Trump’s Tokyo burger sent a USA first message to Japan
It was a potent symbol of how the President’s America First approach to trade affects President Trump’s approach to Asia and how Japan is attempting to satisfy his appetite.
The Financial Times warned that the President’s visit to East Asia had “the potential to cause havoc” and there were some moments of noisy rhetoric.
In Vietnam, Mr Trump warned that the United States will no longer tolerate what he called “chronic trade abuses.”
Edward Alden, a senior fellow at the Council on Foreign Relations in Washington says: “You can see how Trump’s philosophy of America First guides his agenda when it comes to trade. The consistent theme is how will a trade arrangement benefit the United States.”
Yet on many points on the trip, President Trump seemed in a friendly, accommodating mood. In China, he refrained from criticising President Xi Jinping over human rights or pressing for more democracy. In Japan, he said his relationship with prime minister Abe “is really extraordinary.”
“I don’t think we’ve ever been closer to Japan,” he told reporters at Kasumigaseki Country Club golf course, where the two leaders signed baseball hats bearing the words “Donald and Shinzo – Make Alliance Even Greater.”
That alliance came under pressure soon after Mr Trump came to office and pulled America out of the TPP trade agreement, much to the frustration of Mr Abe. Other nations involved in the project are now pressing ahead without US involvement.
The closest the President came to causing diplomatic havoc in Japan was when he said during a speech in Tokyo that more Japanese car manufacturers should build their cars in the US, rather than shipping them over. In fact, three-quarters of cars from Japanese manufacturers which are sold in the US are made in North America.
Praise and appreciation
The President’s speech in Tokyo was less negative about the Japanese automotive industry than some reports suggested. According to the Washington Post, the President said: “Several Japanese automobile industry firms have been doing a really good job.” He particularly praised Mazda for announcing it will invest $1.6 billion in building a new manufacturing plant, which will create as many as 4,000 new jobs.
That puts Japan in a good position to reach a favourable trade arrangement with the US. Mr Trump hopes to reach bilateral trade deals with countries around the world as these are simpler than the complex multilateral agreements, which can take decades to negotiate. Mr Trump believes that America’s position as the world’s largest market will give it an advantage at the negotiating table.
Nevertheless, the business community in the US lobbies government against disrupting trade arrangements, fearing disruption if there are disputes and retaliation. “Rather than gaining jobs through protectionism, in fact jobs could be lost,” says Eswar Prasad, Senior Professor of Trade Policy at Cornell University told the BBC.
“If the US falls out of the supply chain, manufacturers might shift production abroad, which means factories would close in America.”
Professor Presard also foresees geopolitical repercussions in East Asia.
“The international influence of the US is eroding. It is no longer regarded as credible and reliable. Other countries are stepping in to fill the void. This is leading almost every country in the world, particularly countries in the Asian region, to re-evaluate their relations with the US and perhaps move closer into the economic and political embrace of China,” says Professor Presard.
Mr Trump’s former advisor Steve Bannon said just before he left the White House that the US is in an “economic war” with China. China is America’s largest trading partner. Its annual trade in goods and services is worth about $663 billion. After that comes Canada, Mexico and then Japan.
However, Japan’s importance as a US trade partner is shrinking while that of other Asian countries is growing.
As Forbes points out, twenty years ago, Japan accounted for 12% of all US trade. Today is it around 5%. At the same time, the Japanese trade surplus which Mr Trump has complained about ($69-billion last year) accounts for a much smaller slice of the US deficit than in the past, while China’s imbalance is bigger.
If the trend continues, Japan can expect a further fall trade in trade with the United States but it can also expect its trade with Europe to rise. The EU is in the final stages of agreeing a free trade deal with Japan.
Bark and bite
So far, Mr Trump’s tough rhetoric on economic nationalism has led to no substantive changes in US trade policy. “Trump’s rhetoric on trade has been much worse than his bite,” says Martin Wolf of the Financial Times.
That has been a relief to the Japanese government led by Shinzo Abe which fears a regressive, protectionist approach by the United States would harm Japan’s relationship with America and benefit its rival China.
Keeping friendly on his America First terms with Mr Trump is a challenge for Japan but it comes with rich potential awards. A few more hamburgers may well be served to keep the friendship in shape.