US-Japan Alliance Digest Vol 5.18

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• On September 22, PM Takaichi and President Trump met on the sidelines of the UN General Assembly in New York, one day before Trump met with Chinese Pres. Xi Jinping in DC. Topics included strengthening economic security and deterrence capabilities, indicating the strength of the U.S.-Japan relationship ahead of Xi’s visit. Though Trump spoke with Takaichi by phone following Xi’s visit to discuss issues concerning China and reaffirm U.S.-Japan cooperation, some of Trump’s comments during Xi’s visit have caused concern in Japan. Notably, Trump highlighted “common interests” with China as well as its status as a U.S. ally during World War II against Japan. However, Takaichi has aimed to dampen such concerns, publicly referring to the U.S. and Japan as the “most mutually trusting of allies.”
• Finance Minister Katayama disclosed at a news conference that President Trump communicated ongoing concerns about the yen’s continued weakness to PM Takaichi during their summit meeting in New York. Following these remarks, Katayama shared a call with her U.S. counterpart Sec. Bessent where they reaffirmed the yen’s undervaluation as a matter of concern and agreed to step up cooperation. The U.S. and Japan previously coordinated on a joint currency intervention on July 31 to strengthen the yen, and the Bank of Japan raised its interest rates to 31-year high on September 18 to stem inflation, but these comments indicate that further moves could be on the horizon.
• The U.S. and Japan continued to bolster alliance readiness through joint exercises, including Orient Shield 26, which wrapped on September 25. This year’s exercise saw U.S., Japanese, and Australian forces practice combined operations in Hokkaido, including live-fire drills and the exercise’s first joint airborne operation. Meanwhile, both the U.S. and Japan have eyed strengthening defense capabilities in Okinawa Prefecture, with the U.S. storing the Typhon missile system to Kadena Air Base and Japan planning to designate certain facilities for use by the JSDF even during peacetime.
• Two major Japanese automakers are taking steps to expand their manufacturing presence in the U.S., responding to factors such as EV and hybrid demand and tariffs. Reportedly, Honda Motor is close to finalizing plans to build a new hybrid vehicle plant valued at up to $2.5 billion, with the site likely in Ohio, as industry analysts expect demand for fuel-efficient EVs and hybrids to grow further due to rising gas prices. Meanwhile, Nissan announced plans to locally produce 80% of the vehicles it sells for the U.S. market by 2030, up from the current figure of 65%. Expanding local production enables both companies to reduce their tariff burdens.
• The top diplomats of the U.S., Japan, and South Korea met for a trilateral summit during the UN General Assembly on September 21. In their meeting, Sec. Rubio, FM Motegi, and FM Cho affirmed their commitment to the denuclearization of North Korea as well as strengthening their trilateral cooperation on economic security, energy supply resilience, and maintaining regional peace and stability, including in the Taiwan Strait. They also discussed enhanced coordination on Arctic issues, and the nations are expected to sign an MOU to that effect in the future.

The U.S.-Japan Alliance Digest is a bi-weekly summary of bilateral and related developments compiled by Sasakawa USA‘s U.S.-Japan NEXT Alliance Initiative. To receive the Alliance Digest via email, contact Mr. Dustin Hinkley at dhinkley@spfusa.org.

Download US-Japan Alliance Digest Vol 5.18