New Trump Administration
The inauguration speech of the newly elected President Trump made it clear that he is extremely eager to promote an “America First” approach and break with the previous administration’s policies to embark in a new direction. The specific details of his policies have not yet been set out, but overall they are aimed at promoting industry. Major tax cuts, deregulation, and investment in infrastructure are policies designed to strengthen the US economy; if the US economy strengthens and becomes a driver for the world economy, this would also provide a boost for the Japanese economy, accelerating its recovery. We will be watching closely to see what kind of policies are announced, and how they progress.
In terms of trade policy, however, President Trump stated in his inauguration speech that the protection of US industry is the key to achieving great prosperity and strength. If we take this literally, we cannot help but feel concerned. Protecting domestic industry is not the way to achieve economic growth, progress, or change: industries protected by the government may get weaker, but they do not get stronger. Although President Trump has officially declared his country’s withdrawal from the Trans-Pacific Partnership (TPP), therefore, we need him to understand that the TPP has great significance both strategically and economically, and it will be a source of prosperity and stability for the Asia-Pacific region. The Japanese business community will not give up on TPP. We will work with the Japanese government to appeal to President Trump, encouraging him to change his mind.
President Trump has also indicated a policy of reviewing NAFTA. A large number of Japanese companies have made huge investments in Mexico and built value chains in North America. Although there will be no direct effect on the Japanese economy immediately, depending on the direction this NAFTA review takes, it could eventually have a major impact on Japanese companies, and may lead them to change their strategies. There are numerous issues to be addressed, including the relationship with the World Trade Organization, so we will be keeping a close watch on the negotiations among the member nations—the United States, Canada, and Mexico.
Meanwhile, the Japanese business community will be addressing these moves toward protectionism by calling on the United States to work toward a free and open framework for trading and commerce. It is important to help President Trump understand that Japanese companies are integrating into US society, building interdependent relationships, and contributing greatly to economic development. Keidanren has sent missions to the United States two consecutive years, and in 2015 we held talks with Vice President Pence, then the governor of Indiana. We will use the relationships we have developed thus far to continue engaging with key people in the Trump administration. I also want to send another mission this year—once the new administration’s policies and key people have become clear—to exchange opinions with leading government figures at the federal and state levels, as well as with the US business community.
The recent demonstrations witnessed in the United States are to some extent probably just the aftershocks of an intensely fought election. However, now that the new president has taken office, I think he will use his leadership to work toward social unity. I hope that measures to achieve unity will be set out, leading to the healing of divisions.