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Abhimanyu Solanki
31 December 2025 |
What happened?
On 27 October, US President Donald Trump landed in Tokyo, Japan, as part of his Asia tour. He received a royal welcome and met with Japan's Emperor Naruhito at the Imperial Palace.
On 28 October, President Trump met with Japan's newly appointed Prime Minister Sanae Takaichi, the country's first female Prime Minister, at Akasaka Palace in Tokyo. He held several bilateral meetings focused on trade and the US-Japan alliance. Japan remains one of the largest trading and security partners of the US, as the US exported around USD 80 billion in goods to Japan in 2024, while Japan exported roughly USD 148 billion to the United States. Bilateral talks resulted in the US-Japan Technology Prosperity Deal. The two leaders agreed to take further steps for a "New Golden Age" of the ever-growing Japan-US Alliance.
President Trump announced that Japan's previous commitment to invest USD 550 billion in the US has made progress with the advancement of major projects. Both countries agreed to a common policy framework for the mining and processing of critical minerals and rare earths. In a major push, during bilateral talks, Japanese companies outlined their commitments, including up to USD 332 billion to support critical energy infrastructure in the United States. The MOC for the US-Japan Technology Prosperity Deal is also signed, affirming the mutual benefits of using cloud technology.
What is the background?
First, a brief overview of US-Japan economic relations. Trade has been a cornerstone of the US-Japan bilateral relations; however, there is no comprehensive Free Trade Agreement between the two countries. In 2024, the US-Japan trade is estimated at USD 319.2 billion, with a jump of four per cent from 2023. US exports to Japan largely include mineral fuels, liquefied natural gas, meat and poultry, industrial machines, medicines and medical equipment, civilian aircraft, engines, and parts. US imports from Japan are dominated by autos, auto parts, and electronics. Cumulatively, in 2024, the US has a trade deficit of around USD 79 billion. When Trump announced tariffs worldwide, Japan was one of the first countries to sign a deal with the US. President Donald Trump is pushing his "America First" approach in his second term. Earlier in July, the US and Japan struck a trade agreement that imposed a 15 per cent tariff on Japanese goods and included Japan's commitment to invest USD 550 billion in the US. Also, Japan has remained one of the largest investors in the US for many years.
Second, a brief overview of security cooperation. The US remains an important geopolitical ally of Japan in bolstering the latter's security. The US is committed to the defence of Japan by using its full range of capabilities, including nuclear capabilities under Article 5 of the Japan-US security treaty. In regard to China's assertion in the South China Sea, the US and Japan opposed China's "unlawful maritime claims, militarisation of reclaimed features."
What does it mean?
First, the commitment to strengthen relations by the two leaders, President Trump and PM Takaichi. Japan is making efforts to support US manufacturing and exports through billions of dollars in investments in areas such as AI Infrastructure, Electronics, and logistics. Announcement of record purchases of US energy by Japan supports the US Trump approach.
Second, the importance of defence in the bilateral relations. Besides trade, the new technology deal would highlight the importance of security relations between the US and Japan.
About the author
Abhimanyu Solanki is a PhD scholar at the University of Delhi, Delhi.
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