US-Japan Trade Relations: While Japanese PM Shinzo Abe supported US President Donald Trump and took Japan-US ties to next level to counter so-called Chinese threat, Tokyo now bears the cost of more than $2.2 trillion to revive its ailing economy.
According to William Pesek, a Tokyo-based journalist, with coronavirus cases approaching 3.5 million, it’s clear that Donald Trump has given up on fighting the pandemic. The economic fallout to come will reverberate around the globe, sapping growth in China, Japan, South Korea, Southeast Asia and beyond.
The recent US-China trade war is affecting nations around the globe with the US raising tariffs on Chinese products. Pesek explains that analysts applauded Shinzo Abe’s closeness with Trump and believed that Trump’s threats for raising tariffs are against China and Japan will be spared.
However, once Trump began slapping taxes on steel and aluminium, Japan did not score an exception. Trump’s China tariffs, meantime, disrupted the supply chains on which Japan Inc.relies.
US President Donald Trump has failed to reciprocate the allyship shown by Japanese PM Abe who was the first among the world leaders to reach up to the Trump Tower in New York to congratulate the U.S. president-elect on a victory in 2016.
This proximity gave Japan a seat at the Group of Seven nations table not accorded to Beijing. However, things changed when Trump started cosying up to Chinese President Xi Jinping to help win re-election.
Another thing that irked Japan was, President’s closeness with the North Korean leader Kim Jong-un which worried Tokyo as it was considered a security threat. “If Trump cared about Abe or other allies, he would announce an immediate trade war ceasefire. He’d get on the phone with G7 and Group of 20 leaders to devise a collective assault on Covid-19 and the global fallout on growth and incomes,” stated Pesek.
He further added that due to Trump’s unpredictability, it is still uncertain what he may do between now and November 3, the date for US Presidential elections this year. “As he seeks to cheer his base, might slap new taxes on China? Trump could weaken the dollar, further ruining Japan Inc.’s year,” the author wrote.
The author also argues that Abe called this upon himself especially in the current scenario where Japan’s economy is losing fast. “Abe made big mistakes of his own. One: not working harder since 2012 to implement big structural reforms to labour markets or Japan Inc.’s patriarchal mindset,” he said
“He failed to cut red tape, catalyze a startup boom or liberalize immigration in ways that would’ve positioned Japan to woo multinational companies tempted to flee Hong Kong as China clamps down on the city. Another: hiking sales taxes to 10% last October, a move that contributed to a 7.3% GDP contraction,” he added.
He concluded by saying that Trump’s action might weaken the dollar further, making it worse for Japan’s economy. “The bill for that blunder, $2.2 trillion and counting, will be one for the record books,” he said.