Updated April 29, 2020
U.S.-Japan Relations
Overview
champion of the Olympics, and apparently has long seen
Japan, a U.S. treaty ally since 1951, is a significant partner
the event as a key aspect of his legacy.
of the United States in several foreign policy areas,
particularly security and trade issues. Shared security goals
COVID-19 Scrambles Japan’s Politics
range from meeting the challenge of an increasingly
Abe has dominated Japan’s politics since he led the Liberal
powerful China to countering threats from North Korea.
Democratic Party (LDP) back into power in 2012. Since
The mutual defense treaty grants the U.S. military the right
then, the LDP-led coalition has won six successive
to base U.S. troops—currently numbering around 50,000—
parliamentary elections and Abe has become the longest-
and other military assets on Japanese territory in return for a
serving premier in modern Japan’s history. Before the
U.S. pledge to protect Japan’s security. The two countries
COVID-19 pandemic struck, Abe seemed likely to remain
collaborate across multiple bilateral, regional, and
in power until 2021 after hosting the Olympics, which he
multilateral institutions on issues such as science and
could have presented as the capstone to his tenure. The
technology, global health, energy, and agriculture. Japan
pandemic, however, has scrambled Japan’s political future.
also is the fifth largest U.S. trading partner (fourth largest if
If Abe’s COVID-19 response is deemed insufficient, it
European Union [EU] countries are considered separately)
could open the door to an earlier departure. Alternatively,
and second largest source of foreign direct investment in
the continued health emergency and the Olympics’
the United States. Japanese investors are the largest foreign
postponement could lead to Abe staying in power beyond
holder of U.S. Treasury securities.
2021. A key issue will likely be whether a viable alternative
to Abe emerges, either within the LDP or from Japan’s
Despite their shared security concerns and the personal
fractured and weak opposition parties, for the first time
rapport that has developed between Prime Minister Shinzo
since he became prime minister in 2012.
Abe and President Donald Trump, significant policy
differences between Washington and Tokyo have emerged.
The U.S.-Japan Military Alliance
In 2020, two sets of bilateral negotiations loom large.
Since the early 2000s, the United States and Japan have
Observers expect the Trump Administration to demand
taken significant strides to improve the operational
significant concessions from Japan on both (1) the re-
capability of their alliance as a combined force, despite
negotiation of a burden-sharing agreement that establishes
political and legal constraints. Abe has prioritized Japan’s
how much Japan contributes to the cost of hosting U.S.
alliance with the United States, including accelerating
troops on its territory and (2) the “second stage” of trade
reforms to make Japan’s military (known as the Self-
talks, potentially covering contentious issues, such as auto
Defense Forces, or SDF) more capable, flexible, and
trade, that were excluded from two recent “stage one” trade
interoperable with U.S. forces. Japan’s 2014 decision to
agreements.
engage in limited collective self-defense—the right to
Japan and the Coronavirus Pandemic
defend another country that has been attacked by an
aggressor—and the 2015 revision of the U.S.-Japan defense
Japan avoided a large-scale initial outbreak of COVID-19
following the virus’s spread beyond China in January 2020,
guidelines are both indications of these changes.
making it stand out as an apparent outlier among major
Japan pays roughly $2 billion per year to defray the cost of
industrialized countries. But a sharp jump in cases in Tokyo
stationing U.S. military personnel in Japan. In addition,
in late March prompted Abe to call for a nationwide state of
Japan pays compensation to localities hosting U.S. troops,
emergency. While this declaration grants local leaders more
rent for the bases, and the costs of new facilities to support
authority, many of the measures are not mandatory,
the realignment of U.S. troops. Japan’s current cost-sharing
particularly for the private sector. Critics have questioned
agreement with the United States, known as the “Special
the relatively low testing rate and pointed to Japan’s risk
Measures Agreement” or SMA, is due to be re-negotiated
factors of a large elderly population, densely populated
this year. With an eye on the troubled SMA negotiations
cities and public transport, and high smoking rates. As of
with South Korea, analysts predict that the Trump
April 29, Japan’s confirmed cases neared 14,000, including
Administration will demand significant increases in Japan’s
the 718 positive cases aboard the Diamond Princess cruise
contribution, and that the SMA negotiations could become
ship that was marooned off Japan’s coast in February.
entangled with the two sides’ trade talks.
A longstanding effort to relocate a U.S. Marine Corps base
Tokyo was scheduled to host the 2020 Summer Olympic
in Okinawa continues to face steep challenges. Relocating
Games in July and August, and for weeks Japanese and
the Futenma airbase to a less-congested area of the
International Olympic Committee officials insisted that the
prefecture has divided Japan’s central government and the
Games would go forward. On March 24, the organizers
Okinawan leadership for decades. The Okinawan governor,
bowed to growing international pressure and agreed to
who was elected in 2018 on an anti-base platform, vows to
postpone the Olympics, ultimately deciding to commence
block the plan. In February 2019, a nonbinding referendum
the Games in July 2021. Abe has been the most prominent
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U.S.-Japan Relations
on the relocation showed that 72% of Okinawan voters
roughly $1 trillion stimulus package (20% of GDP). Supply
opposed construction of the new base. About 25% of all
and demand shocks resulting from COVID-19 have dented
facilities used by U.S. Forces Japan (USFJ) and over half of
demand for Japan’s exports, cratered tourism, and created
USFJ personnel are located in Okinawa, which comprises
supply chain bottlenecks. This hits the Japanese economy at
less than 1% of Japan’s total land area.
a precarious time, with spending already hampered by an
October 2019 increase in the consumption tax from 8% to
Regional Relations
10%. Fourth quarter GDP fell by 1.8% (7.1% on annual
Tokyo is existentially concerned about Beijing’s growing
basis). A decline in GDP again in the first quarter of 2020
economic and military power. A perpetual challenge in the
would mark the start of a recession, the first since 2015.
relationship is a dispute between the two countries (as well
as Taiwan) over a group of uninhabited Japanese-
Figure 1. Top U.S. Trade Partners, 2019
administered islets in the East China Sea (known as the
Senkaku Islands in Japan, and Diaoyu in China). Despite
these tensions, relations with Beijing have improved
markedly since 2016, although the political impact of the
coronavirus pandemic could complicate the path ahead.
Before the outbreak of COVID-19, Japan was preparing to
host Chinese President Xi Jinping for an official state visit,
which was anticipated to further stabilize the relationship.
The summit, now canceled, would have built upon Abe’s
2018 visit to Beijing, the first leaders’ meeting between the
two countries since 2011.
The U.S. effort to engage North Korea diplomatically since

2018 is viewed with some skepticism by Japan. Many
Source: Bureau of Economic Analysis.
Japanese are unconvinced that North Korea will give up its
Trade Agreement Negotiations
nuclear weapons or missiles and fear that Tokyo’s interests
A trade deal has long been a U.S.-Japan priority, despite
will be marginalized if U.S.-North Korea relations improve.
differing preferences for bilateral vs. regional approaches.
Other major concerns are North Korea’s abduction of
In October 2019, after six months of talks, the United States
Japanese citizens in the 1970s and 1980s and the threat
and Japan signed two agreements that cover tariffs and
posed by North Korean medium-range missiles, which the
market access in some industrial goods and agricultural
Trump Administration often downplays compared to North
Korea’s long
trade, and rules on digital trade. The deals, which took
-range missiles. Trump’s shift on North Korea
effect in January 2020, without formal action by Congress,
and his statements questioning the value of alliances
are considered “stage one” of a broader trade agreement,
generally and Japan specifically have prompted questions
with future talks expected in 2020. Members of Congress
among Japanese policymakers about the depth and
durability of the U.S. commitment to Japan’s security.
and U.S. stakeholders generally welcomed the agreements,

notably expanded market access for U.S. agriculture—U.S.
Japan’s ties
agricultural exports were disadvantaged in the Japanese
with South Korea are fraught because of
sensitive historical issues from Japan’s
market in recent years as other Japanese FTAs took effect.
colonization of the
Many observers, however, strongly advocate for a more
Korean Peninsula from 1910 to 1945. A series of actions
comprehensive trade deal. They question whether next
and retaliatory countermeasures by both governments
stage talks will progress expeditiously, given a number of
involving trade, security, and history-related controversies
more difficult items left on the agenda (e.g., auto trade,
in 2018 and 2019 caused bilateral relations to plummet,
services, currency issues), and competing priorities, such as
eroding U.S.-South Korea-Japan policy coordination. Some
COVID-19. In the interim, Japan achieved its goal of
analysts have criticized the Trump Administration for not
avoiding U.S. national security tariffs on auto imports,
doing more to improve relations between Tokyo and Seoul.
which the Trump Administration had proposed.
Economic and Trade Issues
Additional CRS products: RL33436, Japan-U.S.
The United States and Japan are the world’s largest and
Relations: Issues for Congress; RL33740, The U.S.-Japan
third-largest economies, respectively, and are closely
Alliance; R42645, The U.S. Military Presence in Okinawa
intertwined by trade and foreign investment. In 2019, Japan
and the Futenma Base Controversy; and IF11120, U.S.-
was the fifth-largest U.S. trading partner for exports ($124
Japan Trade Agreement Negotiations.
billion) and imports ($182 billion). Many economists credit
Abe’s economic program, outlined in 2012 and nicknamed
Emma Chanlett-Avery, Coordinator, Specialist in Asian
“Abenomics,” with revitalizing the Japanese economy after
Affairs
nearly two decades of relative stagnation. However, several
Mark E. Manyin, Specialist in Asian Affairs
long-term challenges (e.g., low inflation expectations, a
Brock R. Williams, Specialist in International Trade and
declining working-age population, and limited fiscal and
monetary policy space) remain a concern.
Finance
Cathleen D. Cimino-Isaacs, Analyst in International Trade
Japan’s economic policy in 2020 is likely to focus on the
and Finance
more immediate threat of containing the economic fallout
from COVID-19. The government has responded with a
IF10199
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U.S.-Japan Relations


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https://crsreports.congress.gov | IF10199 · VERSION 14 · UPDATED

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