Cracks in Pax Americana?

The White House is running out of time to negotiate its long-promised trade deals with the USA’s trading partners as only a few days remain of a 90-day pause on President Donald Trump’s “Liberation Day” tariffs. On June 11, the US Commerce Secretary Howard Lutnick said a flood of deals was coming. On Thursday (June 26), Lutnick told Bloomberg that ten deals would be announced imminently. Till now, Trump has struck trade deals with only two countries—China and the UK. In May, the US and China had agreed to reduce mutual tariffs. This is the first deal by the US Administration since the ‘Trade War’ was announced by President Trump, primarily targeting China. Currently, the epicentre of the ‘Trade War’ has shifted to Japan—the trusted ally of the USA for the last eight decades. But barely within six months of Trump's 2nd term, it appears that the shine is coming off the US-Japan ‘Golden Age’, says Gearoid Reidy for Bloomberg Opinion. Trump has warned that ‘spoiled’ Japan may not get a US trade deal, reports CNN.

On June 27, 2025, Trump said, negotiations with Japan have been held up over discussions about US car and rice exports and threatened up to 35 per cent tariffs on Japan if the deals are not concluded within the July 9 dateline. Besides the current 25 per cent levy on its auto and steel exports to the US, Japan faces a 24 per cent “reciprocal” tariff on all other exports beginning July 9.

Reacting to the US threat, Japanese Prime Minister Shigeru Ishiba said on Wednesday (July 2), he was determined to protect his country’s national interests. “Japan is different from other countries as we are the largest investor in the United States, creating jobs,” Ishiba said in a public debate with opposition party leaders. “With our basic focus being on investment rather than tariffs, we’ll continue to protect our national interest,” he promised.

The US imported roughly USD 148 billion in goods from the country last year, which ranked as the sixth-highest total among all trading partners. The USA runs a trade deficit with Japan. In 2024, the deficit was as high as USD 68 billion. Japanese exports to the US were hit with a 24 per cent levy when Trump launched his global tariff offensive on April 2, before pausing them for three months. On Tuesday (July 1), Trump also said that he does not plan to extend the pause on tariffs beyond July 9.

Japan Under the US Shadow

Japan and the USA have a long history of trade. In the 1850s, Japanese ports were opened to American trade for the first time after naval officer Commodore Matthew C Perry arrived in Japan with a fleet of four Black Ships.

Tensions between Japan and the USA arose during World War II. In August, the United States Army Air Forces (USAAF) detonated atomic bombs over the Japanese cities of Hiroshima and Nagasaki, resulting in thousands of deaths. On August 15, Emperor Hirohito announced the unconditional surrender of Japan. Following this, the Allies began an occupation of Japan, which ended in April 1952. But the United States maintains control of several islands, including Okinawa Prefecture, for military use. On July 1, 1957, United States Forces Japan (USFJ), a subordinate unified command of the United States Indo-Pacific Command, was activated at Fuchū Air Station in Tokyo as the Japan Air Self-Defence Force (JASDF). It was originally an Imperial Japanese Army base from 1940 to 1945. After the Japanese surrender it was occupied by US forces and became a US military base known as Fuchu Air Station. The Japanese Prime Minister Shinzo Abe proposed, in 2007, the Quadrilateral Security Dialogue (QUAD), a strategic security dialogue between Japan, the United States, Australia and India.

The US maintains a significant military presence in both Japan and South Korea, with numerous bases supporting various branches of the armed forces. The three largest hosts of US troops — Japan, Germany, and Korea — are facing renewed pressure from the Trump administration to significantly increase their defence budgets. As of 2025, the defence-to-GDP ratios of the three countries stand at 2.4 per cent for Germany, 1.8 per cent for Japan, and 2.3 per cent for Korea at 61.2 trillion (USD 45.1 billion).

Areas of Conflict

In addition to the conflict on tariff rates, the major area of concern among the Japanese is the growing interference of the USA in its security issues. Though Japan has not faced any invasion from China during the last many centuries, the USA has engineered the ‘Chinese threat’ perception to maintain its military bases in Japan and Korea. Since the 1953 armistice that saw a cessation of fighting in the Korean War, US troops have been based in South Korea to deter North Korea and defend the South. 28,500 American troops are currently stationed in South Korea at bases in Guam and other locations across the Indo-Pacific. In March, the US Under Secretary of Defence for Policy advocated prioritising US military assets to counter China. Defence Analysts fear that this America’s security rejig inadvertently strengthens an alliance between North Korea, China, and Russia.

Lately, the top American general in Japan has touted sweeping command reorganisation and highlighted growing regional threats from China. The goal, he said, is to improve war-fighting effectiveness alongside Japan and enhance the alliance’s deterrence posture. In April, USFJ — headquartered at Yokota Air Base in western Tokyo — announced plans to open a satellite office at Akasaka Press Centre, a US Army installation in central Tokyo near Japan’s Ministry of Defence. Reacting to the growing US involvement, the former Japanese PM Hatoyama warned that American bases make Japan a target and undermine its sovereignty. 'We should create a Japan without US military bases', he warned.

The US Secretary of State and Defence Secretary had been expected to meet the Japanese Foreign Minister and Defence Minister in Washington on July 1 for the annual “2+2” security talks. But Tokyo cancelled the meeting, after the US had pressed Japan to raise its defence budget to 3.5 per cent of gross domestic product – up from an earlier request of 3 per cent. According to observers, Tokyo wants to re-engage with Washington after the Upper House election on July 20, hoping to negotiate from “a position of domestic strength”.

The ongoing trade negotiation faced a roadblock after Japan refused to jeopardise its agricultural sector amidst President Trump's criticisms. Rising domestic rice prices due to poor harvests have led Japan to reduce stock while maintaining strict import policies. In a firm stance during ongoing trade discussions, Japan has made it clear that it will not compromise its agricultural sector despite pressure from the United States. Under a WTO agreement, Japan allocates a limited quota for tariff-free rice imports, a policy President Trump argues reflects poorly on US-Japan trade relations.

Against the growing tension between the USA and its allies – Japan and South Korea — there is a possibility of a realignment of the power equation among the East Asian major economies. Signs of change are already visible. Both South Korea and Japan have joined the China-initiated Regional Comprehensive Economic Partnership ( RCEP), which India had opted out of. In March this year, the top diplomats from Japan, China, and South Korea met in Tokyo, seeking common ground on East Asian security and economic issues. The first gathering of the countries’ foreign ministers since 2023 came as US President Donald Trump upended decades-old alliances, potentially opening the door for China to forge closer ties to countries traditionally aligned with Washington. These three nations have a combined population of nearly 1.6 billion and an economic output exceeding USD 24 trillion. With their vast markets and great potential, the proposed alliance can exert significant influence on the global power equation.

The writer is a professor of Business Administration who primarily writes on political economy, global trade, and sustainable development. Views expressed are personal