President Donald Trump's salvos on trade and currency are rattling Japan Inc., but many here hope Prime Minister Shinzo Abe can sell him a "win-win" package of job creation and investment when they meet this week, averting a return of the Japan-bashing of the 1980s.
Abe moved early to build a personal rapport with Trump, meeting him in New York shortly after he was elected. With Japan's largest export market at stake, its businesses need him to keep at it.
Japan's status as the cornerstone U.S. ally in the Pacific was reassuringly reaffirmed in a recent visit by U.S. Defense Secretary Jim Mattis. Tokyo has reiterated its commitment to spending more on its own security and buying more military aircraft and other equipment from the U.S.
That won't directly affect trade figures, however, which are measured by the private sector.
Japan logged the second largest trade surplus with the U.S. last year, at $68.9 billion dollars. That's way below China's, at $347 billion, and on a par with the surpluses run by Germany and Mexico.
Still, there's plenty to worry about.
After taking office, Trump pulled the plug on U.S. involvement in the Trans-Pacific Partnership, then a dozen, now 11-member trade pact the Obama administration promoted as a way to expand U.S. exports and influence in the Pacific Rim and counter China's growing economic sway.
Trump has criticized Toyota Motor Corp. for planning to build an assembly plant in Mexico, complained Japanese don't buy enough U.S.-made cars, and accused Japan of engineering its monetary policies to help Japanese exporters.
Abe won't be traveling with any business leaders during his trip, which begins Thursday. But following the lead of Softbank tycoon Masayoshi Son, who met with Trump in November and promised 50,000 jobs and $50 billion in new investments, officials say they are hammering out a job-creation package of infrastructure investments to propose during Abe's visit.
According to various versions of the proposal reported in Japanese newspapers, key areas of investment may include building high-speed trains, joint development of robotics, artificial intelligence and space technologies and ramping up imports of U.S. natural gas in Japan and elsewhere in Asia by building more liquefied natural gas facilities on this side of the Pacific.
Resource-poor Japan imports almost all its energy needs since most of its nuclear reactors were shut down after the 2011 Fukushima nuclear disaster. But price and currency trends can blunt any impact on the trade balance: In 2016, Japan's imports of liquefied petroleum gas, or LPG, from the U.S. jumped nearly 44 percent by volume, but the value of those imports fell slightly.
Japanese businesses have in general been supportive of so-called "Abenomics," the prime minister's attempts to keep Japan's growth going. And they are applauding his effort to woo Trump.
Abe's pro-active approach makes sense, says Willian Saito, an entrepreneur, educator and adviser to the Japanese government.
If the U.S. wants Japanese bullet-train technology, or if Japan wants to diversify its energy portfolio, "it's a win-win," Saito said. "I see all change as an opportunity. You can definitely make the best of it," he said. "If we have an economic-centric plan here, this is in the interest of both leaders."
Trump's policies also could herald new opportunities for Japan to invest in the U.S., analysts say.
The U.S. is already the top destination for Japan's direct foreign investment, totaling $460 billion last year, more than in Europe at $398 billion, or all of Asia at $376 billion, according to Hiromichi Shirakawa, an analyst at Credit Suisse.
Having seen Japanese-made vehicles smashed in earlier spells of Japan-bashing trade friction, Toyota and other manufacturers shifted much of their production to the U.S.
Toyota President Akio Toyoda and other business leaders have stoutly defended their role in providing U.S. jobs and investment.
Toyota has invested $22 billion in the U.S. in the last 60 years, and plans another $10 billion in investments in the next five years.
"We are already producing extremely large number of cars in the U.S. We are one of the American manufacturers, aren't we? I hope President Trump understands that," Toyoda recently told reporters.
Japanese companies employ 383,000 Americans in manufacturing jobs, the most among all foreign-owned companies, according to the U.S. Commerce Department. Including auto parts, dealerships and factories, the Japanese auto industry provided more than 1.5 million jobs in 2015, figures from the Japan Automobile Manufacturers Association show.
Trump's assertion that Tokyo is deliberately seeking to devalue its currency to aid exporters like Toyota is another big worry. Finance Minister Taro Aso, who will visit Washington with Abe, insists the central bank's lavish monetary easing is aimed only at rekindling inflation, even though it has also coincided with a weakening of the yen against the dollar in the past five years.
Currency rates are critical for Japanese manufacturers and other businesses that earn a large share of their revenue overseas: Every 1 yen rise against the dollar erases about 40 billion yen (about $3.6 million) in Toyota's operating profits.
Rising U.S. interest rates are already pushing the dollar higher against the yen. And if the economy continues to strengthen under Trump, rising consumer spending is likely to increase imports from Japan, worsening the trade imbalance.
Apart from his package of proposals for creating jobs and promoting cooperation and investment, Abe has said that in lieu of the region-wide TPP, Japan may strike a bilateral trade deal with the U.S.
Koya Miyamae, a senior economist with SMBC Nikko Securities, says such a deal could be tougher than the TPP for Japan, resulting in tariffs for its exports or other regulations.
The joke these days in Tokyo is that Abe should make sure to lose when the two leaders play golf this weekend at Trump's club in Palm Beach, Florida.
"Japan is in serious trouble," said Miyamae, adding with a laugh: "Japanese custom says that the host must always lose in 'settai' or entertainment, golf. But in this case, Abe is doing the courting. So he has to lose."
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