How Trump’s perception of Japan collides with today’s economic reality
Japan was the genesis of President Donald Trump’s tariff-led approach to reshaping the global economy. When he lands in Tokyo, trade will again be on his agenda.
October 26, 2025
TOKYO — The Japan that first caught President Donald Trump’s attention in the 1980s was a Japan of glitzy excess and big dreams, a place so flush with cash that businessmen dropped $14,000 tips at hostess bars and golf memberships cost upward of $3 million.
Sales of high-end models of Ferrari and Mercedes-Benz cars soared. Land values were so high that the Imperial Palace grounds in the center of Tokyo, measuring just over 1 square mile, were worth more than all the real estate in California.
In the 1980s, when the 30-something real estate developer built a golden tower in New York on Fifth Avenue bearing his name, Japanese companies snapped up prime property in the United States — including Rockefeller Center near Fifth Avenue.
Japan was also a global leader in innovation: It had invented the Sony Walkman, VCRs and Nintendo games. It seemed like Japan owned the future.
A renowned Harvard professor had even published a book called “Japan as Number One,” so certain did it appear that Japan would leapfrog the United States to become the world’s biggest economy.
This Japan appears to be the animating principle behind the tariff regime that Trump, now on his second presidential term, is using to reshape the global economy and stop, as he said, wealthy economies from “ripping off” the United States, experts say.
“First they take all our money with their consumer goods, then they put it back in buying all of Manhattan,” Trump told Playboy magazine in 1990. “So either way, we lose.”
His solution, then and now: tariffs.
But Japan today is not the go-go speculative booming Japan of Trump’s memory. Today, Japan is number four.
Trump will arrive in Tokyo on Monday, his first trip of this term. He and Japan’s newly elected prime minister, Sanae Takaichi, are expected to discuss the U.S.-Japan trade agreement, under which Japan agreed to 15 percent tariffs on all its exports to the United States and promised to invest $550 billion into the country.
But Trump’s trade policies are stuck in the era of competition four decades ago, analysts say.
“He’s never really let go of that perception of Japan as a peer challenger … even as Japan isn’t exactly a peer competitor with the United States anymore,” said Paul Nadeau, an expert in international trade policy at Temple University’s Japan campus. “He never got past it.”
Like every prime minister since the real estate bubble burst in 1991, Takaichi has vowed to reinvigorate the Japanese economy.
By 1991, the greatly inflated stock and land prices collapsed after the Japanese central bank aggressively raised interest rates to cool the market. It brought about a financial crisis that led to prolonged economic stagnation for more than 30 years, known as the “lost decades” of almost no growth.
Corporations became hesitant to invest, and the spiraling demand led to a long bout of deflation. The Asian currency crisis in the late 1990s, major natural disasters and the Japanese central bank’s policies contributed to the slump.
Now, Japan faces a multitude of economic problems: a rapidly aging and shrinking population, with around 30 percent of its population of about 123 million over 65 years old.
A severe worker shortage caused by a shrinking population and low fertility rate have opened the door to more foreign workers than ever before — a big change in homogenous, immigrant-wary Japan.
A weak currency. A cost of living crisis as prices are finally rising after three “lost decades.”
And Japan’s automobile industry, which was a source of trade friction with the United States both in the 1980s and currently in the second Trump era, is now lagging behind China as the world’s largest auto exporter, particularly in the global shift toward electrical vehicles.
Japan is now known for its social stability rather than rapid growth, with its exceptionally punctual trains, impeccably clean streets and a deep cultural commitment to social harmony.
But the sluggish growth of the past three-plus decades also means the decadent tales of Japanese luxury in the 1980s are now a distant memory.
“In retrospect, there was obvious hubris,” said Jesper Koll, an influential economist who has been a resident here since 1986.
In 1987, Japan’s GDP per capita surpassed that of the U.S., creating profound shifts in Americans’ view of their place in the world.
“The envy of being outbid by the Japanese during the bubble was certainly there. It absolutely shaped [Trump’s] world view,” Koll said, adding that Japan showed the United States’ economic dominance could be challenged.
“Germans had cars, but they weren’t in your living room, they weren’t your landlord,” said German-born Koll. “Whereas the Japanese, they made your cars, they were in your living room, they were your landlords.”
Even as American fascination with Japanese culture and products grew — and memories of World War II receded — a wave of anxiety about Japan’s economic rise swept the United States. In 1987, some members of Congress gathered on the Capitol lawn and smashed a Toshiba radio with sledgehammers to show their disdain for the Japanese electronics company.
Trump, a New York real estate developer at the time, latched onto those frictions.
In 1987, he paid almost $100,000 to take out full-page ads in The Washington Post, the New York Times and the Boston Globe complaining that “for decades, Japan and others have been taking advantage of the United States” by not spending enough on its own defense. He argued that the U.S. should “tax the wealthy nations” like Japan, which “built a strong and vibrant economy with unprecedented surpluses.”
That is an approach he has applied with vigor in his second term, slapping tariffs on countries rich and poor alike. He has been particularly strident in his approach toward China — the country now lining up to overtake the United States — and has threatened aggressive tariff hikes and extended strict controls on exports of the advanced computer chips China needs to pull ahead.
The good news is that Trump’s views now on tariffs — and Japan — can also be moderated.
(photo)
Trump, visiting Tokyo in 2019, dines with first lady Melania Trump, then-prime minister Shinzo Abe and his wife, Akie, at the Inakaya restaurant in Roppongi. (Kiyoshi Ota/Getty Images)
Nadeau, of Temple University, noted that during Trump’s first term, when he questioned the value of alliances and demanded Japan pay more to host U.S. troops, he still developed a friendship with then-prime minister Shinzo Abe, who managed Trump’s impulses to lash out against Japan through flattery and golf games.
And officials in Trump’s second administration, such as Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer, have similarly helped bring more nuance into the U.S.-Japan trade relationship, Nadeau said.
Plus, some things have gone Trump’s way in the intervening decades.
In 1990, Trump visited Tokyo on a business trip to meet with Japanese bankers and to attend a boxing match featuring American boxing champion Mike Tyson. Trump wasn’t completely taken with the place. He refused to eat raw fish, eating McDonald’s instead, according to the 1993 book, “Lost Tycoon: The Many Lives of Donald J. Trump.”
During a walk at the Imperial Gardens, Trump decided he wanted to meet with the emperor and ordered his entourage to set up a meeting. The emperor’s spokesman did not know who he was, and informed Trump that an appointment might be arranged in one year’s time if he submitted a written request, according to the book.
Trump returns to Tokyo this week as president. And this time, he already has an appointment with the emperor. In fact, it will be their second time meeting each other.
Chie Tanaka contributed to this report.