Are the Japanese playing their Trump card?

by Michael Zielenziger

There have been any number of surprises in the month since Donald J. Trump won the U.S. presidency. Yet few would have predicted that among the most prominent foreigners to appear at Trump Tower to make obeisance to the President-elect in the past few weeks would be two high-powered officials from Japan: Prime Minister Shinzo Abe and Softbank president Masayoshi Son.

Given Mr. Trump’s campaign vows to rapidly reverse America’s trade deficit, crack down on foreign imports and immigration, reduce America’s military footprint abroad, and promote an agenda of “America First,” you wouldn’t expect the president-elect to offer so much time on his busy calendar to leaders from Japan.

On Japan’s side, however, there are a number of urgent motivations to assertively promote themselves to an incoming Trump administration and seek his support:

There are “good Asians” and “bad Asians.”

Trump has made a habit of demonizing the Chinese for stealing jobs and boosting America’s trade deficit–even if China buys a lot of American-made stuff and is investing in US manufacturing. But we’ve seen this movie already. Before China became Asia’s bogeyman, many Americans demonized Tokyo.

Remember the Detroit autoworkers who took to destroying Toyota sedans with sledgehammers? The Japanese are eager to present themselves as “good Asians,” in contrast to those “bad Asians” from China (with whom, by the way, they’re engaged in territorial disputes and share longstanding mutual animosity.) Honda and Toyota now employ tens of thousands of American workers and try to present themselves as responsible “American” companies, no different from any red-blooded, US-owned firm. So explaining to Trump that Japanese aren’t Chinese—and that they share Trump’s suspicions—may well seem important.

The Japanese need the American consumer market as much as the Chinese do. The possibility of a huge stimulus package by the incoming Trump administration has already boosted the dollar against the Japanese yen. From 104 before the election, the yen is now trading at close to 114 to the dollar. The currency move alone makes Japanese goods cheaper abroad, lifts Japanese exports, and hence boosts corporate profits. That’s the difference between gains and losses for major exporters like Sony, Honda, and Fast Retailing, owners of the clothing line Uniqlo. So Japan and the US share common economic interests at a time when the Japanese domestic economy remains relatively stagnant.

The Japanese government needs US troops. The largest US military complex outside the US sits on the Japanese island of Okinawa, and Japan’s government—if not so many of its citizens—wants American forces to stay. During the campaign, candidate Trump railed against the cost of sending so many US troops to far-flung bases in South Korea, Japan, and elsewhere, saying the endeavor put too much of a burden on American taxpayers. Prime Minister Abe undoubtedly reminded the president-elect that Japanese taxpayers dole out about $1.6 billion per year in so-called “host nation support” (or what the Japanese refer to as “the sympathy budget”) to defer some of the costs of basing 50,000 US troops in the Japanese archipelago. These soldiers would be called upon if the US ever engaged in war with China over Taiwan, or needed to confront the nuclear-armed North Koreans. The Japanese would also be unable to fight China without US boots on the ground, so Abe doesn’t want the US forces to say “sayonara.”

Japan and Trump have many other shared interests. If you forget the trade deficit, and the fact that the Japanese benefit mightily from free trade deals that Trump doesn’t like, the Japanese and Trump share a number of other significant economic interests:

·+Abe wants to revise his nation’s pacifist constitution to allow the nation to remilitarize. While a majority of Japanese in opinion polls oppose the move to revise Article 9, which bars the country from conducting war, Trump would likely have no problem seeing Japan fend more for itself. Other American leaders might have shrunk from seeing Japanese grow its military, but Trump presumably has no problems with that.

+Son, the chairman of Softbank, wants to see his Sprint cellphone provider merge with T-Mobile, a move the Obama administration blocked on competitive grounds. You can argue that having three strong competitors in the mobile phone market is better for consumers than having two strong ones and two weak ones, so maybe Son’s pledge to invest $50 billion and create 50,000 jobs represented an effort to “change the thinking” of the incoming administration.

+Japan is finally on the verge of legalizing casino-style gambling, a measure Abe believes will stimulate moribund consumer spending. Allowing casinos to open means major opportunity for hotel and casino operators—and some analysts say gambling in Japan could be as big as it is in Macao—the source of wealth for such GOP notables as Sheldon Adelson. Given his experiences in Atlantic City, casino gaming is an industry Mr. Trump understands.

Anyone for Texas hold’em?

Michael Zielenziger is a Managing Editor of Thought Leadership. He has worked on a range of topics including the impacts of globalization, workforce issues, the interactions of media and technology, the changing US healthcare environment, and the prospects for emerging markets, with a special focus on Asia.