This is the second time I have addressed the “Trump Tariffs” on this blog. While this is fundamentally a trade issue, it is simultaneously a matter of national security and diplomacy. Therefore, no matter how much the Ishiba administration might wish to decouple tariffs from diplomacy and security, they will likely find it impossible. It is essentially the United States declaring, “We will not open our markets to those who are pro-China.”
The Ishiba administration currently appears to be adopting a “hardline” stance toward the U.S., but rather than being firm, it seems they simply don’t know what to do. I do not necessarily reject a hardline approach, but if that is the path chosen, there are a mountain of things that must be done: forming a domestic consensus on China policy, crafting a trade strategy that includes bringing the EU into the fold, securing food and energy supplies, establishing domestic weapon production, and debating constitutional reform and nuclear deterrence. Furthermore, we must rethink our foreign reserve holdings—specifically, reducing our dependence on the dollar. An administration like Ishiba’s, which does nothing but repeat ad-hoc commentary and lacks any long-term policy vision, is incapable of achieving this. Come to think of it, Ishiba once spoke of an “Asian version of NATO,” only to be immediately rebuffed by India’s Prime Minister Modi. Lately, he hasn’t even mentioned it.
If we are to stand in opposition to the U.S., the question of how to ensure economic growth becomes a primary concern. Japan was the world’s second-largest economy for a long time; therefore, it was a fundamental mistake to pursue austerity at home while looking to the U.S. market as the engine for growth. If we don’t want the U.S. dictating terms to us, we must achieve growth led by our domestic economy. Despite this, and despite holding over 500 trillion yen in net foreign assets (the largest in the world), the LDP has repeatedly pushed austerity under the guise of “having no money.” It is beyond farcical that they have worsened both national and social security finances while shouting for “fiscal discipline.”
Look around the world: is there a single other country where real wages have been on a downward trend for nearly 30 years? If there is, I would love to know. Given that every country besides Japan has managed to avoid this, it clearly demonstrates that raising real wages and enriching the lives of citizens is not actually that difficult. It is simply a matter of proper macroeconomic management.
Incidentally, many believe that the imposition of the Trump tariffs will exert downward pressure of about 1% on Japan’s GDP. Japan’s nominal GDP is 600 trillion yen; putting aside the technical difference between real and nominal, a 1% drop is roughly 6 trillion yen. For a nation that not only holds 500 trillion yen in net foreign assets but also recorded a current account surplus exceeding 30 trillion yen in 2024 alone, 6 trillion yen should be an insignificant sum. It is a problem that can be solved simply by implementing large-scale economic stimulus. In my view, a nation with Japan’s level of national strength should not have its economy dictated by the trends of foreign nations in the first place.
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