Japan must brace itself for Trump tariffs and prepare, says top adviser

TOKYO – Japan needs to prepare for the tariffs US President-elect Donald Trump has pledged against China, Canada and Mexico, and adjust supply chains to reduce collateral damage on Japan Inc, according to one of the nation’s top security officials.  

Mr Akihisa Nagashima, national security adviser to Prime Minister Shigeru Ishiba, said in an interview with Bloomberg on Dec 12 that he had “frank” discussions on tariffs with members of Trump’s team during a recent visit to the US.

“I came to the realisation that Japan must be prepared for Trump following through on his plans,” Mr Nagashima said. 

In November, Trump threatened to impose a 25 per cent tariff on imports from Canada and Mexico, saying he would enforce them if those countries failed to take stronger action against the flow of migrants and fentanyl into the US.

Trump also said he would impose an additional 10 per cent tariff on goods from China. 

The tariffs would likely prompt Japan to try to cut its reliance on the three nations, where some Japanese companies operate and Japanese-made parts are sent to make finished products that are shipped to the US, according to Mr Nagashima. 

“Japanese companies will, of course, make efforts to reorganise supply chains, and I believe that Japan as a nation will also make such efforts,” Mr Nagashima said. “That will be economically rational.” 

Trump also threatened global tariffs of up to 20 per cent during his presidential campaign that could hit Japan directly.

The incoming President has previously criticised Japan’s trade surplus with the US, despite Japan being one of the largest foreign investors in America. 

“Trump has two major themes in his mind: job growth and reducing the trade deficit,” Mr Nagashima said.

“He seems to use tariffs as a leverage to achieve other policy goals. In that sense, I wonder if there will be some requests for Japan.” 

Mr Nagashima spent several days in Washington in November, where he met about 20 people – about half of whom he said are set to be part of Trump’s diplomatic and security teams.

A clear takeaway from the meetings was that Trump will not impose his propensity for bilateral trade deals on security matters, Mr Nagashima said.

The new US administration will likely honour the two nations’ trilateral and quadrilateral security partnerships with other nations such as South Korea, Australia, the Philippines and India, the adviser added. 

“There’s no question that Trump is confident on bilateral deals, but my understanding is that he won’t destroy all the multinational frameworks and reset all the deterrence and response capabilities that we have accumulated so far,” he said. 

Mr Nagashima said it is critical for Japan to emphasise how its defence build-up was helping regional security and the contributions Tokyo was already making to the US economy by investing and creating jobs.

Still, he declined to weigh in on US political opposition to a bid by Nippon Steel Corp to buy United States Steel Corp, which includes guarantees of job security for American steelworkers.

“I think it is important to communicate closely with each other, not only about this deal, but also about the implications of investment from Japan and how it will lead to job growth,” he said.

Mr Nagashima is also the head of the Japan-South Korea parliamentarians’ association, and said he was concerned about political upheaval in Seoul resulting from President Yoon Suk Yeol’s failed attempt to impose martial law.

Under Mr Yoon, South Korea has grown closer to Japan, deepening a three-way security partnership with the US.

Mr Nagashima said a worsening security picture in North-east Asia, including threats from North Korea, made it unlikely that Seoul would make any far-reaching policy changes on cooperation with allies, even if there is major political change.

“We will cooperate with the US side and make efforts to deepen cooperation with South Korea,” he said. BLOOMBERG