan alliance framework. Japan also actively participates in Exercise Malabar with the U.S. and India, a trilateral naval exercise aimed at strengthening maritime cooperation and security.

Beyond the joint military presence and exercises, the U.S. and Japan cooperate closely in numerous other security domains. This includes the development of ballistic missile defense technology, as well as enhancing capabilities in areas such as space, cyber warfare, and maritime domain awareness. The alliance is also increasingly focused on joint research and development in emerging technologies like artificial intelligence (AI) for defense applications. For instance, the two countries are collaborating on developing the Glide Phase Interceptor (GPI) hypersonic missile defense system and exploring potential cooperation on unmanned Collaborative Combat Aircraft (CCA). These collaborative efforts aim to bolster the alliance's deterrence and response capabilities against a range of evolving threats.

Given its post-war pacifist constitution and commitment to the Three Non-Nuclear Principles (non-possession, non-production, non-introduction of nuclear weapons), Japan relies heavily on the U.S. nuclear umbrella for extended deterrence. Amidst an increasingly severe regional security environment, particularly the threat posed by North Korea's nuclear and missile programs, the United States has repeatedly reaffirmed its ironclad commitment to defending Japan under Article V of the U.S.-Japan Security Treaty, utilizing its full range of capabilities, including nuclear. These assurances from the United States are crucial for Japan's security and regional stability.

4. Economic Interdependence and Influence: U.S. Economic Policy and the Japanese Economy

Japan is one of the most significant trading and investment partners for the United States. In 2022, the total bilateral trade in goods and services between the U.S. and Japan reached $309 billion. Both exports and imports increased compared to 2021, indicating the deep economic interdependence between the two nations. Japan serves as a major market for numerous U.S. goods and services, including agricultural products, chemicals, pharmaceuticals, commercial aircraft, and industrial machinery. Conversely, the U.S. primarily imports automobiles, auto parts, and electronics from Japan.

The United States maintains a persistent trade deficit with Japan, particularly in goods trade. In 2022, the U.S. goods trade deficit with Japan was approximately $68 billion, largely driven by imports of automobiles and related parts. This trade deficit has been a recurring concern for U.S. policymakers, leading to efforts aimed at reducing the deficit and enhancing market access in Japan. However, it is crucial to note that Japan is the largest source of foreign direct investment (FDI) into the United States. As of 2021, Japan's cumulative FDI stock in the U.S. reached $721 billion. This investment is predominantly concentrated in the manufacturing sector, especially transportation equipment manufacturing (e.g., automobiles), and supports nearly one million jobs in the United States.

The trade relationship between the U.S. and Japan has historically witnessed various tensions involving a range of products. U.S. trade policies have often aimed to limit Japanese exports to the U.S. or increase U.S. exports to Japan. U.S. tariffs, particularly on automobiles and auto parts, could potentially inflict significant negative impacts on the Japanese economy. Analysts have estimated that substantially higher tariffs, including those on all imported automobiles, could slow Japan's annual economic growth rate by up to approximately 2% in the coming years. Japan has repeatedly called for exemptions from such tariffs, citing its status as the largest investor in the U.S. U.S. trade policy can also affect Japanese technology exports, including semiconductors and pharmaceuticals. For example, imposing tariffs on semiconductors from Japan would have a greater impact on U.S.-Japan trade than tariffs on copper or lumber.

U.S. investment plays a significant role in Japan's technology sector, and vice versa. U.S. FDI into Japan can introduce new technologies, foster innovation, and enhance the productivity of Japanese firms. Conversely, Japan has increased its investment in the U.S. technology sector, particularly in fields such as artificial intelligence (AI), defense technology, and semiconductors. Japan has pledged to invest $1 trillion USD in the United States by 2025, a significant portion of which will be directed towards advanced technology sectors. This substantial investment not only strengthens U.S.-Japan trade relations but also positions Japan as a key partner in shaping the future of AI investment and defense technology innovation.

Economic security has emerged as a national security priority in both Tokyo and Washington, as both nations confront challenges posed by China's civil-military fusion and economic coercion. Japanese and U.S. policymakers have turned to industrial policy to support domestic production and research in strategic sectors. The two countries are collaborating to enhance supply chain resilience for critical products such as semiconductors, batteries, and rare earth elements. Japan has recently invested in reshoring production and diversifying suppliers, aligning with U.S. efforts to "friend-shore" supply chains among trusted partners. This cooperation extends to other economic security priorities like digital infrastructure and cybersecurity. Frameworks such as the U.S.-Japan Competitiveness and Resilience (CoRe) Partnership (formerly JUCIP) and the Minerals Security Partnership (MSP) are being utilized to enhance cooperation on economic security issues.

5. Political and Diplomatic Alignment: Navigating Bilateral and Multilateral Issues

The U.S.-Japan Security Treaty continues to serve as the foundation for political and diplomatic alignment between the two countries. Under this alliance framework, Japan and the United States cooperate closely, sharing roles and responsibilities not only in bilateral matters but also concerning regional issues in the Asia-Pacific and global affairs. Frequent high-level visits and meetings between leaders and officials from both nations underscore their close and active political relationship. For example, Prime Minister Ishiba conducted an official visit to the U.S. in February 2025, where he reaffirmed the determination to pursue a new golden era for U.S.-Japan relations. Ministerial-level meetings, such as those between the foreign and defense ministers of both countries (also known as the "2+2" format), also occur regularly to discuss shared security and foreign policy issues.

The United States and Japan coordinate closely on a range of regional issues. Both countries express growing concern over China's increasing assertiveness in the Indo-Pacific region and the importance of maintaining a Free and Open Indo-Pacific (FOIP). The U.S. and Japan also cooperate extensively to address the threat posed by North Korea's nuclear and missile programs, including through trilateral cooperation with South Korea. Both nations emphasize the importance of peace and stability across the Taiwan Strait and oppose any unilateral attempts to change the status quo by force or coercion.

The United States and Japan are also crucial partners within multilateral frameworks. Both are key members of the Quadrilateral Security Dialogue (Quad), which also includes Australia and India, a grouping focused on promoting a free and open Indo-Pacific. The Quad collaborates on a range of issues, including maritime security, infrastructure, and global challenges. The U.S. and Japan also engage in other trilateral and multilateral partnerships with countries like South Korea, Australia, and the Philippines to address specific security and economic issues. For instance, the U.S.-Japan-South Korea trilateral partnership is vital for responding to North Korean threats and promoting regional stability.

6. Cultural and Social Dimensions: Shaping Perceptions and Policies

American cultural influence on Japanese society has been extensive and long-lasting, particularly following World War II. American music, fashion, films, and other aspects of popular culture have been widely embraced by the Japanese populace. The presence of the U.S. military during the occupation period played a significant role in introducing and popularizing many of these cultural elements. Conversely, Japanese popular culture, especially anime, manga, and video games, has become increasingly popular and influential in the United States. This cultural exchange has fostered mutual understanding and appreciation between the peoples of the two countries.

Numerous people-to-people exchange programs have been established to further enhance mutual understanding and build relationships between the U.S. and Japan. The JET (Japan Exchange and Teaching) Programme is a prominent example, having sent thousands of Americans to Japan to teach English and engage in cultural exchange. The Fulbright Program also supports scholars and students from both countries to pursue academic and research opportunities abroad. The Kakehashi Project and the TOMODACHI Initiative focus on promoting youth exchanges, aiming to cultivate future leaders and strengthen bilateral understanding. Organizations such as the Japan-United States Friendship Commission (JUSFC) and the U.S.-Japan Council play crucial roles in supporting and promoting these exchange activities.

Public perception and opinion in both the U.S. and Japan, shaped by history and cultural exchange, can influence policy decisions related to the alliance. While generally positive, historical sensitivities and differing perspectives on global engagement can occasionally present challenges. However, opinion polls consistently show high levels of support for the U.S.-Japan alliance in both countries. In Japan, support for strengthening the alliance has remained above 90% for over a decade. This strong public backing provides a solid foundation for continued cooperation and alliance enhancement.

7. Case Studies of Policy Impact: Tangible Effects and Mutual Influence

The U.S.-Japan Security Treaty and its subsequent revisions serve as a prime example of how U.S. policy has profoundly impacted Japan. The treaty not only shaped Japan's post-war defense policy but also guided the development of the Japan Self-Defense Forces (JSDF). Under the U.S. security umbrella, Japan was able to focus on rebuilding its economy after World War II, following the Yoshida Doctrine. Consistent U.S. pressure on Japan to increase defense spending and assume a larger security role in the region has contributed to Japan's recent decision to significantly boost its defense budget and procure new military capabilities.

U.S. trade policy has also had significant repercussions for the Japanese economy. The threat or imposition of tariffs on key Japanese exports like automobiles and steel has compelled Japan to engage in negotiations and consider alternative economic strategies. The U.S. withdrawal from the Trans-Pacific Partnership (TPP) in 2017 was another instance where U.S. policy caused disappointment in Japan, which had been a strong proponent of the trade agreement. Conversely, Japan has also undertaken actions and policies that influence the United States in the region. For example, Japan's strong advocacy for the "Free and Open Indo-Pacific" (FOIP) concept was adopted by the United States and has become a shared strategic framework for their engagement in the region.

8. Current Trends and Future Trajectory: Challenges and Opportunities in the Alliance

The U.S.-Japan relationship faces several emerging challenges amidst a rapidly changing global landscape. The rise of China as a geopolitical and economic power presents one of the most significant challenges, requiring the alliance to continuously adapt and strengthen to maintain regional stability. Economic competition, particularly in the technology sector, and persistent trade imbalances could also potentially strain the relationship. Domestic political shifts in both the United States and Japan could also affect the future stability and direction of the alliance.

Nevertheless, the U.S.-Japan alliance also possesses numerous opportunities for future strengthening and expansion. Security cooperation is expected to continue deepening, including in emerging domains such as cybersecurity, artificial intelligence, and space. Japan is likely to assume a more significant leadership role in the Indo-Pacific and beyond, contributing more actively to regional and global security. Enhancing multilateral and trilateral partnerships involving the U.S. and Japan will also be crucial for addressing specific regional challenges. Economic security cooperation, focusing on building resilient supply chains and protecting critical technologies, will remain a priority area.

To bolster the alliance and navigate future challenges, continued high-level dialogue and coordination on strategic objectives and policy alignment are essential. Further investment in joint military capabilities and enhanced interoperability, particularly in emerging domains, is crucial. Proactive management of economic competition and the pursuit of mutually beneficial trade and investment policies are needed. Strengthening people-to-people exchanges will foster deeper understanding and build resilience against disinformation. Finally, close consultation and coordination within multilateral frameworks will promote regional stability and a rules-based international order.

9. Conclusion: Sustaining a Vital Partnership in the 21st Century

The U.S.-Japan relationship is a profound and multifaceted one, where U.S. policies have significantly influenced post-war Japan across security, economic, and political domains. Concurrently, Japan has increasingly played a more active role in shaping U.S. strategic thinking and regional policy. The enduring importance of the U.S.-Japan alliance for maintaining peace, security, and prosperity in the Indo-Pacific region cannot be overstated. It serves as a critical counterweight to emerging challenges and a foundation for regional stability. To sustain this vital partnership in the 21st century, both nations must remain committed to adapting the alliance to the evolving global context, addressing emerging challenges through close cooperation, and leveraging the deep bonds of shared values and strategic interests that have underpinned their relationship for decades.

Stay Connected in Japan! Get Your Softbank SIM & Pocket WiFi at CTS!

Need reliable internet access while in Japan? CTS offers fantastic deals on Softbank SIM cards and Pocket WiFi!

Choose Your Perfect Softbank SIM:

• Light Data Needs: Plans available like 1GB (¥5,500/year) or 5GB (¥9,500/year).
• Popular Choices: Get ample data with our 35GB plan for only ¥2,650/month, 50GB for just ¥2,850/month, or even 100GB starting from ¥3,500/month!
• Unlimited Freedom: Opt for the SB FULL DATA plan at ¥4,980/month. (Monthly plans require an initial fee. Ask about our cost-saving 6-month and 1-year packages!)

Need Internet On-The-Go for Multiple Devices? Get Pocket WiFi!

• Flexible Monthly: ¥4,800 per month.
• Great Value Packages: ¥28,800 for 6 months or ¥55,000 for a full year!

Visit CTS today to get connected with Softbank! Find the plan that suits you best.