Behind Japan 'One Hundred Percent'

In September 2016, Japanese Prime Minister Shinzo Abe inadvertently committed a diplomatic faux pas when he met with U.S. Democratic presidential nominee Hillary Clinton without meeting her opponent, Donald Trump. When Trump went on to win in November – shocking the world – Abe, recognizing his mistake, rushed to Trump Tower in New York to meet the newly elected U.S. president. The two leaders hit it off and Abe gifted Trump a gilded golf driver. Abe left New York in November describing Trump as a "trustworthy leader" and someone that Japan could do business with.

The elephant in the room in Abe's first meeting with Trump was, of course, the then-president-elect's harsh criticism of the Trans-Pacific Partnership, a mainstay of his campaign. For Japan, TPP was the crown jewel of the future economic order of the Asia-Pacific and losing the United States' support for the multilateral 12-country agreement would be a bitter pill to swallow. Without the United States, the TPP, as signed, cannot enter into force and Trump, true to his word, signed an executive order on his first working day in office instructing the United States to withdraw from the agreement. Japan, meanwhile, had submitted notification of its successful ratification of the TPP to New Zealand, who holds the agreement's register, on January 19 – Obama's last full day in office.

So, with this history, when Abe landed in Washington on February 10 to meet with Trump, expectations for the U.S.-Japan relationship had shifted. Days before Abe landed in Washington, Trump's defense secretary, James Mattis, had gone to Tokyo where he affirmed the foundational principles of the U.S.-Japan alliance, which is based on their 1952 Treaty of Mutual Cooperation and Security. Mattis also became the highest-level U.S. figure since Obama in 2014 to clarify that Article V of the treaty covered the Japan-administered Senkaku Islands in the East China Sea, which China claims as the Diaoyu Islands. (Article V provides that the United States would act to defend Japan if it comes under attack by a third party.)

The Abe-Trump summit had its awkward moments, including a viral video of a 19-second handshake between the two leaders, with Abe pulling away at last with an exaggerated facial expression. Moreover, at Mar-a-Lago, the two leaders were seen huddling alongside members at Trump's club as news emerged that North Korea had carried out a ballistic missile launch into the Sea of Japan. Leaving aside these moments, however, the optics of the visit and the substantive outcomes were largely a success for Abe.

Abe had three primary objectives with his state visit and succeeded on all counts. First, he sought to seal in a man-to-man personal relationship with Trump, who operates on the basis of these sorts of interpersonal affinities. Second, Abe sought ironclad assurance from Trump that the U.S.-Japan alliance would persevere despite the U.S. president's misgivings about cost-sharing. Third, on trade and economics, Abe sought to assure Trump that Japan was neither a currency manipulator nor an economic adversary of the United States.

On the first, the two leaders – from their joint press conference to their time golfing together at Mar-a-Lago – established something that looked an awful lot like a friendship. For instance, Trump, who is rarely seen smiling in photographs, was grinning ear-to-ear in photographs he tweeted of him and Abe. In a meeting with Republican lawmakers days after Abe left, Trump called Abe a "fabulous guy," saying "I like him." The interpersonal dynamic to the Trump-Abe relationship appears to be in good stead after the state visit.

On the alliance, Abe also managed to get the U.S. president to hit all the right notes. Abe and Trump began their joint statement with an acknowledgement of the alliance: "The unshakable U.S.-Japan Alliance is the cornerstone of peace, prosperity, and freedom in the Asia-Pacific region." The statement also mentioned the Senkakus and the East China Sea and condemned North Korea. Addressing Trump's misgivings about cost-sharing and Abe's interest in normalizing Japan, the statement noted that "the United States will strengthen its presence in the region, and Japan will assume larger roles and responsibilities in the alliance." North Korea's first ballistic missile test of 2017, moreover, led to a hastily arranged press conference at Mar-a-Lago, where Trump affirmed that the United States was "one hundred percent" behind Japan.

Regarding trade and economics, Abe avoided falling into the trap of coming to Washington as a supplicant in the relationship, hoping to show Trump how much Japan invested and contributed to U.S. economic prosperity. Instead, Abe stood up for high-standards multilateral trade deals, like the TPP, while on stage with Trump during a joint press conference. One of the more important takeaways from the summit was that the two countries will push ahead on exploring new opportunities in economic cooperation through a new dialogue framework that will be led by U.S. Vice President Mike Pence and Japan's Deputy Prime Minister and Finance Minister Taro Aso.

Back in Japan, the visit was seen positively, giving Abe ample space to explore new avenues of economic cooperation with Trump. (One poll showed 70 percent of Japanese respondents expressing satisfaction with the visit.) One hotly discussed topic is the old idea of a U.S.-Japan bilateral trade deal emerging out of TPP's ashes. No doubt, the Pence-Aso dialogue will consider this topic, which was once a mainstay proposal in the U.S.-Japan bilateral relationship, but lost steam once multilateral trade deals picked up in the 2000s. There are certain structural challenges, however. Japan maintains a large trade surplus with the United States, with exports to the United States forming a critical pillar of its economy. Trump's obsession with eliminating the U.S. trade deficit and seeking bilateral trade deals that would shift the balance of trade toward making the U.S. a net exporter will lead to baseline compatibility problems with Japan (i.e., Trump will be unable to agree to win-win tariff reductions, instead seeking clear advantages for U.S. exporters in Japan).

The question of monetary policy and Trump's old allegations that Japan is a "currency manipulator" could also crop up down the line, derailing any Abe-Trump bonhomie. The monetary "arrow" of 'Abenomics' and Japan's need to weaken the yen for structural reasons will be seen by the Trump White House as unfair foreign exchange meddling – a charge that Japan strongly denies.

“You look at what China’s doing, you look at what Japan has done over the years. They – they play the money market, they play the devaluation market and we sit there like a bunch of dummies,” Trump had said, days before Abe arrived in the United States. It's unclear if his views have changed since then. Abe, after returning from the U.S., told the upper house of the Japanese Diet that “I think Trump shared the view that our monetary policy is not for currency manipulation but for ending deflation.”

In the end, Abe's visit, while a success, may have just opened the doors on a brief honeymoon period for the two leaders. Trump's longtime obsession with trade deficit reduction and accusations against Japan of unfair economic behavior, borne of his 1980s-era experiences in U.S. real estate, still leave ample space for Abe and his government to end up with a headache down the line. Abe will look to tread carefully as the alliance enters a new era under Trump. His top priority will be to ensure that the alliances remains "unshakeable" and that the U.S. remains behind Japan "one hundred percent" on defense matters. The economic and trade track, however, will be bumpy.