Tariffs, Trust, and Tokyo

Um, uh, the last time Tobias came on, I was not yet a subscriber to, uh, his substack observing Japan. I am now. And I can attest it's as good as you might expect it to be from the last time he was on. So I appreciate, um, uh, Tobias making the time. Uh, we could start in a lot of different places, but we should probably start in the obvious place, which is, um.

Liberation Day, uh, United States tariffs, not just on enemies, but on allies, including Japan. Uh, and it wasn't, I, I see. If I characterize this correctly, it seems to me that in some sense the biggest negative reaction to us tariffs and the. The protectionist impulse in US trade policy in some ways has not been China or Europe. It has been Japan, which has basically said we're not signing on to anti-China provisions and we expect the rollback of all of these tariffs.

Uh, you've had what, five trade meetings now between the United States and Japan? Um, seemed like the last one didn't go anywhere, that there's no agreement on just about. Anything between the two sides. Um, so, um, where, where are Japan US relations at? Because from somebody who is not focused on Japan all the time, it seems like Japan is basically saying to the United States like, we're not going along with you.

And that's pretty shocking because there's arguably no country in the world that is more dependent on US security that is closer to the United States, outside of the five eyes in Japan. And it looks like relations are not particularly good. So am I overcharacterizing it?

If the US is not engaged and committed that Japan's security will be, uh, will be detriment, it'll be extremely detrimental for Japan's security. So, uh, on all those scores, that is, that has been Japan's main goal. And the fact that you now have, uh, you know, a US administration, uh, you have to not only, uh.

Is reconsidering that longstanding commitment, but, you know, now is essentially asking a, a, a higher price to be paid by Japan and other US allies to, to keep doing things, uh, that it was doing. I mean, it just puts Japan in, in such an uncomfortable situation. And of course, you know, for Japanese companies, the United States is, you know, an exceedingly important market. Uh, you, Japan invests a lot in the United States. I mean, it's just, it's, it's.

Something that frankly they just would prefer not to have to deal with. Uh, but they do have red lines, so they can't just say, well, we need to keep, we're gonna do anything to keep the US happy because ultimately, uh, there are prices that Japan does not feel comfortable paying. And so that's really where things are stuck right now.

And there's also some level, I think, of consternation on the Japanese side because if you believe the US reporting on this, like the US doesn't even really know what it wants from Japan. I thought you laid out really well. Like, you know, there's the Stephen Miran approach and then there's what the United States is actually doing. And then there's the reporting on that meeting where Greer and Lutnick.

Cent are all in the meeting and have to pause the meeting because they don't agree on what they're asking from the Japanese side. So maybe like some, some of this is just like Japan not quite understanding what it is the United States wants. Um, what do you think the United States wants, like what, what do you think the United States is trying to get out of this and what would be like, are there any, are there any concessions that Japan is gonna be willing to make?

Because I sort of read their current position as like, you guys are crazy, so come to us with a real. Ask and sure we can talk. But right now, like, does it, like this is, this is bonkers. Like we have nothing to work with.

And I, and I, I mean, I thought it was, uh, you know, that was the first thing that came to mind was that, you know, back in the, the eighties, nineties when, you know, you had. Serious, longstanding friction between the US and Japan. Uh, you know, Japan didn't really have the equivalent of A-U-S-T-R at that point. And so you, you had Japanese negotiators from different parts of the Japanese government doing that.

Essentially. I, I mean, you know, almost the exact same scenes where, you know, you'd have the, the, the Mitzi guy arguing with the Ministry of Finance guy and the foreign ministry and, you know, they'd be, um, having arguments in front of the United States where the US actually did have a unified, uh. Position in the course, you know, represented by the USTR.

And so it's just, it's a little funny to see the situation reversed where, uh, actually heading into the TPP negotiations, one of the innovations Japan made, uh, this was the, uh, you know, under Abe was, you know, we actually can't enter these talks and do it the way we used to do. We actually have to have our own sort of answer to USTR.

Um. Part of the reason why, you know, the US and Japan were actually able to overcome a lot of longstanding hurdles in those talks was that, uh, you did essentially have a US trade representative negotiating with the Japan trade representative. Uh, and, and instead of having, um. You know, one side or the other are arguing amongst themselves on the other side of the table.

And so now here we are full circle and Japan is like, we wish we were negotiating with a single negotiator instead of, you know, watching them negotiate amongst themselves. But that, I mean, in some ways that really is the fundamental problem because it does seem that there are some really irreconcilable goals within the Trump administration where you have, um. You know, what sounds like, you know, the, the Lunik position?

The Navarro position where the goal really is we, the United States just needs to buy less stuff from foreigners. Right? That, that is the goal. In which case, um. There doesn't seem to be a whole lot of room to negotiate, um, on a lot of these tariffs where, you know, we're not, you know, this is not like, you know, we're gonna, you know, raise our tariffs and then we're gonna negotiate with you for concessions.

And ultimately the goal is to remove, you know, most of the tariffs so that you know, but ultimately get some, some. Some concessions out of view to give our producers more market access. That, you know, does not seem to be the thinking of a lot of people in the administration, um, versus someone like bein who does, you know, certainly at different times has suggested that the goal is to negotiate and ultimately to get better terms of access for, uh, US producers in a foreign market.

And so, you know. One of those positions Japan can work with, you know, Japan, you know, if the goal is, you know, okay, we'll give you some concessions and then you'll, you'll remove, you know, you know, some of these tariffs you're imposed. And then we say, you know, great, we made a deal. We have a, you know, stronger economic, um, economic ties between our countries and we go forward. But if that's not the situation, um.

There's, there's not a lot, I mean, Japan's not gonna just accept, you know, 25% tariffs on, uh, its largest, its single largest, uh, category of exports to the United States. I mean, it's, it's, you know, that, that is just such a red line. And now of course, today, you know, Trump comes out and says that auto tariffs are gonna go even higher. Um, I mean, and, and, and I mean, I think that the important thing too, to note, and, and this is, I think.

Something that I, I have been, uh, personally frustrated with watching the Trump administration do trade policy is that, uh, they either don't realize or don't care that other countries have domestic politics too. And so what we've seen over the course of these negotiations, uh, as you know, we've had successive rounds of usan talks, has been UBA saying, uh, you know, these auto tariffs are absolutely unacceptable. You know, you know, we cannot sign on to an agreement. Does that, does not, uh.

I mean the, the, the demand has been eliminate, I think now they're now getting to a point where at least they have to be reduced. Um, but the point is that if, if. The Trump administration's not even willing to discuss them, and now they're talking about raising them even further, then there's no real basis for an agreement because frankly, an agreement that doesn't have some concessions from the US on automobile tariffs is not something that Japan is going to be able to sign onto.

And it's certainly not something that, uh, Ishiba can sign onto, uh, without really, you know, paying a price domestically. And he has, he has positioned himself so that he can't, uh, sign on to that without paying some price domestically.

Do you think that this has done fundamental and even irrevocable damage to US Japan relations? And if so, what does that look like three years from now, five years from now? Or is Japan in the category of countries like Canada, which okay, like yes, it's rude and it's heavy handed and everything else, but you don't really have a choice but to go along because you're too exposed either from a trade perspective or a security perspective or, or anything else. So take that one however you want.

At least a decade, you know, you know what exactly, you know, what exactly are you prepared to do has been the question I think from, uh, you know, from Japan as far as the United States concerned. So they've already been living in a world where, uh, the reliability of the United States, at least as an economic partner, uh, has been in serious doubt in Tokyo for a while, and they've already been thinking about how do we, uh.

Design and protect a, you know, a rules-based international economic order, uh, on the basis of the United States. Is it best going to be, uh, an inconsistent partner? Uh. And, and you also, that was during the Biden years, right? Where, you know, I think there was a lot of frustration that on the one, you know, from one side of the mouth, they talked about French shoring. And now on the other side of the mouth you had, you know, Biden opposing, you know, DuPont Steel buying US steel.

So, I mean, there's, you know, this, this, this is not just about Trump. This is not something that began, you know, in April. This is, you know, really, uh, a longer term, uh, disenchantment, uh, and frustration with the United States really stepping back and pulling back from, uh. Playing, you know, a, a, a rulemaking role both within Asia and also within the global, uh, the global economy. And so, uh, you know, Japan's already been thinking about its plan Bs on that front.

You know, it's already, uh, viewed, uh, you know, brought TPP back to life. Um, as part of that effort, it has drawn closer to the EU as part of that effort. Uh, you know, deepening ties with various, um, you know, various countries in Southeast Asia, even, you know, viewing China as, um. Find, you know, finding a way to, uh, live with China and continue to have an economic relationship with China, you know, navigating US China frictions and the impact that has on Japan.

And so Japan's already in this mindset of thinking about, okay, how do we, um. How do we navigate a world where the United States basically is sitting out a lot of, uh, efforts to integrate the global economy. So we're gonna see that continue. You know, there's already talk about how do you bring, uh, TPP and the EU closer together. So you're, you're almost creating this kind of advanced set of, of global economic rules.

Um, kind of sidestepping the log jam at the WTO sidestepping, uh, you know, the US setting things out. So we're already seeing that. Um, the bigger. Question when it comes to the reliability of the United States is more on the security side and you know, do things, you know, do you see the kind of spillovers or do you see the kind of actions from the Trump administration where Japan really says, you know, we really don't feel like, you know, the US security guarantee, uh, is.

Is, is viable, is alive, you know, you know, there's been things, you know, whether it's, you know, uh, actions undertaken, uh, or that could be undertaken by Trump or, uh, rhetoric. I mean, you know, and at this point, uh, you know, a lot of that now is, is speculative. It's been on the back burner. I mean, clearly, you know, trade is, is, uh, front of mind, and that's the main focus.

Uh. But if there is reason down the road to really question, uh, the credibility of the US security guarantee, then you're really gonna see, uh, you know, real change in Japan's approach, you know, to its relationship in the United States. Uh, and, and really with it then it's approached the world. But for the moment, you know, it does seem that the trade issues are somewhat insulated from

All right. Well, I'm gonna do the bane of, of all analysts existence. I know this 'cause I am one. I'm gonna ask you two different hypotheticals. The first is, um, okay, well let's say the United States hypothetically says we're not gonna defend Taiwan from China in the future. I. Like, what, what options does Japan have at that point? Or does that, does that not even matter to them?

Does the hypothetical have to be that the United States says we're not gonna defend, uh, contested islands in the East China Sea or something like that, that are contested between Japan and China? Like, China can have those, like what, what happens in that scenario? Like what, what options does Japan have?

So, um, you know, so good luck. Um, the, you know, of course. You know, in theory, um, Japan's still not gonna say, okay, us go home. I mean, if, if, if part of that is, you know, the US is gonna keep bases in Japan and you know, like we're, you know, the line just happens to, you know, mm-hmm. Be, um, just east of Taiwan. Um. That's one thing.

I mean, I think Japan will be very unhappy about that because, you know, the sort of, the geo, the geo strategist, you know, look at the map and they say, you know, if, if, um, you know, Taiwan is, you know, integrated into mainland China, um, you know, it gives, it just, I mean, is is a physical threat to Japan. Just, you know, where it mo you know, moving, uh, China's naval presence, you know, that much further east, you know, and, and having access to the Western Pacific.

Um. That is just something that I think Japan is, is concerned about and, um, you know, so just, you know, from a sheer recognition of, uh, geography is, is concerned about. Um, but I mean, if it does mean grand bargain with China and therefore we don't even need our alliance system in Asia, then clearly that's, you know, that's a major wake up call and, and, and a crisis for Japan. Um, and it's not.

You know, it's, it's uncomfortable for Japan because it's not something that, you know, if it happens without, with little warning, you know, you get sort of a Trump shock. You know, Nixon, Nixon in 1971, style shock. Then, um, you know, almost overnight, you know you're gonna get, um. You know, a feeling of panic in Tokyo, but maybe not a lot of good options and mm-hmm. You know, even for the discuss, you know, all the discussion about, you know, Japan is a latent nuclear power.

Uh, you know, as soon as you start looking at the details of, in the complexity of that, you know, that is not something that, uh, you know, even, you know, you know, you hear sometimes like cavalier suggestions that it could be done in six months. I mean, um. I mean, it is not, uh, not something that can happen easily. And in the meantime, what happens? Um, you know, you know, when, you know during however many months it takes to, to have your own nuclear deterrent.

Um, you know, what sort of, what sort of coercion are you vulnerable to? So, um, you know, it's, it's such a, a. Drastic hypothetical that it's really hard, you know, it's really hard to know. How does the Japanese public respond? How do Japanese elites respond? I mean it's, you know, certainly from the moment it's very hard to imagine, you know, Japan wanting to reach some sort of accommodation with China or some sort of, you know, finlandization.

You know, like, will, you know, you leave us alone and you know, we won't make any trouble for you. Um, in foreign policy. I mean, that's. That's also hard to imagine. Um, but, you know, in a, in a shock situation, United States decides that it's, it's pulling out, um, a lot of things that seem unthinkable now could become possible. And, you know, there certainly will be people domestically in Japan arguing, uh, you know, you know, do we wanna really, um.

You know, lift, you pick up the sword essentially that the US would be dropping down and, and you know, that that's gonna be a really tough, uh, debate domestically

All right. Well, second hypothetical, uh, Shinzo Abe and Donald Trump had a very close relationship. Donald Trump thought very highly of him. If he's still alive, does this look diff completely different or do you think that the way that Japan, US relations have played out here in the first six months of the Trump administration would be. Fundamentally different if he had not been assassinated.

You know, the fact that he went to meet him right after, uh, right after he was elected, when, you know, no one else really knew what to do. And, you know, Abe got on a plane and went very quickly and met with him at Trump Tower. Um, you know, that I think won him a lot of credit. You know, they, uh. Early visit to Mar-a-Lago after inauguration I think got him a lot of credit. And so, um, that in some ways maybe, uh, certainly delayed some things. It certainly may be avoided.

Uh. More severe outcomes, but I, I, I would argue that you really got diminishing returns from that personal relationship as well. That by, you know, 2018 when Trump starts, uh, talking with North Korea, you know, you get Abe calling up Trump constantly, you know, please don't forget Japan. Please don't forget Japan. Um, and I don't think that worked with Trump personally. I think to the extent that Trump's or that Abe's sort of efforts to, um.

Kind of prevent a bad deal with North Korea that would harm Japan. Uh, I, I think he had help inside the Trump administration. Uh, you know, I think there's, you know, been reporting about, you know, John Bolton basically, um, working with Abe to, to help, um, prevent, uh, you know, a, a deal that would basically let North Korea, uh, keep it to nuclear weapons and basically get, you know, uh, you know, a, like a steal of approval for its, you know, for its arsenal. Um, mm-hmm.

You know, if that hap, you know, if you saw similar talks happen now, would would it look like that? Probably not. Um, even with Abe around and, you know, also, you know, Abe, you know, really, you know, was not eager to get into a situation of doing us Japan, you know, by an federal trade talks. And, you know, Trump threatens automobile tariffs and what happens, Japan has to come to the table. So, um. Things weren't always as, uh, pleasant and cheerful, uh, and and friendly as people remember.

Um, you know, and, and Trump, of course, is perfectly capable of talk, you know, like is happy to talk about how much he likes this place or is friendly towards that place. Um, but then we'll turn around and, and, you know. Slap tariffs on a country, right? I mean, you know, right before Liberation Day, what was it? Israel was saying, you know, we'll take all US tariffs, you know, all US codes, you know, due to free and did it matter? No, it didn't matter.

And um, you know, so there's clearly a limit, you know, to how far personal diplomacy. What would Trump even during the first term, and clearly I think during this term, you know, he feels more confident. You know, he won the popular vote last year, feels stronger. He's been there before. You know that this is not, um, you know, he's not as, I think, susceptible to flattery maybe as he once was or, or certainly, um, also maybe is wier and is, is willing to let.

Those engaging in flattery, think they're, they're getting something from him. And, um, you know, ultimately, you know, he, you know, is happy to let them think that, but is ultimately not giving up anything, um, in return. So, I, I'm, I am not. Necessarily convinced that things would look different. Right. You know, that would, would the Liberation Day tariff, would, would Abe have been able to convince Trump to exempt Japan from those? I don't, I don't think so.

Um, would the kind of, you know, would Abe have been able to, um, kind of navigate, you know, the, the internal divisions, you know, on trade that we've talked about, um, in this conversation? Not necessarily. I mean, um. You know, the people within, um, you know, the, the Navarros and the Latinxs.

I mean, you know, would Abe be able to, um, kind of, you know, lean on the scale so that, um, kind of they're overpowered and, and have to kind of make a, make up friendlier deal with Japan just because, you know, Abe, um, could get Trump on the phone easily. I, I'm not convinced, I, I'm really not convinced. Things seem just very different this time around.

All right. Let, let's move away from, uh, the United States. Let's talk a little bit of about, um, Japanese relations with China. Um, in late December, you had Japan's foreign minister visit China. A couple interesting meetings. Also met China's foreign minister. You had. Some follow up in March about, you know, consensus points and pledging economic co collaboration and things like that at the same time. I mean, if you look just at, uh, I looked at the South China morning post this morning.

China's military saying Japan is breaching its pacifist constitution with long range missile tests. So it's not like everything is perfect. Um. You also, I mean, I don't know if these reports were ever confirmed, but about, you know, South Korea, Japan and China coordinating some kind of response to us tariffs like that was sort of denied by one side, maybe by one side. And no, this has, you know, sort of all over the place there.

So where, where do us, uh, excuse me, where do Japan China relations stand from your point of view? Have they gotten better? Is it basically still the same? Are they in flux? Like where, where are they? Um,

I mean, you really have had efforts, uh, really going back a year now by the Japanese government, uh, to try to repair some of the damage. Um, you know, things were, uh. You know, it's, it's been this rollercoaster, right? You know, under second Abe things started out really poorly and, you know, out of military tensions and wars of words and battles over history.

Uh, and then by, you know, by 20 16, 20 17, not coincidentally after, after Trump takes office, I mean, you did have, uh, Abe really investing in trying to improve the economic relationship with China. Uh. You know, get on the same page, find opportunities for cooperation. And, you know, to the point where the, you know, in 2020 had COVID not happened, Xi Jinping was supposed to visit, you know, to, to visit Japan on a state visit. So that, you know, that was sort of where things were.

And then COVID happened and, you know, trying to, uh, you know, what came down heavy on Hong Kong. And, and there's a real backlash to that in, uh, in Japan. And that really, um. Sour things, and you know, you've had worse, you know, trade friction with, uh, with the United States and, you know, the Biden administration's approach and, and Japan tagging along with that. And so, I mean, so you, I mean, you've just had this, um, decline now for the last five, you know, four or five years.

And now they're at this point now of, okay, how do we undo some of that damage? Which, you know, not only is it, you know, you know. You know, this export control and, and, you know, you know, foregoing this, uh, this visit and announcing this military, you know, exercise with this country. You know, just like the series of, uh. Steps that really have, um, heightened tensions. I mean, it's also just trying to restore, uh, channels of communication.

I mean, that, that really is, I think the, the most important thing we've seen over the last year. It's been less about, you know, tangible improvement, um, which has been very halting and has been more about, you know, how do you get, uh. You know, getting Japanese political leaders back to China, you know, who used to have these kinda regular delegations going over and, and having communication. How do you get business delegations going back?

How do you then have, uh, you know, communist party officials coming on, on visits to Japan, Chinese government officials back to Japan, um, just restarting some of these exchanges. So, you know, the exchange of views are there. And I mean, and that really, I. I think that that has been the most important thing. You know, really going back to basically roughly September of last year, you've now had a series of exchanges. Things seem much more routinized.

Um, you know, the communication is happening. Um, even if, uh, you know, just getting over some of the, the real challenges is, is proving very difficult. They're at least talking to each other.

Um, uh, I think. I think President Biden, one of the things he got the least amount of credit for was the way that he really ironed out some of those disagreements between Japan and South Korea. Now, he had a favorable South Korean government to do it, but hey, he knew it was an issue. He tried. It was sort of a major, I think, a major success story for him. Does all that go away?

Early returns from the South Korean government suggest that, uh, maybe a little more pragmatic than the progressive label looks. Maybe they want to continue to deepen or at least keep relations with Japan, um, and with the United States fairly good. Do you see any imminent. Change there. I mean, there's been also some things about maybe South Korea and North Korea relaxing things a little bit.

And you can imagine if we return to Fire and Fury and Rocket Man, we'll put that, we'll put that VHS back in and start replaying some of the Trump won, um, episodes from that sort of thing. So, and any, is this a source of optimism for Japan? Is this a Oh no, not this too, like the sky is falling. Is it somewhere in between? Um, how do we think about it?

I mean, president Lee has, uh, been saying the right things and on the campaign trail, you know, was saying the right things and, um, you know, but in general, when you have, um, you know, a, you know, in, in some ways, in some ways, I mean, the situ, it's not quite like, you know, when Moon, uh, uh, moon Jian was president, but the last time. Progressive Korean president, right?

Because then you had a progressive Korean president and a pretty right wing Japanese Prime Minister in Prime Minister Abe. And, um, the, you know, this, you essentially got this sort of escalatory spiral on history issues as a result of that. Um, you know, in part because you had, um, kind of the, the, the each, each leader's domestic base was essentially pushing them. Um. Yeah, away from, you know, the pushing the two countries apart.

And so the question is, um, you know, circumstances are a little different now, and in part also 'cause I think, you know, views in, in, uh, South Korea have changed, maybe even less about Japan and more about, you know, fears of China I think are pretty well ingrained. Um, you know, I think one of the things that, uh.

Japanese, uh, elites and particularly, you know, more right wing Japanese elites have been convinced of is, you know, China, you know, South Korea, you know, they're too close to China. Uh, they're not reli, they're not a reliable partner when it comes to security in the region. You know, we can't trust them, and so therefore it's not worth investing any, you know, real effort in trying to get along with them anyway. And. I think the mood in Tokyo maybe has changed a little bit on that.

There's a little more willingness to see that okay, maybe the South Korean people as a whole are, you know, are, you know, skeptical of China. They are, you know, that there is the material for uh, kind of broader security cooperation, um, on that. Um. So that might be in the backdrop of, of the kind of new tone that we've heard from, from President Lee. I mean, the, the question, you know, in all of this is, I mean, it's easy to say it on the campaign trail.

It's easy to say it now after you've been, you know, elected and inaugurated. Uh, the question is, when, when something happens, the test, the relationship, what that, you know, do you grandstand for your, for your core supporters or, you know. Do you do shuttle diplomacy? You know, and try to, you know, try to get to a situation where cooler heads can prevail and you can say the relationship is bigger than this.

You know, we have to, you know, we can't let, um, you know, sort of, uh, you know, a legal case about history, you know, something historical or, you know, historical claims, uh, derail, you know, cooperation about other issues or, you know, more kind of tangible future looking, uh, cooperation and. You know, it's, you know, until we actually see something like that happen, um, that remains to be seen.

I mean, in some ways it's not bad that, um, um, prime Minister Ishiba, uh, is in power in that, you know, he is a, he is, you know, in a Japan. Context on, you know, as far as relations with Korea go, I mean, he's relatively progressive about it. I mean, he's been, um, you know, he has called for much more reckoning by Japanese with what Japan actually did in Korea. Um, you know, it's something that makes him not particularly especially popular with the, the right wing of his own party.

Um, you know, it'll be interesting to see, you know, this is of course a big, um, anniversary year. Um. Both, uh, for the, um, you being the, uh, uh, 60th anniversary of normalization or establishment of diplomatic relations between Japan and South Korea. Of course, it's also the, um, the 80th anniversary of the end of World War ii, and, and Yeshiva has made noise about wanting to put out some sort of statement. It's not clear what sort of legal status that statement will have.

I mean, and there's debate, you know, con, that's been a pretty, uh. Length debate, uh, in Japan about what kind of statement Ishiba will be able to make. But, um, you know, there's some opportunity there for, you know, a prime minister like Ishiba to maybe, um, say some things on these occasions that, you know, um, to maybe disarm some South Korean, uh, skepticism or hostility towards Japan. You know, having a, a prime minister say that, um, I mean the, the problem.

Um, Farba of course, is that as long as his, uh, political situation is a little weak, um, he may be limited in what he can say for fear of backlash from his right. And so, so that's something to consider. I mean, and, and, you know, he might be the right person, but is not necessarily in a position where he can just say whatever he wants with, you know, without fearing for, uh. Political, you know, political consequences.

So, um, you know, maybe, and maybe ultimately for the long-term stability of the bio relationship, the best thing would've been if, if someone like Abe could have, um, made some sort of more kind of deeper heartfelt gesture with a Korean progressive in power. Um, and that might have maybe resulted in, in some sort of more durable, uh. Kind of settlement.

But, um, you know, so the potential for friction is there, you know, even with, uh, with me saying the right things, um, there's, you know, there's still, you know, there's still plenty of hostility in both countries, uh, waiting to be inflamed. Um, so yeah, it's, that's really the thing to watch for, you know, is, is there a, uh. You know, a catalyst at some point that really undoes some of the work that we've seen. Hmm.

Uh, if I'm, if I'm reading your tone correctly, um, let's, let's pivot a little bit now to, to Japanese domestic politics, um, at your advice. Uh, I started, I'm slowly working my way through the nobility of failure by Ivan Morris. Uh, loving it, by the way. And the last time we talked, you mentioned that maybe, uh. Ishiba would, would be, would be a chapter in this book in the future. Uh, and things weren't, did not seem to be going particularly well at the beginning.

We could talk about rice prices, we could talk about terrible approval ratings, potential votes of no confidence, but he seems to have turned the ship around a little bit, like his approval ratings starting to inch up. You've got some pretty good pushes on, on trying to lower rise. You've got some deals with the opposition about pension reform. So where, where are you at with Yeshiva? Do you think it's fundamentally the deck is stacked against him? Is he turning it around?

Is he still gonna be the tragic hero? Like how are we feeling a couple months in? Um, yeah,

I mean, his, you know, his premiership now has been, you know, fundamentally shaped by the fact that he is at the head of a minority government and everything has to be negotiated. Uh, every, you know. Everything requires, you know, consulting with multiple opposition parties, trying to convince at least one of them to support something that his government wants to do. And predictably what that has done has forced him to scale back, back his ambitions.

And, you know, the criticism, you know, you know, even, and especially from within the LDP has been, well, you know, we don't know what he wants to do. You know, he has not really, uh, you know, laid out a vision, you know, and, and I mean, and some of that is just, he's kind of a different sort of. Politician, you know, for doing like the kind of fox and hedgehog dichotomy.

You know, Abe in, in a lot of ways was something of a hedgehog in that, you know, was like absolutely fixated on, on this idea of kind of national greatness and, you know, make Japan great again. Perhaps we might call it, you know, that, you know that, that, you know, all out effort to make Japan stronger, to make Japan wealthier, to to leave behind, uh, the. You know, the, the frustrations and the difficulties of the lost decades to make Japan powerful and relevant.

Uh, that's, that's not kind of how Ishiba is. Ishiba is much more Fox like, you know, much less animated by this sort of big, obsessive vision. Um, much more, uh, adapting responsive. He's not really, he's not terribly ideological ultimately. Um. So, um, you know, it's, it's just a reason.

You know, in some ways it makes him well suited to the situation where he has to negotiate and he has to be willing to compromise and, you know, be extremely flexible on, uh, what he's willing to concede on when it comes to negotiating on, on policies with the opposition. Um, but it does mean that we just don't know, um. There's not, there's not a huge vision that he's, you know, gonna put all of his effort into trying to achieve.

I mean, there really is just a sense of he's just trying to survive here as long as he can and sort of walk this tightrope, um, and, and hope it, uh, just hope it works out. And I. You know, for people who are used to watching, you know, you know, expecting a leader to be like Abe and to lay out this grand vision and you know, this, this is what we're working towards. Even if there's gonna be momentary zigs and zags, that's not what you're getting with Ishiba.

And, um, and so that's, I mean, that's just, that's just the difference. Um, you know, he's got his big test in about a month when there'll be upper house elections. Um, and I. Basically, I mean, it really will be make or break for his government because if, um, if they can, if the LDP cannot hold, or if the ruling coalition cannot hold the upper house majority they have now, it's very hard to see how Ishiba survives that.

So, um, you know, talk, we'll have to, we'll have to revisit things in a few weeks and see if he's still, uh, if he, if he's still around, because every, everything for him is going to be writing on that.

And maybe it'll, maybe it'll determine his fate in, in those elections that you just talked. Uh,

Um, you know, there has been, uh, a long-term secular decline in Japanese. Rice consumption that, you know, people just are not eating as much as they used to. I mean, it's still, you know, an absolute staple of the Japanese diet, but it's, you know, what Japanese people eat now is more diversified than in the past. So, relatively speaking, they're just consuming less rice.

And so, um, you know, you, you've had that and you know of, as a result, you know, the farmers are kinda factoring that into their, um. Each of their calculations when it comes to, to acreage. And of course, the Japanese government is still, uh, despite reforms in the past, is still, uh, paying farmers not to grow. So, you know, there's, there's just, there's not a lot of, uh, flexibility in the production system.

Uh, another factor that's been cited is that just with the tourism boom, um, you have lots of foreigners coming and even if, uh. The Japanese people are eating less rice. Well, you have all these foreigners come who want to come and eat sushi and want to eat all this, uh, you know, they want to eat the rice. So, um, so you had shortages last year and then, uh, and then you just have prices, you know, steadily start rising. And, you know, we saw, um. Prices in April doubled 98% year over year.

And that was, you know, sort of now like the peak. And that really put this at the center of the agenda, you know, it's been sort of rising in importance. And, and with that it was, you know, wow, okay. Like this is, you know, people really, um, are, are struggling with this. And also because it's such an important component in a lot of other food, um, it was, you know, fueling higher than, you know, over, you know, higher, um.

Higher than the 2% inflation target, uh, inflation steadily because, um, you have this expensive input now that is, that is making other things more expensive or at least you know, among, you know, depending on which, uh, type of inflation you're looking at. Um. So, you know, clearly a problem, clearly contributing to, uh, cost of living increases that, uh, new households are feeling. And, uh, somewhat fortuitously for Ishiba.

His, uh, his agricultural minister, uh, had a, a Marie, I mean, literally people were calling him, uh, Marie Antoinette for saying this. You're saying that, uh. You know, I get so much rice for free for my supporters, uh, that, um, I don't have to buy any rice and not, not something that went over terribly well with the public. And so after a couple days, he was asked and the popular kojiro was brought in to be agriculture minister.

Uh, and with that, uh, the government basically announced an entirely new approach to this problem of. Rising rice prices. They've been releasing rice from government stockpiles for, uh, several months now. But the system that they were using to do that was auctions.

And basically what was happening was that you would be having these, you know, you, you'd have the auctions to buy government stockpiled rice, uh, and people would be buying, you know, they basically wholesalers or, or suppliers rebuying it and then holding onto it, you know, with the ex, you know, assuming that, okay, well if we just hold onto it the way prices are going, we'll just sell it, you know, for more. Um, in, you know, in a month or two.

And so, um, they recognized that that approach wasn't working. And so what Kazumi announced, basically the day he took office, was that they were gonna start, uh, making deals with major retailers directly and start selling, uh, from the government stockpiles directly to the retailers. And there was a, basically a stampede of major retailers to sign up for this.

Um. And it, I mean, it's polled very well and the rice is now starting to arrive in stores and, and overall rice prices are starting to tick down. So, so far that looks like they've maybe turned a corner. I mean, it looks like a, a really successful reboot of their Rice Pro policy. Uh, there are now bigger structural questions because, uh, lower rice prices, well, who doesn't like lower rice prices? The rice producers that are also an important LDP constituents. So, um.

We're starting to see the beginnings of a bigger debate about. Japanese agricultural policy. How do you, you know, how should you subsidize farmers? How you should protect farmers? You know, should they just stop discouraging them from planting rice altogether? Let them plant more, um, but really do export promotion and really start trying to sell Japanese rice overseas.

Uh, have other sort of subsidies and so that, that debate is to come and will be, I think, a major issue, uh, after the upper house election. Uh, but for now. You know, the focus really is how do you get more rice into stores and bring prices down and, uh, you know, so far so good for ishiba and zumi.

I, I find Japan I are, are you finding you're getting more interest in people in Japan? Because for a long time I feel like Japan has been this, I don't know, not a black box, but it's like I understand China better than I understand. Japan. 'cause there's just more access to information readily in English about it. And it's like less, I, I don't know. It's, it's easier to read.

Have have you noticed a significant uptick in interest in what you're doing, or is it still, still relatively quiet when it comes to Japan?

I mean, all of that I think is now weighing on, on people's minds. So, uh, no, definitely I have noticed. You know, for my business, Japan foresight, you've definitely noticed more, uh, more interest, more inquiries about it. And I welcome those inquiries of course. But, uh, yeah, no, it feel, it feels like a good time to be watching Japan.