November 3, 2017 / 5:12 AM / a year ago

Breakingviews - Abe best off keeping Trump out of economic rough

HONG KONG (Reuters Breakingviews) - Shinzo Abe will have to be on more than just his golf game this weekend when he meets with Donald Trump. The Japanese prime minister is hosting the U.S. president and they’re slated to play at least another nine holes together. Abe would be wise to stay on the geopolitical fairway and out of the economic rough.

U.S. property magnate Donald Trump practices his swing at the 13th tee of his new Trump International Golf Links course on the Menie Estate near Aberdeen, Scotland, Britain June 20, 2011. To match Special Report USA-ELECTION/TRUMP-GOLF REUTERS/David Moir/File Photo

Japan has fared better following the U.S. election than might have been expected. Abe rushed to meet Trump soon after he won and has since maintained close contact. The result has been a better rapport than most world leaders enjoy with the disrupter-in-chief. And despite Trump’s hatred of trade imbalances, his transactional worldview, and radical suggestions during the campaign about Asian security, America has recommitted to the longstanding alliance.

The latest face-to-face talks are likely to focus on the threat across the Sea of Japan. That makes sense: both men take a similarly dim view of North Korean leader Kim Jong Un. And Tokyo fears being surprised by a U.S. strike, which could have unpredictable consequences.

Abe mostly likes the economic status quo, though. Maintaining it will be a challenge given Trump’s instincts, and the $57 billion trade surplus Japan ran last year with the United States. Tokyo does not want a bilateral trade deal forcing down the gap by opening up sensitive markets such as rice. It prefers bigger pacts, like the Trans-Pacific Partnership, which it has helped stitch back together after the U.S. withdrawal. Any pressure to strengthen the yen, now comfortably weak at 114 per dollar, would also be worrying. It could derail a lengthening upturn in growth.

As Takuji Okubo of Japan Macro Advisors notes, Abe already has successfully separated the “potentially thorny trade issues” from the top political relationship. These are now being handled separately by Vice President Mike Pence and Japanese Deputy PM Taro Aso.

The arrangement turns such matters into slower-burn, more technocratic issues. That has been yielding small wins for both sides: most recently on persimmons and potatoes, for example. The last thing Abe needs is for Trump to take a fresh swing – on the golf course, Twitter or beyond – at Japan’s economic policies.


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