Updated January 11, 2023
U.S.-Japan Relations
Overview
capable, flexible, and interoperable with U.S. forces. Japan
Japan, a U.S. treaty ally since 1951, is a significant U.S.
pays roughly $2 billion per year to defray the cost of
partner in several foreign policy areas, particularly security
stationing U.S. military personnel in Japan. In addition,
and trade. Shared security goals include meeting the
Japan pays compensation to localities hosting U.S. troops,
challenge of an increasingly powerful China and countering
rent for the bases, and the costs of new facilities to support
threats from North Korea. The U.S.-Japan mutual defense
the realignment of U.S. troops.
treaty grants the United States the right to base U.S.
troops—currently numbering around 54,000—and other
A long-standing effort to relocate a U.S. Marine Corps base
military assets on Japanese territory in return for a U.S.
in Okinawa to a less-congested area has divided Japan’s
pledge to protect Japan. The two countries collaborate
central government and Okinawan leaders for decades.
through bilateral and multilateral institutions on issues such
About 25% of facilities used by U.S. Forces Japan (USFJ)
as science and technology, global health, energy, and
and over half of USFJ personnel are in Okinawa, which
agriculture. Japan is the fourth-largest overall U.S. trading
comprises less than 1% of Japan’s total land area.
partner and largest source of foreign direct investment into
Okinawans have long expressed widespread opposition to
the United States, and its investors are the largest foreign
new base construction.
holders of U.S. Treasury securities. Congressional interest
and oversight in U.S. relations with Japan generally focuses
Japan Expands its Defense Posture
on the strength of the alliance—particularly on how Japan
As perceived threats from North Korea and China have
and the United States coordinate their China strategies—
grown more acute, Japan’s government has reconsidered its
and how Japan and South Korea cooperate on security.
approach to national security. With the Liberal Democratic
Party (LDP) and its smaller coalition party Komeito in firm
The Biden Administration has emphasized the restoration
control of the Diet (Japan’s parliament), Kishida has the
of U.S. alliances in Asia and has placed the U.S.-Japan
potential to loosen some of Japan’s long-held restrictions on
alliance at the center of the U.S. Indo-Pacific strategy. The
its military posture, particularly if he gains Komeito’s
more assertive security and foreign policy postures Japan
support for these changes. On December 16, 2022, the
has adopted since the early 2010s has given Japan—and the
government of Japan released a trio of much-anticipated
U.S.-Japan alliance—more options for dealing with an
security documents: the National Security Strategy (NSS),
array of global and regional issues. Both governments
the National Defense Strategy, and the Defense Buildup
distrust Beijing and see China’s rising power and influence
Program. Taken together, these documents provide a
as detrimental to their national security. Japan’s proximity
blueprint that could fundamentally reshape Japan’s
to China—and the two countries’ maritime and territorial
approach to defending itself and to its security relationship
disputes—heightens its concern. President Biden has
with the United States.
embraced the Quadrilateral Security Dialogue (“the Quad”)
with Japan, Australia, and India as a primary mechanism to
The documents label China as an “unprecedented strategic
advance shared goals in the region and has participated in
challenge,” declare Japan’s intention to develop a
three leader-level Quad meetings. The Biden
“counterstrike” capability to attack enemy missile sites, and
Administration also is negotiating a new regional economic
outline plans to increase Japan’s expenditures to 2% of its
and trade initiative with Japan and key partners.
national gross domestic product (GDP), in line with NATO
standards. Post-war Japan generally has limited defense
Prime Minister Fumio Kishida’s government responded to
spending to 1% of its GDP. If this increase takes effect,
Russia’s invasion of Ukraine forcefully, arguing that
Japan’s defense budget will become the third-largest in the
Russia’s aggression has implications for Japan’s security
world. The documents do not specify how Japan will
because of the war’s potential to usher in an international
implement and resource these goals, or to what extent Japan
system where the “rule of force” replaces the “rule of law.”
will pursue them in tandem with the United States.
Japan has adopted most of the sanctions and other penalties
against Russia employed by the United States and Europe,
Japan also has expanded its security cooperation with
and provided humanitarian and material support for
Australia, the United Kingdom, and India, with the
Ukraine despite Russia’s threats to curtail energy supplies.
encouragement of the U.S. government. Although not as
developed or formalized as the U.S. treaty alliance, these
The U.S.-Japan Military Alliance
burgeoning relationships indicate efforts by Japan to
Since the early 2000s, the United States and Japan have
diversify its defense partnerships and—potentially—lessen
improved the operational capability of the alliance as a
its dependence on the United States for its security.
combined force, despite Japanese political and legal
constraints. Japan has accelerated reforms to make its
military (known as the Self-Defense Forces, or SDF) more
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U.S.-Japan Relations
Regional Relations
Economic and Trade Issues
Tokyo is existentially concerned about Beijing’s growing
The United States and Japan, two of the world’s three
economic and military power. A perpetual challenge is a
largest economies, are key trade and investment partners. In
dispute between the two countries (as well as Taiwan) over
2021, Japan was the fifth-largest U.S. trading partner for
a group of uninhabited Japan-administered islets in the East
exports ($112 billion) and imports ($167.0 billion), and
China Sea (known as the Senkaku Islands in Japan, and
fourth-largest overall trading partner (Figure 1).
Diaoyu in China). Despite these tensions, which have been
In their first ever “Economic 2+2” meeting in July 2022,
fueled in part by frequent operations near the islands by
U.S. and Japanese officials emphasized shared priorities
PRC government vessels, Tokyo and Beijing have largely
and the need to make their economies more competitive and
managed to keep tensions from escalating. As China has
resilient amid global economic risks and uncertainties. In
increased economic, diplomatic, and military coercion of
2021, Japan’s GDP growth was 1.7%, after decreasing by
Taiwan, the Government of Japan has framed the prospect
4.5% in 2020, and the government remains focused on
of cross-Strait conflict as an urgent challenge. Such a
pandemic economic recovery with fiscal and monetary
conflict could involve the United States, and likely would
support. In late 2022, Kishida announced a new package of
implicate U.S. and Japanese military personnel and assets in
economic measures worth ¥39 trillion ($264 billion), to
Japan, especially in Okinawa.
facilitate economic relief from rising food and energy
prices. Several long-term challenges (e.g., declining
Wary of China’s rising influence, Japan has cultivated
working-age population) also remain perennial economic
relations with Southeast Asia, launched a U.S.-Japan-
concerns for Japan. Kishida’s priorities include supporting
Australia regional infrastructure financing initiative, and
supply chain security, broader income redistribution,
championed the Quad to improve defense coordination and
buttress the region’s institutions
greater use of digital technologies, and green growth. The
. Japan has also welcomed
Bank of Japan, unlike other central banks, has maintained
the Australia-UK-United States (AUKUS) pact (see
loose monetary policy and acted to prevent interest rate
IF12113) and pledged cooperation with the partnership.
increases, which in turn has put downward pressure on the
yen—it fell to a 24-year low against the dollar in 2022.
Japan-South Korea relations are perennially fraught because
While Japanese officials have historically lauded a weak
of a territorial dispute and sensitive historical issues
yen, the effect on import costs is also of increasing concern.
stemming from Japan’s colonization of the Korean
Peninsula from 1910 to 1945. Beginning in 2018, a series of
Figure 1. Top U.S. Trade Partners, 2021
actions and retaliatory countermeasures by both
governments involving trade, security, and history-related
controversies caused relations to plummet. Relations have
improved since Yoon Suk-yeol became president of South
Korea in May 2022. Tokyo and Seoul have taken a number
of steps to restore a positive relationship, including holding
three trilateral heads-of-state meetings (the first since 2017)
in 2022. Following North Korea’s flurry of missile tests in
2022, the United States, Japan, and South Korea resumed

public trilateral military exercises, including a first-ever
Source: Bureau of Economic Analysis.
trilateral ballistic missile defense exercise in October 2022.
Trade Agreement Negotiations
For decades, Japan has pursued productive relations with
In May 2022, Japan joined 13 other countries as an
Southeast Asian countries, providing generous official
inaugural negotiating partner in the U.S.-led Indo-Pacific
development assistance and earning broadly positive
Economic Framework for Prosperity (IPEF) initiative, an
reviews from regional leaders, and in the past decade has
economic arrangement that aims to address selected trade
redoubled these efforts. Japanese officials frequently visit
issues, such as digital trade, trade facilitation, labor, and the
the region and the government has launched several
environment, but not tariff liberalization or other market
initiatives that emphasize capacity-building in the security
accession provisions. IPEF also addresses issues not
sphere. Japan’s approach generally complements U.S.
typically covered in trade talks, like supply chain resiliency.
policy toward Southeast Asian countries, with both the
Previously, the Trump and Abe Administrations negotiated
United States and Japan pursuing strong relations with
two limited trade deals, which took effect in 2020,
Vietnam and the Philippines in particular. Japan also has
liberalizing some agricultural and industrial goods trade and
developed stronger relations with countries like Cambodia
establishing digital trade rules. Some Members of Congress
and Burma, in contrast to the United States, which has
and U.S. trade partners like Japan have called for the United
placed sanctions and restrictions on interactions with their
States to join the 11-nation Comprehensive and Progressive
authoritarian regimes. Under the Biden and Trump
Agreement for Trans-Pacific Partnership (CPTPP), which
Administrations, the United States and Japan have launched
Japan helped form after U.S. withdrawal from the proposed
a number of initiatives to cooperate on infrastructure
TPP in 2017. The Biden Administration has indicated it
projects, including many involving significant public-
does not intend to pursue CPTPP membership at this time.
private partnerships, in Southeast Asia.
Emma Chanlett-Avery, Coordinator, Specialist in Asian
Affairs
Mark E. Manyin, Specialist in Asian Affairs
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U.S.-Japan Relations

Caitlin Campbell, Analyst in Asian Affairs
Cathleen D. Cimino-Isaacs, Specialist in International
IF10199
Trade and Finance


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https://crsreports.congress.gov | IF10199 · VERSION 23 · UPDATED

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