Japan is closely watching the early days of the Donald Trump presidency. This presidency will face a political economy trilemma, a concept pioneered by Harvard professor Dani Rodrik to explain the trade-off among three competing goals: globalization, national sovereignty, and democracy.[i] Rodrik argues that a nation cannot achieve the three goals simultaneously and in full. For example, pursuing unregulated globalization and democracy requires sacrificing national sovereignty, leaving workers displaced by the effects of globalization.[ii] To rebalance them, the first Trump administration prioritized populism and national sovereignty at the expense of globalization, adopting policies like tariff hikes, withdrawals from multilateral trade agreements like the Trans-Pacific Partnership (TPP), and strict immigration controls. Some analysts think that the “democracy” element of the trilemma will come under further threat in Trump’s second term, and the balance between the three competing goals will likely remain a critical challenge. This article explores three opportunities for Japan and the U.S. to navigate the trilemma together.
Navigating the Retreat from Globalization and the U.S.-Japan Partnership
The pursuit of neoliberal globalization—unregulated free trade, has triggered challenges in the U.S., including job displacement in manufacturing and vulnerabilities in critical supply chains—all of which have fueled public discontent and political polarization. Considering these situations, free trade policies may seem unfeasible under a second Trump administration. However, it is important that we continue to ideate on effective partnerships and frame them in a way that aligns with his campaign promises.
There are two approaches that the Trump administration could take to retreat from globalization. One would be implementing a steep 20% universal tariff on all countries, likely resulting in multiple trade wars. The other way would be to focus on trusted trading partners, a strategy that centers supply chains and trading networks around allied countries. This presents a more constructive alternative, particularly as China seeks to fill the void left by the United States. China’s application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) underscores Beijing’s ambition to leverage the trading system that the U.S. originally led to further its interests.[iii] Meanwhile, traditional U.S. allies, including in South America and Southeast Asia, are strengthening trading ties with China. There is a risk that China could use that influence to undermine the U.S. alliance system.
To reassert its global leadership, the U.S. should work with Japan to establish a practical framework for trusted trading partners. Japan’s enduring relationships with ASEAN countries position it as a vital ally. By combining economic strengths and diplomatic relationships, the U.S. and Japan can provide a compelling alternative to China’s growing economic dominance and build a more resilient regional trade and supply chain network.
The first Trump administration already invoked elements of this strategy. For example, it initiated WTO e-commerce negotiations and secured the U.S.-Mexico-Canada Agreement with high-standard, cross-border data flow rules, effectively addressing contemporary trade issues to facilitate cross-border businesses. Unlike the Biden administration, which has shown limited progress in these areas, the second Trump administration is expected to take the lead in outlining new trade rules with U.S. allies. This collaborative approach would enable the U.S. to regain its leadership in the global trading system while offering an effective alternative to China’s growing dominance.
National Sovereignty and the U.S.-Japan Alliance
A second Trump term comes as Japan is facing growing security threats. In a strategic shift, Japan is now enacting major defense policy reforms. It is committed to substantial increases in defense spending, with a goal to raise its defense budget and complementary initiatives, such as research and development, to $68bn by 2027 (2% of its gross domestic product).[iv] This would make Japan’s defense budget the third largest in the world.[v] These shifts in policy reflect Japan’s increasing focus on responding to a more severe and complex security environment, including from China’s increasing military activities, including China’s frequent incursions near the Senkaku Islands, joint Russia-China bomber patrols around Japan, and military exercises in contested areas like the South China Sea.
Unlike in the first Trump term, Japan now faces domestic political instability. In the October national election, opposition parties—which are less supportive of the U.S.-Japan military alliance due to hesitance around increasing military spending at the expense of domestic welfare programs—made significant gains and the ruling Liberal Democratic Party lost its majority for the first time in 15 years.[vi] The lack of a strong political mandate complicates Trump’s preference for one-on-one deals with heads-of-state, as decisions by the prime minister could face resistance from opposition forces. In addition, the political instability may force Japan to prioritize internal political dynamics over foreign policy commitments, which could lead to a more cautious stance from Tokyo regarding the U.S.-Japan alliance. If Trump presses for increased Japanese defense spending, this could trigger a domestic backlash, including widespread demonstrations in Japan and cuts to necessary defense spending by opposition parties. All of this commotion may embolden China to perceive a weakened U.S.-Japan partnership as an opportunity to take military action, including potentially against Taiwan.
As we are at a critical juncture for Indo-Pacific security, the US could strain bilateral ties by mishandling these dynamics, risking Japan’s internal stability and the broader strategy for regional security cooperation. Thus, the second Trump administration would be wise to strengthen multilateral engagements rather than pursue bilateral deals. For example, enhancing cooperation through joint exercises and cyber capabilities within the QUAD (a security dialogue among the U.S., Japan, India, and Australia) and trilateral efforts involving South Korea or Australia can help solidify U.S.-Japan cooperation without placing undue pressure on Japan’s fragile domestic politics. Japan remains committed to deepening cooperation with the U.S. as a global partner in promoting a free and open international order, balancing the need for enhanced security measures with the realities of Japan’s political landscape.
Democracy and Shared Values between the U.S. and Japan
While security concerns dominate discussions about the U.S.-Japan alliance, the foundation of this partnership is rooted in shared democratic values, the third element of Rodrick’s trilemma. In the post-war Indo-Pacific region, the U.S.-Japan alliance has been fundamental in maintaining a democratic international order. If the U.S. and Japan fail to serve as a beacon of democracy, it risks ceding global influence to authoritarian powers that reject fundamental democratic values. This would jeopardize peace and stability in the region. As the U.S. and Japan are both committed to the rule of law, human rights, and democratic governance, they have shared interests not only in defending democratic institutions but in actively revitalizing them.
This revitalization must involve addressing the root causes of public discontent—economic stagnation, concerns over public safety, and the erosion of trust in government. Economic inequality, in particular, is a critical factor. Carlos Boix, a professor at Princeton University, argues that lower levels of inequality lead to achieving stable democracy.[vii] In Japan, the Liberal Democratic Party has similarly struggled to articulate clear economic policies despite public demand for stronger anti-inflation measures. In the U.S., nearly half the population does not have at least $500 in savings, making inflation and economic insecurity critical concerns.[viii] Consequently, many voters see Trump as a leader who listens and responds to their concerns.
To mitigate these challenges, the U.S. and Japan should navigate economic complexities while minimizing harm to vulnerable populations. Japanese firms create nearly 1 million American jobs and contribute 15% of inward foreign direct investment, enhancing U.S. economic stability and promoting equitable growth.[ix] U.S. and Japanese leaders should prioritize policies that strengthen and expand these business ties to support vulnerable communities.
Conclusion: Toward a Hopeful Future
The U.S. remains a critical pillar of the international order, and the world is watching closely as it navigates this period of transition. From the perspective of a student from Japan, a close ally, it is disheartening to see increasing polarization in the U.S., where people blame societal problems on the opposing side or dismiss different viewpoints as “uneducated.” This kind of polarization only weakens the fabric of democracy and states’ abilities to address internal and external challenges. After World War II, the U.S. shaped Japan’s democratic system during the Allied occupation, which reflected broader ideals that democracy thrives on the principle of love for fellow citizens, for shared humanity, and for the diversity of thought—values that remain essential to both nations today.
The time has come for the U.S. and its allies like Japan to reaffirm their commitment to shared values of democracy, human rights, and the rule of law. Together, we must work toward a future where the three competing goals of the political economy trilemma—sovereignty, democracy, and globalization—can be balanced pragmatically. Although the challenges we face are significant, so too are the opportunities. Deepening the U.S.-Japan relationship will be vital to successfully navigating this new era and contributing to a more stable, prosperous, and democratic global community. The stakes could not be higher—for our nations, our peoples, and the future of the international order.
[i] Rodrik, D. (2011). The globalization paradox: Democracy and the future of the world economy. W.W. Norton & Company.
[ii] Pew Research Center, “In U.S. and UK, Globalization Leaves Some Feeling ‘Left Behind’ or ‘Swept Up,’” October 5, 2020, https://www.pewresearch.org/global/2020/10/05/in-u-s-and-uk-globalization-leaves-some-feeling-left-behind-or-swept-up/
[iii] Thomas L. Friedman, (2021, September 21). “China’s leaders are having fun with us. Who can blame them?”, The New York Times, September 21, 2021,
https://www.nytimes.com/2021/09/21/opinion/china-biden-australia-tpp.html
[iv] The Prime Minister’s Office of Japan, (2022). National Security Strategy of Japan.
https://www.cas.go.jp/jp/siryou/221216anzenhoshou/nss-e.pdf
[v] Mari Yamaguchi, “Japan Cabinet OKs Record Military Budget to Speed Up Strike Capability, Eases Lethal Arms Export Ban,” AP News, December 22, 2023,
https://apnews.com/article/japan-military-budget-us-china-missile-5e1e2c40890b3ca8ea682c2dc91f9553.
[vi] Motoko Rich and Hisako Ueno, ”Shigeru Ishiba Wins Vote to Remain as Japan’s Prime Minister”, The New York Times, November 11, 2024,
https://www.nytimes.com/2024/11/11/world/asia/japan-prime-minister.html
[vii] Boix, C. (2003). Democracy and redistribution.
https://doi.org/10.1017/cbo9780511804960
[viii] Mike Winters, “How much money Americans have in their savings accounts—nearly half have less than $500”, CNBC, January 24, 2024
https://www.cnbc.com/2024/01/24/how-much-money-americans-have-in-savings.html
[ix] U.S. Department of Commerce, (2024). Foreign Direct Investment in the United States. https://www.commerce.gov/sites/default/files/2024-10/FDI-Report-Final.pdf