Updated February 2, 2021
U.S.-Japan Relations
Overview
Political Transition in Tokyo
Japan, a U.S. treaty ally since 1951, is a significant partner
Abe, Japan’s longest-serving prime minister, dominated
of the United States in several foreign policy areas,
Japan’s politics during the eight years of his premiership,
particularly security and trade. Shared security goals range
steering his Liberal Democratic Party (LDP)-led coalition
from meeting the challenge of an increasingly powerful
to six successive parliamentary election victories.
China to countering threats from North Korea. The U.S.-
Following Abe’s September 2020 resignation, his ruling
Japan mutual defense treaty grants the United States the
LDP overwhelmingly elected Suga to replace him. Japan’s
right to base U.S. troops—currently numbering around
parliament, the Diet, which is dominated by the LDP
50,000—and other military assets on Japanese territory in
coalition, then elected him to serve as prime minister. Suga
return for a U.S. pledge to protect Japan’s security. The two
(born in 1948) has pledged to advance Abe’s initiatives,
countries collaborate through multiple bilateral and
including revitalizing Japan’s economy and supporting the
multilateral institutions on issues such as science and
U.S.-Japan alliance. Aside from combating COVID-19, he
technology, global health, energy, and agriculture. Japan is
has identified his priorities as administrative and structural
the fourth largest U.S. trading partner and largest source of
reforms such as creating a digitization agency. Since
foreign direct investment into the United States, and its
becoming premier widespread criticism of his handling of
investors are the largest foreign holders of U.S. Treasury
the pandemic has dropped his approval rating numbers
securities.
below 40% in several polls. Elections for the Diet’s Lower
House, which selects the prime minister, must be held by
The U.S.-Japan relationship remains strong, and recent
October 2021. If Suga’s low poll numbers continue, the
leadership transitions in both capitals could smooth
LDP may replace him when his term as party president ends
relations and deepen cooperation across a greater set of
in September, if not before.
issues. Whereas alliance relations under former President
Trump and former Prime Minister Shinzo Abe relied
The U.S.-Japan Military Alliance
heavily on personal rapport between leaders, President
Since the early 2000s, the United States and Japan have
Biden and Prime Minister Yoshihide Suga may revert to a
taken significant strides to improve the operational
more traditional partnership that relies more on
capability of their alliance as a combined force, despite
institutionalized ties. Suga has pledged continuity in foreign
Japanese political and legal constraints. Japan has
policy, and Biden has emphasized rejuvenating bilateral
accelerated reforms to make its military (known as the Self-
alliances to deal with issues like North Korean
Defense Forces, or SDF) more capable, flexible, and
denuclearization as well as China’s maritime assertiveness,
interoperable with U.S. forces. In the last few years,
human rights violations, and attempts to set new economic
however, Japan appears to have been hedging against its
rules and norms through its growing outward investment.
reliance on the United States and taking tentative steps
Both leaders are likely to prioritize parallel domestic
toward developing more strategic autonomy. In summer
challenges of curbing the Coronavirus Disease 2019
2020, Japan suspended its plan to purchase Aegis Ashore
(COVID-19) pandemic and economic recovery.
ballistic missile defense batteries from the United States,
Cooperation on energy and climate issues also promises to
and has begun to consider acquiring a strike capability,
increase. In the short term, the countries will confront the
sometimes referred to as “counterattack,” that would allow
expiration of their existing cost-sharing agreement for
it to hit enemy bases. The capability remains controversial
hosting the U.S. military in Japan.
in light of Japan’s pacifist constitution, but the willingness
Japan and the Coronavirus Pandemic
to explore it could indicate a desire to stand up its own
defense, and rely less on U.S. protection.
Japan’s number of COVID-19 cases are low by Western
standards: under 400,000 cases and 5,500 deaths as of
Japan pays roughly $2 billion per year to defray the cost of
January 2021. Periodic spikes—particularly in densely
stationing U.S. military personnel in Japan. In addition,
populated Tokyo—have prompted temporary restrictions on
Japan pays compensation to localities hosting U.S. troops,
social gatherings. Japan has yet to begin administering
rent for the bases, and the costs of new facilities to support
vaccines, as it completes domestic clinical trials. Concerns
the realignment of U.S. troops. Japan’s current cost-sharing
about global supply shortages have alarmed officials and
agreement with the United States, known as the “Special
spurred new contracts with international vaccine producers.
Measures Agreement” or SMA, expires at the end of March
Japan has the largest percentage of people over 65 years of
2021. Officials could agree to a short-term extension of the
age in the world, making its citizens particularly vulnerable.
current SMA and postpone negotiations to reach the
In addition to the economic fallout from the pandemic,
customary five-year agreement.
Japan faces a decision on whether to hold the Summer
A longstanding effort to relocate a U.S. Marine Corps base
Olympics in Tokyo in July 2021. Last year’s Games were
in Okinawa continues to face challenges. Relocating the
postponed because of the virus—a grave disappointment
Futenma airbase to a less-congested area of the prefecture
and major economic hit for Japan.
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U.S.-Japan Relations
has divided Japan’s central government and the Okinawan
The primary focus of Japan’s economic policy in 2021 will
leadership for decades. Okinawan governor Denny Tamaki
likely be containing the economic fallout from COVID-19.
has vowed to block the plan even as construction efforts
Three supplementary budgets have been approved so far for
continue at the new site. A 2019 nonbinding referendum
FY2020 (ending March 2021) with roughly $3 trillion of
showed that 72% of Okinawan voters opposed the new
total stimulus (over 60% of GDP). Japan entered the
base. About 25% of all facilities used by U.S. Forces Japan
COVID-19 era with sluggish growth (0.3% in 2019), in part
(USFJ) and over half of USFJ personnel are in Okinawa,
due to a 2019 consumption tax increase from 8% to 10%.
which comprises less than 1% of Japan’s total land area.
Even with the heavy fiscal stimulus, the International
Monetary Fund (IMF) estimates GDP fell in 2020 by 5.1%.
Regional Relations
Resurgent infections and shutdowns in the Tokyo area
Tokyo is existentially concerned about Beijing’s growing
highlight the fragility of the 2021 outlook. Japan’s exports,
economic and military power. A perpetual challenge is a
particularly to China, are a recent bright spot, but tourism is
dispute between the two countries (as well as Taiwan) over
heavily depressed, and concerns over spillover effects from
a group of uninhabited Japanese-administered islets in the
ongoing U.S.-China trade tensions persist.
East China Sea (known as the Senkaku Islands in Japan,
Figure 1. Top U.S. Trade Partners, 2019
and Diaoyu in China). Despite these tensions, Tokyo has
tried to stabilize relations with Beijing and had planned to
host Chinese President Xi Jinping for an official visit in
2020, but the visit was cancelled due to the pandemic. Wary
of China’s rising influence, Japan has deepened ties with
other countries in the region. Japan has cultivated warm
relations with several Southeast Asian countries, launched a
U.S.-Japan-Australia regional infrastructure financing
initiative, and championed the Quadrilateral Security
Dialogue with the United States, India, and Australia to
improve defense coordination.

Japan’s relations with South Korea are perennially fraught
Source: Bureau of Economic Analysis.
due to sensitive historical issues from Japan’s colonization
Trade Agreement Negotiations
of the Korean Peninsula from 1910 to 1945. Since 2018,
The Trump and Abe Administrations negotiated two limited
these relations marked their lowest levels in decades. A
trade agreements, which took effect in early 2020 without
series of actions and retaliatory countermeasures by both
action by Congress, liberalizing some agricultural and
governments involving trade, security, and history-related
industrial goods trade and establishing rules on digital
controversies in 2018 and 2019 caused bilateral relations to
trade. By expanding market access for U.S. agricultural
plummet, eroding U.S.-South Korea-Japan policy
exports to Japan and eliminating the threat of proposed new
coordination. The Biden Administration has pledged to
U.S. tariffs on Japan’s auto exports, the deals addressed key
rejuvenate U.S. alliances and may be considering how to
concerns in both countries and received broad stakeholder
facilitate trust between the two U.S. allies to foster more
support. The Trump Administration did not pursue a more
effective trilateral cooperation.
comprehensive second-stage trade deal, despite urging from
President Trump’s 2018-2020 attempt at diplomacy with
many in Congress. President Biden’s intent to focus on
North Korea unnerved Tokyo, as many Japanese are
domestic economic policies before negotiating new trade
unconvinced that North Korea will give up its nuclear
deals suggests it may be some time before the two countries
weapons or missiles. Given Japan’s proximity to North
address significant issues left out of the initial agreements
Korea, Japanese observers worry Pyongyang could target
(e.g., auto trade, services, currency). A key question is
their homeland. Japanese officials also prioritize accounting
whether the Administration might join the 11-nation
for North Korea’s abduction of Japanese citizens in the
Comprehensive and Progressive Agreement for Trans-
1970s and 1980s, and hope the Biden Administration will
Pacific Partnership (CPTPP), which Japan helped form after
include the issue in future negotiations with Pyongyang.
the Trump Administration withdrew from the Trans-Pacific
Partnership (TPP) in 2017.
Economic and Trade Issues
Additional products: RL33436, Japan-U.S. Relations:
The United States and Japan, two of the world’s three
Issues for Congress; RL33740, The U.S.-Japan Alliance;
largest economies, are key trade and investment partners. In
CRS In Focus IF11644, Japanese Prime Minister Abe’s
2019, Japan was the fifth-largest U.S. trading partner for
Resignation and the U.S.-Japan Alliance, and IF11120,
exports ($125.0 billion) and fourth-largest for imports
U.S.-Japan Trade Agreement Negotiations.
($180.5 billion). Several long-term challenges (e.g.,
declining working-age population, low productivity growth,
Emma Chanlett-Avery, Coordinator, Specialist in Asian
low inflation, and large government debt load) are perennial
concerns for Japan’s economic policy. Suga plans to
Affairs
continue his predecessor’s expansionary fiscal and
Mark E. Manyin, Specialist in Asian Affairs
monetary policies and pursue new reform priorities focused
Brock R. Williams, Specialist in International Trade and
on a digitalization campaign and green growth strategy.
Finance
Cathleen D. Cimino-Isaacs, Analyst in International Trade
and Finance
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U.S.-Japan Relations

IF10199


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https://crsreports.congress.gov | IF10199 · VERSION 15 · UPDATED

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