Japan Braces for Trump-Style Pressure on Defense Spending and Yen Policy

Japan is bracing for renewed pressure from Washington on defense spending and yen policy ahead of the US midterm elections. Officials in Tokyo are preparing for potential demands from the Trump-aligned wing in Congress to increase Japan's contribution to its own defense, with some calling for an acceleration or even exceeding the country's current target of raising defense spending to 2% of GDP by 2027.

Japanese policymakers and diplomats have been closely monitoring the US electoral landscape, aware that a shift in power could embolden lawmakers who advocate for tougher stance on allies' defense contributions. This renewed pressure comes as Japan has already made significant strides in increasing its defense spending, with the government announcing plans to reach the 2% target by 2027.

On the currency front, the yen remains a point of friction between the two countries, with Washington historically viewing a weaker yen as a concern for trade competitiveness. Japan has intervened in the foreign exchange market in recent months to support the currency, which has traded at multi-decade lows against the dollar. Any renewed US pressure on currency policy could complicate Tokyo's efforts to stabilize the yen.

The midterm elections carry significant implications for this dynamic, with a shift in power potentially influencing the administration's approach to currency and trade policy. Japanese officials are said to be preparing for multiple scenarios, with contingency planning reportedly underway across government ministries.