How the US and Japan have set the standard for democratic cooperation

With increasing geopolitical competition and a changing global economy, the US-Japan relationship is taking on newfound importance. And while both countries experienced political changes in 2024, there is an enduring consensus across the Pacific about the opportunity and necessity to deepen and broaden the US-Japan alliance.

The US-Japan alliance has become stronger over time and through political change. The first foreign leader to visit President-elect Donald Trump in 2016 was the late Prime Minister of Japan, Shinzo Abe. President Biden and former Prime Minister Fumio Kishida then prioritized taking the relationship to “new heights.” With President-elect Trump returning to the White House in January, shared economic and geopolitical priorities—including confrontation with Russia, competition with China, and threats from North Korea—will likely bring the US and Japan closer still.

The US-Japan relationship has become a pillar of stability and prosperity in Asia. Together, the two countries have broadened how leaders globally understand the world’s most populous region. Prime Minister Shinzo Abe coined the phrase “free and open Indo-Pacific,” a shared vision for a connected and peaceful future for billions of people in diverse countries. President Trump and President Biden adopted that idea, making it the standard for US engagement abroad and bipartisan consensus at home.

Based on that shared framework, Washington and Tokyo have reshaped democratic cooperation in the Indo-Pacific, expanding bilateral cooperation to minilateral and multilateral forums. The Quad—a diplomatic partnership between Australia, India, Japan, and the US—reemerged in 2017 at the working level and in 2020 at the ministerial level, after more than a decade of dormancy. With four Quad Leaders’ Summits in the last four years, the group now works on a wide range of issues from security to infrastructure, to investments, to education. Tokyo has also joined trilaterals with Washington and Seoul, and has deepened collaboration with Manila. The Japan-led G7 Hiroshima AI Process has also allowed it to steer conversations about international AI governance and safety.

Japanese economic statecraft also offers models of diversification and resilience for other countries. In 2010, China surpassed Japan as the world’s second-largest economy. That same year, approximately a decade before Beijing imposed export controls on rare earth minerals to the US, China’s leadership embargoed rare earth exports to Tokyo. Japan responded with an innovative approach, launching new mining and refining partnerships, finding new suppliers, and working with countries in likeminded markets, including Australia, to diversify its supply chains. 

In turn, Tokyo’s economic policies are attracting supply chains and capital flows to Japan. US Ambassador to Japan Rahm Emmanuel has made the case that China’s slowing growth and shared concerns about its assertiveness make Japan an attractive alternative destination for international investment. And with the rise of artificial intelligence and technological competition with Beijing, Tokyo has made the revitalization of its semiconductor market a “national project,” investing significantly more as a percent of gross domestic product in chips than the United States, Germany, or France. Meanwhile, Japan’s global economic footprint is growing, as shown by expanding commercial ties to the Middle East, with members of the Gulf Cooperation Council exploring new commercial opportunities and investment theses in Japan beyond the traditional energy sector.

The result of these shifts is that Japan is becoming one of the most interesting markets in the world, to the benefit of American workers and investors. Japan is the US’s sixth-largest trading partner and the top source of foreign direct investment. Meanwhile, domestic reforms, targeted industrial policy, and shifting trade flows are driving international investors’ interest in Japan, which has stated its goal to double foreign direct investment stock by 2030. With stronger economic prospects, Goldman Sachs Research estimates that the risk of ultra-low inflation in Japan has abated, and that its growth in 2025 and 2026 is expected to outpace that of the Euro area.

Perhaps as significantly, the US-Japan alliance has also undergone a quiet revolution in the security domain, with global implications. Japanese leaders have acknowledged the connections between security in Europe and in Asia, understanding that setbacks in one theater could have ramifications in their region as well.

Soon after Russia’s full-scale invasion of Ukraine, in 2022, the Japanese cabinet approved the “Three Security Documents.” Together, these policies would make the Japanese Self-Defense Forces the third-largest military in the world by doubling defense spending as a percent of GDP by 2027. Tokyo is one of Kyiv’s staunchest partners, providing over $12 billion in support for Kyiv and enlisting the support of eight of the 10 ASEAN members to condemn the Russian invasion. Japan is working with the UK and Italy to develop a next-generation fighter aircraft through the Global Combat Air Program. And Tokyo is also now one of NATO’s top partners in the Indo-Pacific. With growing will and capabilities, Tokyo’s posture and support would likely be critical in any collective response to a Taiwan contingency, or other geopolitical crises in the Indo-Pacific.

Tokyo and Washington do not always agree, and there are challenges that both capitals can work to overcome. The US withdrew from the Trans-Pacific Partnership in 2017, and the Biden administration’s Indo-Pacific Economic Framework, or IPEF, has not yet established a foundation for American economic statecraft in the Indo-Pacific. Meanwhile, Japan’s long-term challenges, particularly demography, may necessitate additional thoughtful reforms and partnerships, and a new American administration will be tasked with executing its own approach in a challenging international environment.

Despite the obstacles, cooperation between Japan and the US, as well as their partners, is the basis for freedom and openness in the Indo-Pacific. That cooperation spans the economic, technological, and security domains. It will likely deepen, as public opinion on both sides of the Pacific favors deepening the US-Japan relationship, as shown in poll after poll, where Americans express confidence in Japan, and Japanese citizens support engagement with the US

The strength of the US-Japan relationship is the product of decades of effort through multiple administrations, and it builds on historic goodwill between their peoples and partners. The result is that today the US-Japan relationship is perhaps the most important alliances in the world. And it is one of the greatest assets than any new leader in Tokyo and Washington has on day one.

 

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