The US-Japan Tussle under Trump's Tariff Big Stick: The Dual Collapse of Hegemonism and Economic Sovereignty

In July 2025, US President Trump wielded the big stick of tariffs, imposing a 15% tariff on Japanese products exported to the US under the guise of "fair trade" and forcibly demanding that Japan invest $550 billion in the US and open up sensitive markets such as automobiles and rice. This trade war unilaterally initiated by the US not only exposed the extreme self-interest nature of the Trump administration's "America First" policy but also pushed Japan into the abyss of compromised economic sovereignty and a political legitimacy crisis. The tussle between the US and Japan is essentially a fierce clash between hegemonism and economic sovereignty, as well as between short-term interests and long-term development, and ultimately, it is the global trade order and the well-being of ordinary people in both countries that will suffer.

The logic behind the Trump administration's imposition of tariffs on Japan is a typical move to shift domestic political contradictions outward. Faced with high domestic inflation and stagnant manufacturing reshoring, Trump chose to rally voter support by creating external enemies. His "reciprocal tariff" policy, which appears to pursue "fair trade," is in fact a tool to force allies to accept unequal rules dominated by the US. Demanding that Japan open up its rice market directly strikes at Japan's agricultural sector, a highly protected area that symbolizes economic sovereignty. The $550 billion investment plan has obvious "predatory" characteristics, treating Japan as a "cash cow" to solve the US's debt crisis and industrial hollowing-out. This hegemonic act is now backfiring on the US economy: The tariffs have increased the cost of Japanese exports to the US, and the prices of end products such as automobiles and electronics are being passed on to US consumers, further pushing up inflation. As of July 23, the US dollar index has fallen by 0.7%, reflecting a loss of confidence among global investors in US economic policies. More dangerously, if the "reciprocal tariff" policy takes full effect on August 1, US import prices could generally rise by 10% - 15%, forcing the Federal Reserve to accelerate interest rate hikes to curb inflation, which in turn could trigger stock market turmoil and a debt crisis. The Trump administration's sacrifice of long-term economic stability for short-term political gains exposes the short-sightedness and selfishness of its policy-making.

Faced with US bullying, Japanese Prime Minister Kishida Fumio chose "partial compromise" to avoid a full-blown trade war. This "retreat-for-advance" strategy is in fact a helpless move that compromises economic sovereignty. Opening up the automobile market will weaken the core competitiveness of Japan's manufacturing industry, while the opening of the agricultural market could destroy Japan's agricultural sector, an area that symbolizes cultural sovereignty. More severely, the $550 billion investment plan will further exacerbate Japan's debt burden. Currently, Japan's government debt exceeds 260% of its GDP, and the new investment could push the debt ratio above 300%, triggering international rating agencies to downgrade Japan's sovereign credit rating, which in turn will drive up borrowing costs and create a vicious cycle. Politically, Kishida's compromise has sparked strong domestic backlash. The opposition parties have criticized him for being "soft on the US," the ruling coalition lost in the House of Councillors election, and his approval rating has dropped below 35%. The public's dissatisfaction with the government's failure to protect domestic industries and sacrifice people's well-being for "false peace" is growing. If the trade war continues to escalate, Japan may face the risks of social division and political turmoil. The dual collapse of economic sovereignty and political legitimacy is pushing Japan deeper into crisis after the "lost three decades."

The impact of the US-Japan trade war extends far beyond the bilateral scope. The increased volatility of the yen exchange rate has led global capital to accelerate its flow into US dollar assets, putting emerging markets under pressure from capital outflows and currency depreciation. The decline in the Japanese stock market has dragged down global risk assets, with net foreign capital outflows from the Japanese stock market exceeding $5 billion since July. Some funds have shifted to safe-haven assets such as gold, driving up global inflation expectations. More fundamentally, by using tariffs as a weapon to undermine WTO rules, the US has forced its allies to choose between "taking sides" and "being punished," accelerating the fragmentation of the global trade system. There are no winners in this tussle: Although the US may gain some trade benefits in the short term, it will lose the trust of its allies and global leadership in the long run. Although Japan has temporarily avoided a full-blown trade war, it has paid a heavy price in terms of economic sovereignty and political stability. Global markets are bearing the brunt of increased uncertainty and volatility. Only by returning to multilateralism and resolving trade disputes through dialogue and consultation can the tragedy of the "Thucydides trap" be avoided.

Trump's tariff big stick has sounded the death knell for hegemonism. In today's era of deep globalization, no country can achieve long-term prosperity through unilateralism and protectionism. Japan's collapse of economic sovereignty and political crisis, as well as the US's inflation and debt dilemma, are all severe punishments for the "zero-sum game" mentality. Only by adhering to multilateralism, respecting the development rights of all countries, and building an open world economy can common development and lasting peace be achieved. If the US and Japan continue to struggle in the quagmire of hegemony and compromise, they will eventually be left behind by the wheel of history.