Tariffs, Trust, and Tokyo

Jacob Smulian: 00:00:03

Hello and welcome to another episode

Jacob Smulian: 00:00:05

of the Jacob Shapiro podcast.

Jacob Smulian: 00:00:07

I am your editor and producer, other Jacob.

Jacob Smulian: 00:00:10

Today we have Tobias Harris, the starting forward on the Detroit Pistons.

Jacob Smulian: 00:00:16

He's gonna talk to us about the geopolitics of Japan.

Jacob Smulian: 00:00:20

That's all I got.

Jacob Smulian: 00:00:21

We're gonna dive in.

Jacob Smulian: 00:00:22

Um, go tell your loved ones that you love them.

Jacob Smulian: 00:00:25

Go touch some grass.

Jacob Smulian: 00:00:27

And, uh, we'll see you out there.

Jacob Shapiro: 00:00:31

Uh, really pleased to welcome the, uh, starting

Jacob Shapiro: 00:00:35

forward on the Detroit Piston.

Jacob Shapiro: 00:00:36

Oh, oh wait.

Jacob Shapiro: 00:00:37

Sorry, I got the wrong, can somebody get me the right bio over here?

Jacob Shapiro: 00:00:40

I, I thought about doing a Zach AKAs between two Ferns and just treating

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you like the Detroit Pistons, Tobias Harris, the whole time.

Jacob Shapiro: 00:00:45

I thought that would've been funny.

Jacob Shapiro: 00:00:46

It's good to see you, man.

Jacob Shapiro: 00:00:47

Thanks for making the time to come on.

Jacob Shapiro: 00:00:49

No, it's great to be back.

Jacob Shapiro: 00:00:50

Thanks, Jacob.

Jacob Shapiro: 00:00:52

Uh, we will throw this in the show notes.

Jacob Shapiro: 00:00:53

Um, uh, the last time Tobias came on, I was not yet a subscriber to,

Jacob Shapiro: 00:00:57

uh, his substack observing Japan.

Jacob Shapiro: 00:00:59

I am now.

Jacob Shapiro: 00:00:59

And I can attest it's as good as you might expect it to be

Jacob Shapiro: 00:01:02

from the last time he was on.

Jacob Shapiro: 00:01:03

So I appreciate, um, uh, Tobias making the time.

Jacob Shapiro: 00:01:06

Uh, we could start in a lot of different places, but we should probably start

Jacob Shapiro: 00:01:10

in the obvious place, which is, um.

Jacob Shapiro: 00:01:14

Liberation Day, uh, United States tariffs, not just on enemies,

Jacob Shapiro: 00:01:18

but on allies, including Japan.

Jacob Shapiro: 00:01:20

Uh, and it wasn't, I, I see.

Jacob Shapiro: 00:01:23

If I characterize this correctly, it seems to me that in some sense the biggest

Jacob Shapiro: 00:01:26

negative reaction to us tariffs and the.

Jacob Shapiro: 00:01:30

The protectionist impulse in US trade policy in some ways

Jacob Shapiro: 00:01:33

has not been China or Europe.

Jacob Shapiro: 00:01:35

It has been Japan, which has basically said we're not signing on

Jacob Shapiro: 00:01:38

to anti-China provisions and we expect the rollback of all of these tariffs.

Jacob Shapiro: 00:01:43

Uh, you've had what, five trade meetings now between the United States and Japan?

Jacob Shapiro: 00:01:48

Um, seemed like the last one didn't go anywhere, that there's

Jacob Shapiro: 00:01:50

no agreement on just about.

Jacob Shapiro: 00:01:52

Anything between the two sides.

Jacob Shapiro: 00:01:54

Um, so, um, where, where are Japan US relations at?

Jacob Shapiro: 00:01:58

Because from somebody who is not focused on Japan all the time, it seems like Japan

Jacob Shapiro: 00:02:02

is basically saying to the United States like, we're not going along with you.

Jacob Shapiro: 00:02:06

And that's pretty shocking because there's arguably no country in the world

Jacob Shapiro: 00:02:08

that is more dependent on US security that is closer to the United States,

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outside of the five eyes in Japan.

Jacob Shapiro: 00:02:15

And it looks like relations are not particularly good.

Jacob Shapiro: 00:02:17

So am I overcharacterizing it?

Tobias Harris: 00:02:22

Well, it's, I mean, the situation in some ways is a

Tobias Harris: 00:02:24

worst nightmare for Japan because of course, you, as you noted that,

Tobias Harris: 00:02:29

I mean, they depend on the, on the United States for its security.

Tobias Harris: 00:02:32

And, and more than that, they want, you know, the goal of Japanese foreign

Tobias Harris: 00:02:37

PO central goal of Japanese foreign policy for a long time now has been

Tobias Harris: 00:02:40

keeping the United States engaged, uh, in what, I guess what we now call the

Tobias Harris: 00:02:45

Indo-Pacific, you know, economically, politically, militarily, you know, that.

Tobias Harris: 00:02:50

If the US is not engaged and committed that Japan's security will be, uh,

Tobias Harris: 00:02:57

will be detriment, it'll be extremely detrimental for Japan's security.

Tobias Harris: 00:03:01

So, uh, on all those scores, that is, that has been Japan's main goal.

Tobias Harris: 00:03:05

And the fact that you now have, uh, you know, a US administration,

Tobias Harris: 00:03:12

uh, you have to not only, uh.

Tobias Harris: 00:03:15

Is reconsidering that longstanding commitment, but, you know, now is

Tobias Harris: 00:03:20

essentially asking a, a, a higher price to be paid by Japan and

Tobias Harris: 00:03:24

other US allies to, to keep doing things, uh, that it was doing.

Tobias Harris: 00:03:28

I mean, it just puts Japan in, in such an uncomfortable situation.

Tobias Harris: 00:03:31

And of course, you know, for Japanese companies, the United States is, you

Tobias Harris: 00:03:34

know, an exceedingly important market.

Tobias Harris: 00:03:36

Uh, you, Japan invests a lot in the United States.

Tobias Harris: 00:03:39

I mean, it's just, it's, it's.

Tobias Harris: 00:03:40

Something that frankly they just would prefer not to have to deal with.

Tobias Harris: 00:03:44

Uh, but they do have red lines, so they can't just say, well, we need

Tobias Harris: 00:03:48

to keep, we're gonna do anything to keep the US happy because ultimately,

Tobias Harris: 00:03:52

uh, there are prices that Japan does not feel comfortable paying.

Tobias Harris: 00:03:55

And so that's really where things are stuck right now.

Jacob Shapiro: 00:03:58

Yeah, that makes sense.

Jacob Shapiro: 00:04:00

And there's also some level, I think, of consternation on the Japanese side

Jacob Shapiro: 00:04:03

because if you believe the US reporting on this, like the US doesn't even

Jacob Shapiro: 00:04:07

really know what it wants from Japan.

Jacob Shapiro: 00:04:09

I thought you laid out really well.

Jacob Shapiro: 00:04:10

Like, you know, there's the Stephen Miran approach and then there's what

Jacob Shapiro: 00:04:13

the United States is actually doing.

Jacob Shapiro: 00:04:15

And then there's the reporting on that meeting where Greer and Lutnick.

Jacob Shapiro: 00:04:19

Cent are all in the meeting and have to pause the meeting because

Jacob Shapiro: 00:04:22

they don't agree on what they're asking from the Japanese side.

Jacob Shapiro: 00:04:25

So maybe like some, some of this is just like Japan not quite understanding

Jacob Shapiro: 00:04:29

what it is the United States wants.

Jacob Shapiro: 00:04:31

Um, what do you think the United States wants, like what, what do you think

Jacob Shapiro: 00:04:35

the United States is trying to get out of this and what would be like, are

Jacob Shapiro: 00:04:37

there any, are there any concessions that Japan is gonna be willing to make?

Jacob Shapiro: 00:04:41

Because I sort of read their current position as like, you guys are

Jacob Shapiro: 00:04:44

crazy, so come to us with a real.

Jacob Shapiro: 00:04:47

Ask and sure we can talk.

Jacob Shapiro: 00:04:49

But right now, like, does it, like this is, this is bonkers.

Jacob Shapiro: 00:04:52

Like we have nothing to work with.

Tobias Harris: 00:04:54

Well, just as an aside on, so the reporting about,

Tobias Harris: 00:04:57

you know, the US negotiators arguing with each other, um, that I believe,

Tobias Harris: 00:05:01

I believe came from Nikkei, um, you know, which tells you it's, I know

Tobias Harris: 00:05:05

clearly saying the Japanese government.

Tobias Harris: 00:05:07

Wanted out there.

Tobias Harris: 00:05:09

Like, this is, this is what we're dealing with in these talks.

Tobias Harris: 00:05:11

But, and the article, at least, at least the Japanese version

Tobias Harris: 00:05:14

of the article mentioned this.

Tobias Harris: 00:05:15

And I, and I, I mean, I thought it was, uh, you know, that was the first

Tobias Harris: 00:05:18

thing that came to mind was that, you know, back in the, the eighties,

Tobias Harris: 00:05:21

nineties when, you know, you had.

Tobias Harris: 00:05:23

Serious, longstanding friction between the US and Japan.

Tobias Harris: 00:05:27

Uh, you know, Japan didn't really have the equivalent of A-U-S-T-R at that point.

Tobias Harris: 00:05:30

And so you, you had Japanese negotiators from different parts of

Tobias Harris: 00:05:34

the Japanese government doing that.

Tobias Harris: 00:05:35

Essentially.

Tobias Harris: 00:05:36

I, I mean, you know, almost the exact same scenes where, you know, you'd

Tobias Harris: 00:05:39

have the, the, the Mitzi guy arguing with the Ministry of Finance guy and

Tobias Harris: 00:05:44

the foreign ministry and, you know, they'd be, um, having arguments in

Tobias Harris: 00:05:47

front of the United States where the US actually did have a unified, uh.

Tobias Harris: 00:05:51

Position in the course, you know, represented by the USTR.

Tobias Harris: 00:05:54

And so it's just, it's a little funny to see the situation reversed where,

Tobias Harris: 00:06:00

uh, actually heading into the TPP negotiations, one of the innovations

Tobias Harris: 00:06:03

Japan made, uh, this was the, uh, you know, under Abe was, you know,

Tobias Harris: 00:06:07

we actually can't enter these talks and do it the way we used to do.

Tobias Harris: 00:06:10

We actually have to have our own sort of answer to USTR.

Tobias Harris: 00:06:14

Um.

Tobias Harris: 00:06:15

Part of the reason why, you know, the US and Japan were actually able to overcome

Tobias Harris: 00:06:19

a lot of longstanding hurdles in those talks was that, uh, you did essentially

Tobias Harris: 00:06:22

have a US trade representative negotiating with the Japan trade representative.

Tobias Harris: 00:06:26

Uh, and, and instead of having, um.

Tobias Harris: 00:06:30

You know, one side or the other are arguing amongst themselves

Tobias Harris: 00:06:33

on the other side of the table.

Tobias Harris: 00:06:34

And so now here we are full circle and Japan is like, we wish we were

Tobias Harris: 00:06:37

negotiating with a single negotiator instead of, you know, watching

Tobias Harris: 00:06:40

them negotiate amongst themselves.

Tobias Harris: 00:06:42

But that, I mean, in some ways that really is the fundamental problem because

Tobias Harris: 00:06:45

it does seem that there are some really irreconcilable goals within the Trump

Tobias Harris: 00:06:48

administration where you have, um.

Tobias Harris: 00:06:51

You know, what sounds like, you know, the, the Lunik position?

Tobias Harris: 00:06:53

The Navarro position where the goal really is we, the United States just

Tobias Harris: 00:06:57

needs to buy less stuff from foreigners.

Tobias Harris: 00:06:59

Right?

Tobias Harris: 00:07:00

That, that is the goal.

Tobias Harris: 00:07:01

In which case, um.

Tobias Harris: 00:07:03

There doesn't seem to be a whole lot of room to negotiate, um, on a lot of

Tobias Harris: 00:07:07

these tariffs where, you know, we're not, you know, this is not like, you

Tobias Harris: 00:07:11

know, we're gonna, you know, raise our tariffs and then we're gonna

Tobias Harris: 00:07:14

negotiate with you for concessions.

Tobias Harris: 00:07:16

And ultimately the goal is to remove, you know, most of the tariffs so that

Tobias Harris: 00:07:20

you know, but ultimately get some, some.

Tobias Harris: 00:07:22

Some concessions out of view to give our producers more market access.

Tobias Harris: 00:07:26

That, you know, does not seem to be the thinking of a lot of people in the

Tobias Harris: 00:07:30

administration, um, versus someone like bein who does, you know, certainly at

Tobias Harris: 00:07:34

different times has suggested that the goal is to negotiate and ultimately

Tobias Harris: 00:07:38

to get better terms of access for, uh, US producers in a foreign market.

Tobias Harris: 00:07:43

And so, you know.

Tobias Harris: 00:07:45

One of those positions Japan can work with, you know, Japan, you know, if

Tobias Harris: 00:07:49

the goal is, you know, okay, we'll give you some concessions and then you'll,

Tobias Harris: 00:07:52

you'll remove, you know, you know, some of these tariffs you're imposed.

Tobias Harris: 00:07:55

And then we say, you know, great, we made a deal.

Tobias Harris: 00:07:57

We have a, you know, stronger economic, um, economic ties between

Tobias Harris: 00:08:00

our countries and we go forward.

Tobias Harris: 00:08:02

But if that's not the situation, um.

Tobias Harris: 00:08:06

There's, there's not a lot, I mean, Japan's not gonna just accept, you

Tobias Harris: 00:08:10

know, 25% tariffs on, uh, its largest, its single largest, uh, category

Tobias Harris: 00:08:16

of exports to the United States.

Tobias Harris: 00:08:18

I mean, it's, it's, you know, that, that is just such a red line.

Tobias Harris: 00:08:21

And now of course, today, you know, Trump comes out and says that auto

Tobias Harris: 00:08:24

tariffs are gonna go even higher.

Tobias Harris: 00:08:25

Um, I mean, and, and, and I mean, I think that the important thing too,

Tobias Harris: 00:08:30

to note, and, and this is, I think.

Tobias Harris: 00:08:33

Something that I, I have been, uh, personally frustrated with watching

Tobias Harris: 00:08:37

the Trump administration do trade policy is that, uh, they either don't

Tobias Harris: 00:08:41

realize or don't care that other countries have domestic politics too.

Tobias Harris: 00:08:44

And so what we've seen over the course of these negotiations, uh, as you know,

Tobias Harris: 00:08:48

we've had successive rounds of usan talks, has been UBA saying, uh, you know, these

Tobias Harris: 00:08:54

auto tariffs are absolutely unacceptable.

Tobias Harris: 00:08:56

You know, you know, we cannot sign on to an agreement.

Tobias Harris: 00:08:58

Does that, does not, uh.

Tobias Harris: 00:09:01

I mean the, the, the demand has been eliminate, I think now they're

Tobias Harris: 00:09:04

now getting to a point where at least they have to be reduced.

Tobias Harris: 00:09:07

Um, but the point is that if, if.

Tobias Harris: 00:09:10

The Trump administration's not even willing to discuss them, and now

Tobias Harris: 00:09:13

they're talking about raising them even further, then there's no real

Tobias Harris: 00:09:16

basis for an agreement because frankly, an agreement that doesn't have some

Tobias Harris: 00:09:20

concessions from the US on automobile tariffs is not something that Japan

Tobias Harris: 00:09:24

is going to be able to sign onto.

Tobias Harris: 00:09:25

And it's certainly not something that, uh, Ishiba can sign onto, uh, without really,

Tobias Harris: 00:09:30

you know, paying a price domestically.

Tobias Harris: 00:09:31

And he has, he has positioned himself so that he can't, uh, sign on to that

Tobias Harris: 00:09:35

without paying some price domestically.

Jacob Shapiro: 00:09:37

Mm-hmm.

Jacob Shapiro: 00:09:38

Um.

Jacob Shapiro: 00:09:39

Do you think that this has done fundamental and even irrevocable

Jacob Shapiro: 00:09:44

damage to US Japan relations?

Jacob Shapiro: 00:09:46

And if so, what does that look like three years from now, five years from now?

Jacob Shapiro: 00:09:50

Or is Japan in the category of countries like Canada, which okay, like yes, it's

Jacob Shapiro: 00:09:55

rude and it's heavy handed and everything else, but you don't really have a choice

Jacob Shapiro: 00:09:58

but to go along because you're too exposed either from a trade perspective or a

Jacob Shapiro: 00:10:02

security perspective or, or anything else.

Jacob Shapiro: 00:10:04

So take that one however you want.

Tobias Harris: 00:10:08

Well, I mean, I guess maybe it's worth stepping

Tobias Harris: 00:10:10

back and saying for the moment that.

Tobias Harris: 00:10:15

You know, things did not start on Liberation Day, right?

Tobias Harris: 00:10:18

I mean, Japan was very frustrated with, with, I mean, even before

Tobias Harris: 00:10:22

Trump was elected with the politics of TPP in the United States.

Tobias Harris: 00:10:25

And the fact that, you know, okay, you, we negotiated this thing and you

Tobias Harris: 00:10:28

can't even get it through Congress.

Tobias Harris: 00:10:30

You know?

Tobias Harris: 00:10:30

So, you know, there's been frustration with rising protectionism in the

Tobias Harris: 00:10:35

United States now for, you know.

Tobias Harris: 00:10:37

At least a decade, you know, you know what exactly, you know, what exactly are

Tobias Harris: 00:10:41

you prepared to do has been the question I think from, uh, you know, from Japan

Tobias Harris: 00:10:46

as far as the United States concerned.

Tobias Harris: 00:10:47

So they've already been living in a world where, uh, the reliability of the

Tobias Harris: 00:10:51

United States, at least as an economic partner, uh, has been in serious doubt

Tobias Harris: 00:10:55

in Tokyo for a while, and they've already been thinking about how do we, uh.

Tobias Harris: 00:11:00

Design and protect a, you know, a rules-based international economic order,

Tobias Harris: 00:11:06

uh, on the basis of the United States.

Tobias Harris: 00:11:08

Is it best going to be, uh, an inconsistent partner?

Tobias Harris: 00:11:12

Uh.

Tobias Harris: 00:11:13

And, and you also, that was during the Biden years, right?

Tobias Harris: 00:11:16

Where, you know, I think there was a lot of frustration that on the one,

Tobias Harris: 00:11:18

you know, from one side of the mouth, they talked about French shoring.

Tobias Harris: 00:11:20

And now on the other side of the mouth you had, you know, Biden opposing, you

Tobias Harris: 00:11:24

know, DuPont Steel buying US steel.

Tobias Harris: 00:11:25

So, I mean, there's, you know, this, this, this is not just about Trump.

Tobias Harris: 00:11:29

This is not something that began, you know, in April.

Tobias Harris: 00:11:31

This is, you know, really, uh, a longer term, uh, disenchantment, uh, and

Tobias Harris: 00:11:36

frustration with the United States really stepping back and pulling back from, uh.

Tobias Harris: 00:11:41

Playing, you know, a, a, a rulemaking role both within Asia and also within

Tobias Harris: 00:11:46

the global, uh, the global economy.

Tobias Harris: 00:11:48

And so, uh, you know, Japan's already been thinking about its plan Bs on that front.

Tobias Harris: 00:11:52

You know, it's already, uh, viewed, uh, you know, brought TPP back to life.

Tobias Harris: 00:11:57

Um, as part of that effort, it has drawn closer to the EU as part of that effort.

Tobias Harris: 00:12:01

Uh, you know, deepening ties with various, um, you know, various

Tobias Harris: 00:12:05

countries in Southeast Asia, even, you know, viewing China as, um.

Tobias Harris: 00:12:09

Find, you know, finding a way to, uh, live with China and continue to have

Tobias Harris: 00:12:14

an economic relationship with China, you know, navigating US China frictions

Tobias Harris: 00:12:18

and the impact that has on Japan.

Tobias Harris: 00:12:19

And so Japan's already in this mindset of thinking about, okay, how do we, um.

Tobias Harris: 00:12:24

How do we navigate a world where the United States basically is

Tobias Harris: 00:12:26

sitting out a lot of, uh, efforts to integrate the global economy.

Tobias Harris: 00:12:30

So we're gonna see that continue.

Tobias Harris: 00:12:32

You know, there's already talk about how do you bring, uh,

Tobias Harris: 00:12:35

TPP and the EU closer together.

Tobias Harris: 00:12:37

So you're, you're almost creating this kind of advanced set

Tobias Harris: 00:12:40

of, of global economic rules.

Tobias Harris: 00:12:42

Um, kind of sidestepping the log jam at the WTO sidestepping, uh,

Tobias Harris: 00:12:47

you know, the US setting things out.

Tobias Harris: 00:12:48

So we're already seeing that.

Tobias Harris: 00:12:50

Um, the bigger.

Tobias Harris: 00:12:52

Question when it comes to the reliability of the United States is more on the

Tobias Harris: 00:12:55

security side and you know, do things, you know, do you see the kind of

Tobias Harris: 00:13:01

spillovers or do you see the kind of actions from the Trump administration

Tobias Harris: 00:13:05

where Japan really says, you know, we really don't feel like, you know,

Tobias Harris: 00:13:12

the US security guarantee, uh, is.

Tobias Harris: 00:13:18

Is, is viable, is alive, you know, you know, there's been things, you know,

Tobias Harris: 00:13:21

whether it's, you know, uh, actions undertaken, uh, or that could be

Tobias Harris: 00:13:26

undertaken by Trump or, uh, rhetoric.

Tobias Harris: 00:13:29

I mean, you know, and at this point, uh, you know, a lot of

Tobias Harris: 00:13:33

that now is, is speculative.

Tobias Harris: 00:13:35

It's been on the back burner.

Tobias Harris: 00:13:36

I mean, clearly, you know, trade is, is, uh, front of

Tobias Harris: 00:13:39

mind, and that's the main focus.

Tobias Harris: 00:13:41

Uh.

Tobias Harris: 00:13:42

But if there is reason down the road to really question, uh, the credibility of

Tobias Harris: 00:13:48

the US security guarantee, then you're really gonna see, uh, you know, real

Tobias Harris: 00:13:52

change in Japan's approach, you know, to its relationship in the United States.

Tobias Harris: 00:13:56

Uh, and, and really with it then it's approached the world.

Tobias Harris: 00:14:00

But for the moment, you know, it does seem that the trade issues

Tobias Harris: 00:14:04

are somewhat insulated from

Jacob Shapiro: 00:14:07

those broader questions.

Jacob Shapiro: 00:14:09

All right.

Jacob Shapiro: 00:14:09

Well, I'm gonna do the bane of, of all analysts existence.

Jacob Shapiro: 00:14:12

I know this 'cause I am one.

Jacob Shapiro: 00:14:13

I'm gonna ask you two different hypotheticals.

Jacob Shapiro: 00:14:14

The first is, um, okay, well let's say the United States hypothetically

Jacob Shapiro: 00:14:20

says we're not gonna defend Taiwan from China in the future.

Jacob Shapiro: 00:14:24

I. Like, what, what options does Japan have at that point?

Jacob Shapiro: 00:14:27

Or does that, does that not even matter to them?

Jacob Shapiro: 00:14:29

Does the hypothetical have to be that the United States says we're not gonna

Jacob Shapiro: 00:14:31

defend, uh, contested islands in the East China Sea or something like that, that

Jacob Shapiro: 00:14:36

are contested between Japan and China?

Jacob Shapiro: 00:14:38

Like, China can have those, like what, what happens in that scenario?

Jacob Shapiro: 00:14:41

Like what, what options does Japan have?

Tobias Harris: 00:14:44

Well, I mean, just to, to poke at that a little bit.

Tobias Harris: 00:14:48

I mean, I think the, I mean the Taiwan.

Tobias Harris: 00:14:52

The first part of the, the, the Taiwan, uh, issue in particular.

Tobias Harris: 00:14:58

I mean, presumably if that's part of some sort of grand bargain with China,

Tobias Harris: 00:15:01

I mean, presumably it's not gonna just be a unilateral declaration, but it's

Tobias Harris: 00:15:04

gonna be, you know, some sort of deal with Xi Jinping that says, you know,

Tobias Harris: 00:15:10

we're drawing, we're dividing up the world and it spheres of influence and

Tobias Harris: 00:15:13

Taiwan is on your side of the line.

Tobias Harris: 00:15:14

So, um, you know, so good luck.

Tobias Harris: 00:15:18

Um, the, you know, of course.

Tobias Harris: 00:15:22

You know, in theory, um, Japan's still not gonna say, okay, us go home.

Tobias Harris: 00:15:28

I mean, if, if, if part of that is, you know, the US is gonna keep bases in Japan

Tobias Harris: 00:15:32

and you know, like we're, you know, the line just happens to, you know, mm-hmm.

Tobias Harris: 00:15:36

Be, um, just east of Taiwan.

Tobias Harris: 00:15:40

Um.

Tobias Harris: 00:15:41

That's one thing.

Tobias Harris: 00:15:42

I mean, I think Japan will be very unhappy about that because, you know,

Tobias Harris: 00:15:45

the sort of, the geo, the geo strategist, you know, look at the map and they say,

Tobias Harris: 00:15:48

you know, if, if, um, you know, Taiwan is, you know, integrated into mainland

Tobias Harris: 00:15:53

China, um, you know, it gives, it just, I mean, is is a physical threat to Japan.

Tobias Harris: 00:15:59

Just, you know, where it mo you know, moving, uh, China's naval

Tobias Harris: 00:16:03

presence, you know, that much further east, you know, and, and having

Tobias Harris: 00:16:07

access to the Western Pacific.

Tobias Harris: 00:16:09

Um.

Tobias Harris: 00:16:11

That is just something that I think Japan is, is concerned about and,

Tobias Harris: 00:16:15

um, you know, so just, you know, from a sheer recognition of, uh,

Tobias Harris: 00:16:19

geography is, is concerned about.

Tobias Harris: 00:16:21

Um, but I mean, if it does mean grand bargain with China and therefore we

Tobias Harris: 00:16:27

don't even need our alliance system in Asia, then clearly that's, you

Tobias Harris: 00:16:30

know, that's a major wake up call and, and, and a crisis for Japan.

Tobias Harris: 00:16:33

Um, and it's not.

Tobias Harris: 00:16:37

You know, it's, it's uncomfortable for Japan because it's not something

Tobias Harris: 00:16:41

that, you know, if it happens without, with little warning, you

Tobias Harris: 00:16:46

know, you get sort of a Trump shock.

Tobias Harris: 00:16:47

You know, Nixon, Nixon in 1971, style shock.

Tobias Harris: 00:16:51

Then, um, you know, almost overnight, you know you're gonna get, um.

Tobias Harris: 00:16:58

You know, a feeling of panic in Tokyo, but maybe not a lot

Tobias Harris: 00:17:01

of good options and mm-hmm.

Tobias Harris: 00:17:04

You know, even for the discuss, you know, all the discussion about, you

Tobias Harris: 00:17:07

know, Japan is a latent nuclear power.

Tobias Harris: 00:17:10

Uh, you know, as soon as you start looking at the details of, in the

Tobias Harris: 00:17:13

complexity of that, you know, that is not something that, uh, you know,

Tobias Harris: 00:17:18

even, you know, you know, you hear sometimes like cavalier suggestions

Tobias Harris: 00:17:21

that it could be done in six months.

Tobias Harris: 00:17:23

I mean, um.

Tobias Harris: 00:17:25

I mean, it is not, uh, not something that can happen easily.

Tobias Harris: 00:17:29

And in the meantime, what happens?

Tobias Harris: 00:17:31

Um, you know, you know, when, you know during however many months it takes

Tobias Harris: 00:17:36

to, to have your own nuclear deterrent.

Tobias Harris: 00:17:38

Um, you know, what sort of, what sort of coercion are you vulnerable to?

Tobias Harris: 00:17:41

So, um, you know, it's, it's such a, a.

Tobias Harris: 00:17:47

Drastic hypothetical that it's really hard, you know, it's really hard to know.

Tobias Harris: 00:17:51

How does the Japanese public respond?

Tobias Harris: 00:17:53

How do Japanese elites respond?

Tobias Harris: 00:17:54

I mean it's, you know, certainly from the moment it's very hard to imagine,

Tobias Harris: 00:17:59

you know, Japan wanting to reach some sort of accommodation with China or

Tobias Harris: 00:18:03

some sort of, you know, finlandization.

Tobias Harris: 00:18:06

You know, like, will, you know, you leave us alone and you know,

Tobias Harris: 00:18:09

we won't make any trouble for you.

Tobias Harris: 00:18:11

Um, in foreign policy.

Tobias Harris: 00:18:13

I mean, that's.

Tobias Harris: 00:18:14

That's also hard to imagine.

Tobias Harris: 00:18:16

Um, but, you know, in a, in a shock situation, United States

Tobias Harris: 00:18:22

decides that it's, it's pulling out, um, a lot of things that seem

Tobias Harris: 00:18:27

unthinkable now could become possible.

Tobias Harris: 00:18:29

And, you know, there certainly will be people domestically in

Tobias Harris: 00:18:32

Japan arguing, uh, you know, you know, do we wanna really, um.

Tobias Harris: 00:18:40

You know, lift, you pick up the sword essentially that the US would be dropping

Tobias Harris: 00:18:43

down and, and you know, that that's gonna be a really tough, uh, debate domestically

Jacob Shapiro: 00:18:48

in Japan.

Jacob Shapiro: 00:18:49

Hmm.

Jacob Shapiro: 00:18:50

All right.

Jacob Shapiro: 00:18:50

Well, second hypothetical, uh, Shinzo Abe and Donald Trump

Jacob Shapiro: 00:18:54

had a very close relationship.

Jacob Shapiro: 00:18:55

Donald Trump thought very highly of him.

Jacob Shapiro: 00:18:57

If he's still alive, does this look diff completely different or do you think that

Jacob Shapiro: 00:19:02

the way that Japan, US relations have played out here in the first six months

Jacob Shapiro: 00:19:05

of the Trump administration would be.

Jacob Shapiro: 00:19:07

Fundamentally different if he had not been assassinated.

Tobias Harris: 00:19:12

It's, you know, it's a question I've, I've, you know, obviously

Tobias Harris: 00:19:15

thought a lot about, uh, over the last, you know, three or six months,

Tobias Harris: 00:19:20

um, you know, I tend to be skeptical though, or at least tend to caution

Tobias Harris: 00:19:26

people not to have an a rose colored.

Tobias Harris: 00:19:30

Spectacles when it comes to looking back to Trump won, where I think there

Tobias Harris: 00:19:35

was a period of time where, uh, you know, Trump Abe's investments in a

Tobias Harris: 00:19:41

relationship with Trump, paid dividends.

Tobias Harris: 00:19:43

You know, the fact that he went to meet him right after, uh, right after

Tobias Harris: 00:19:48

he was elected, when, you know, no one else really knew what to do.

Tobias Harris: 00:19:51

And, you know, Abe got on a plane and went very quickly and

Tobias Harris: 00:19:53

met with him at Trump Tower.

Tobias Harris: 00:19:54

Um, you know, that I think won him a lot of credit.

Tobias Harris: 00:19:57

You know, they, uh.

Tobias Harris: 00:19:59

Early visit to Mar-a-Lago after inauguration I think

Tobias Harris: 00:20:02

got him a lot of credit.

Tobias Harris: 00:20:03

And so, um, that in some ways maybe, uh, certainly delayed some things.

Tobias Harris: 00:20:12

It certainly may be avoided.

Tobias Harris: 00:20:14

Uh.

Tobias Harris: 00:20:15

More severe outcomes, but I, I, I would argue that you really

Tobias Harris: 00:20:19

got diminishing returns from that personal relationship as well.

Tobias Harris: 00:20:22

That by, you know, 2018 when Trump starts, uh, talking with North Korea, you know,

Tobias Harris: 00:20:28

you get Abe calling up Trump constantly, you know, please don't forget Japan.

Tobias Harris: 00:20:32

Please don't forget Japan.

Tobias Harris: 00:20:33

Um, and I don't think that worked with Trump personally.

Tobias Harris: 00:20:38

I think to the extent that Trump's or that Abe's sort of efforts to, um.

Tobias Harris: 00:20:45

Kind of prevent a bad deal with North Korea that would harm Japan.

Tobias Harris: 00:20:49

Uh, I, I think he had help inside the Trump administration.

Tobias Harris: 00:20:52

Uh, you know, I think there's, you know, been reporting about, you know,

Tobias Harris: 00:20:55

John Bolton basically, um, working with Abe to, to help, um, prevent, uh, you

Tobias Harris: 00:21:01

know, a, a deal that would basically let North Korea, uh, keep it to nuclear

Tobias Harris: 00:21:05

weapons and basically get, you know, uh, you know, a, like a steal of approval

Tobias Harris: 00:21:09

for its, you know, for its arsenal.

Tobias Harris: 00:21:12

Um, mm-hmm.

Tobias Harris: 00:21:13

You know, if that hap, you know, if you saw similar talks happen

Tobias Harris: 00:21:17

now, would would it look like that?

Tobias Harris: 00:21:19

Probably not.

Tobias Harris: 00:21:20

Um, even with Abe around and, you know, also, you know, Abe, you know,

Tobias Harris: 00:21:25

really, you know, was not eager to get into a situation of doing us Japan,

Tobias Harris: 00:21:29

you know, by an federal trade talks.

Tobias Harris: 00:21:31

And, you know, Trump threatens automobile tariffs and what happens,

Tobias Harris: 00:21:34

Japan has to come to the table.

Tobias Harris: 00:21:35

So, um.

Tobias Harris: 00:21:37

Things weren't always as, uh, pleasant and cheerful, uh, and

Tobias Harris: 00:21:42

and friendly as people remember.

Tobias Harris: 00:21:45

Um, you know, and, and Trump, of course, is perfectly capable of

Tobias Harris: 00:21:48

talk, you know, like is happy to talk about how much he likes this place

Tobias Harris: 00:21:51

or is friendly towards that place.

Tobias Harris: 00:21:53

Um, but then we'll turn around and, and, you know.

Tobias Harris: 00:21:56

Slap tariffs on a country, right?

Tobias Harris: 00:21:58

I mean, you know, right before Liberation Day, what was it?

Tobias Harris: 00:22:00

Israel was saying, you know, we'll take all US tariffs, you know, all US codes,

Tobias Harris: 00:22:04

you know, due to free and did it matter?

Tobias Harris: 00:22:06

No, it didn't matter.

Tobias Harris: 00:22:06

And um, you know, so there's clearly a limit, you know, to

Tobias Harris: 00:22:13

how far personal diplomacy.

Tobias Harris: 00:22:16

What would Trump even during the first term, and clearly I think during this

Tobias Harris: 00:22:20

term, you know, he feels more confident.

Tobias Harris: 00:22:23

You know, he won the popular vote last year, feels stronger.

Tobias Harris: 00:22:26

He's been there before.

Tobias Harris: 00:22:27

You know that this is not, um, you know, he's not as, I think, susceptible

Tobias Harris: 00:22:33

to flattery maybe as he once was or, or certainly, um, also maybe

Tobias Harris: 00:22:38

is wier and is, is willing to let.

Tobias Harris: 00:22:42

Those engaging in flattery, think they're, they're getting something from him.

Tobias Harris: 00:22:45

And, um, you know, ultimately, you know, he, you know, is happy to let

Tobias Harris: 00:22:50

them think that, but is ultimately not giving up anything, um, in return.

Tobias Harris: 00:22:55

So, I, I'm, I am not.

Tobias Harris: 00:22:59

Necessarily convinced that things would look different.

Tobias Harris: 00:23:02

Right.

Tobias Harris: 00:23:03

You know, that would, would the Liberation Day tariff, would, would

Tobias Harris: 00:23:06

Abe have been able to convince Trump to exempt Japan from those?

Tobias Harris: 00:23:09

I don't, I don't think so.

Tobias Harris: 00:23:11

Um, would the kind of, you know, would Abe have been able to, um,

Tobias Harris: 00:23:18

kind of navigate, you know, the, the internal divisions, you

Tobias Harris: 00:23:21

know, on trade that we've talked about, um, in this conversation?

Tobias Harris: 00:23:25

Not necessarily.

Tobias Harris: 00:23:26

I mean, um.

Tobias Harris: 00:23:28

You know, the people within, um, you know, the, the Navarros and the Latinxs.

Tobias Harris: 00:23:33

I mean, you know, would Abe be able to, um, kind of, you know, lean on

Tobias Harris: 00:23:39

the scale so that, um, kind of they're overpowered and, and have to kind of

Tobias Harris: 00:23:44

make a, make up friendlier deal with Japan just because, you know, Abe, um,

Tobias Harris: 00:23:50

could get Trump on the phone easily.

Tobias Harris: 00:23:51

I, I'm not convinced, I, I'm really not convinced.

Tobias Harris: 00:23:54

Things seem just very different this time around.

Jacob Shapiro: 00:23:57

Yeah, I mean, the recent Musk, uh, Trump drama shows you how

Jacob Shapiro: 00:24:00

quickly some of these things can change no matter how much, uh, Trump seems

Jacob Shapiro: 00:24:03

to be having to bromance with someone.

Jacob Shapiro: 00:24:05

Um, which I think, I think the, the, the Trump Abe things felt a little bromance.

Jacob Shapiro: 00:24:10

All right.

Jacob Shapiro: 00:24:10

Let, let's move away from, uh, the United States.

Jacob Shapiro: 00:24:13

Let's talk a little bit of about, um, Japanese relations with China.

Jacob Shapiro: 00:24:16

Um, in late December, you had Japan's foreign minister visit China.

Jacob Shapiro: 00:24:21

A couple interesting meetings.

Jacob Shapiro: 00:24:22

Also met China's foreign minister.

Jacob Shapiro: 00:24:24

You had.

Jacob Shapiro: 00:24:25

Some follow up in March about, you know, consensus points and pledging

Jacob Shapiro: 00:24:30

economic co collaboration and things like that at the same time.

Jacob Shapiro: 00:24:33

I mean, if you look just at, uh, I looked at the South China

Jacob Shapiro: 00:24:35

morning post this morning.

Jacob Shapiro: 00:24:36

China's military saying Japan is breaching its pacifist constitution

Jacob Shapiro: 00:24:40

with long range missile tests.

Jacob Shapiro: 00:24:41

So it's not like everything is perfect.

Jacob Shapiro: 00:24:43

Um.

Jacob Shapiro: 00:24:44

You also, I mean, I don't know if these reports were ever confirmed, but about,

Jacob Shapiro: 00:24:47

you know, South Korea, Japan and China coordinating some kind of response

Jacob Shapiro: 00:24:50

to us tariffs like that was sort of denied by one side, maybe by one side.

Jacob Shapiro: 00:24:55

And no, this has, you know, sort of all over the place there.

Jacob Shapiro: 00:24:58

So where, where do us, uh, excuse me, where do Japan China relations

Jacob Shapiro: 00:25:01

stand from your point of view?

Jacob Shapiro: 00:25:02

Have they gotten better?

Jacob Shapiro: 00:25:03

Is it basically still the same?

Jacob Shapiro: 00:25:05

Are they in flux?

Jacob Shapiro: 00:25:06

Like where, where are they?

Jacob Shapiro: 00:25:08

Um,

Tobias Harris: 00:25:09

that, when, when everyone kind of freaked out about the, uh, that.

Tobias Harris: 00:25:13

Japan, China, South Korea, based on, you know, Chinese state media reporting.

Tobias Harris: 00:25:18

I mean, that was, that was really ridiculous.

Tobias Harris: 00:25:21

But, um, anyway, it's, you know, this, this predates Trump.

Tobias Harris: 00:25:25

I mean, you really have had efforts, uh, really going back a year now

Tobias Harris: 00:25:30

by the Japanese government, uh, to try to repair some of the damage.

Tobias Harris: 00:25:35

Um, you know, things were, uh.

Tobias Harris: 00:25:39

You know, it's, it's been this rollercoaster, right?

Tobias Harris: 00:25:41

You know, under second Abe things started out really poorly and, you

Tobias Harris: 00:25:44

know, out of military tensions and wars of words and battles over history.

Tobias Harris: 00:25:50

Uh, and then by, you know, by 20 16, 20 17, not coincidentally after, after Trump

Tobias Harris: 00:25:56

takes office, I mean, you did have, uh, Abe really investing in trying to improve

Tobias Harris: 00:26:01

the economic relationship with China.

Tobias Harris: 00:26:03

Uh.

Tobias Harris: 00:26:04

You know, get on the same page, find opportunities for cooperation.

Tobias Harris: 00:26:07

And, you know, to the point where the, you know, in 2020 had COVID not happened,

Tobias Harris: 00:26:12

Xi Jinping was supposed to visit, you know, to, to visit Japan on a state visit.

Tobias Harris: 00:26:16

So that, you know, that was sort of where things were.

Tobias Harris: 00:26:20

And then COVID happened and, you know, trying to, uh, you know,

Tobias Harris: 00:26:25

what came down heavy on Hong Kong.

Tobias Harris: 00:26:27

And, and there's a real backlash to that in, uh, in Japan.

Tobias Harris: 00:26:31

And that really, um.

Tobias Harris: 00:26:34

Sour things, and you know, you've had worse, you know, trade friction with,

Tobias Harris: 00:26:40

uh, with the United States and, you know, the Biden administration's approach

Tobias Harris: 00:26:43

and, and Japan tagging along with that.

Tobias Harris: 00:26:45

And so, I mean, so you, I mean, you've just had this, um, decline now for the

Tobias Harris: 00:26:52

last five, you know, four or five years.

Tobias Harris: 00:26:54

And now they're at this point now of, okay, how do we undo some of that damage?

Tobias Harris: 00:26:59

Which, you know, not only is it, you know, you know.

Tobias Harris: 00:27:03

You know, this export control and, and, you know, you know, foregoing this, uh,

Tobias Harris: 00:27:09

this visit and announcing this military, you know, exercise with this country.

Tobias Harris: 00:27:14

You know, just like the series of, uh.

Tobias Harris: 00:27:17

Steps that really have, um, heightened tensions.

Tobias Harris: 00:27:20

I mean, it's also just trying to restore, uh, channels of communication.

Tobias Harris: 00:27:25

I mean, that, that really is, I think the, the most important thing

Tobias Harris: 00:27:28

we've seen over the last year.

Tobias Harris: 00:27:29

It's been less about, you know, tangible improvement, um, which has

Tobias Harris: 00:27:34

been very halting and has been more about, you know, how do you get, uh.

Tobias Harris: 00:27:40

You know, getting Japanese political leaders back to China, you know, who used

Tobias Harris: 00:27:44

to have these kinda regular delegations going over and, and having communication.

Tobias Harris: 00:27:48

How do you get business delegations going back?

Tobias Harris: 00:27:50

How do you then have, uh, you know, communist party officials coming on,

Tobias Harris: 00:27:54

on visits to Japan, Chinese government officials back to Japan, um, just

Tobias Harris: 00:27:57

restarting some of these exchanges.

Tobias Harris: 00:28:00

So, you know, the exchange of views are there.

Tobias Harris: 00:28:02

And I mean, and that really, I. I think that that has been

Tobias Harris: 00:28:06

the most important thing.

Tobias Harris: 00:28:07

You know, really going back to basically roughly September of last year,

Tobias Harris: 00:28:11

you've now had a series of exchanges.

Tobias Harris: 00:28:13

Things seem much more routinized.

Tobias Harris: 00:28:15

Um, you know, the communication is happening.

Tobias Harris: 00:28:18

Um, even if, uh, you know, just getting over some of the, the real challenges

Tobias Harris: 00:28:24

is, is proving very difficult.

Tobias Harris: 00:28:26

They're at least talking to each other.

Jacob Shapiro: 00:28:31

Um, well let, let's sort of stay in the same vein, um, and say,

Jacob Shapiro: 00:28:35

um, also there's been a big election in South Korea over the last couple of weeks.

Jacob Shapiro: 00:28:38

We've got.

Jacob Shapiro: 00:28:40

Uh, is progressive too strong?

Jacob Shapiro: 00:28:41

I mean, you've got a South Korean leader now who you would think is

Jacob Shapiro: 00:28:44

gonna maybe revamp some of the previous South Korean administration's approach.

Jacob Shapiro: 00:28:49

So that administration basically tried to put to bed conflict with Japan, tried

Jacob Shapiro: 00:28:52

to deepen, uh, relations with both the United States and Japan, TR laterally.

Jacob Shapiro: 00:28:57

Um, uh, I think.

Jacob Shapiro: 00:28:58

I think President Biden, one of the things he got the least amount of

Jacob Shapiro: 00:29:00

credit for was the way that he really ironed out some of those disagreements

Jacob Shapiro: 00:29:03

between Japan and South Korea.

Jacob Shapiro: 00:29:05

Now, he had a favorable South Korean government to do it, but

Jacob Shapiro: 00:29:07

hey, he knew it was an issue.

Jacob Shapiro: 00:29:08

He tried.

Jacob Shapiro: 00:29:09

It was sort of a major, I think, a major success story for him.

Jacob Shapiro: 00:29:12

Does all that go away?

Jacob Shapiro: 00:29:13

Early returns from the South Korean government suggest that,

Jacob Shapiro: 00:29:16

uh, maybe a little more pragmatic than the progressive label looks.

Jacob Shapiro: 00:29:19

Maybe they want to continue to deepen or at least keep relations with Japan, um,

Jacob Shapiro: 00:29:24

and with the United States fairly good.

Jacob Shapiro: 00:29:26

Do you see any imminent.

Jacob Shapiro: 00:29:27

Change there.

Jacob Shapiro: 00:29:28

I mean, there's been also some things about maybe South Korea and North

Jacob Shapiro: 00:29:31

Korea relaxing things a little bit.

Jacob Shapiro: 00:29:33

And you can imagine if we return to Fire and Fury and Rocket Man, we'll put

Jacob Shapiro: 00:29:37

that, we'll put that VHS back in and start replaying some of the Trump won,

Jacob Shapiro: 00:29:42

um, episodes from that sort of thing.

Jacob Shapiro: 00:29:44

So, and any, is this a source of optimism for Japan?

Jacob Shapiro: 00:29:47

Is this a Oh no, not this too, like the sky is falling.

Jacob Shapiro: 00:29:50

Is it somewhere in between?

Jacob Shapiro: 00:29:51

Um, how do we think about it?

Tobias Harris: 00:29:56

For the moment.

Tobias Harris: 00:29:57

I mean, president Lee has, uh, been saying the right things and on the

Tobias Harris: 00:30:01

campaign trail, you know, was saying the right things and, um, you know, but in

Tobias Harris: 00:30:07

general, when you have, um, you know, a, you know, in, in some ways, in some

Tobias Harris: 00:30:17

ways, I mean, the situ, it's not quite like, you know, when Moon, uh, uh, moon

Tobias Harris: 00:30:22

Jian was president, but the last time.

Tobias Harris: 00:30:25

Progressive Korean president, right?

Tobias Harris: 00:30:26

Because then you had a progressive Korean president and a pretty right wing Japanese

Tobias Harris: 00:30:31

Prime Minister in Prime Minister Abe.

Tobias Harris: 00:30:33

And, um, the, you know, this, you essentially got this sort

Tobias Harris: 00:30:38

of escalatory spiral on history issues as a result of that.

Tobias Harris: 00:30:42

Um, you know, in part because you had, um, kind of the, the, the

Tobias Harris: 00:30:48

each, each leader's domestic base was essentially pushing them.

Tobias Harris: 00:30:52

Um.

Tobias Harris: 00:30:53

Yeah, away from, you know, the pushing the two countries apart.

Tobias Harris: 00:30:56

And so the question is, um, you know, circumstances are a little different

Tobias Harris: 00:31:02

now, and in part also 'cause I think, you know, views in, in, uh, South Korea

Tobias Harris: 00:31:08

have changed, maybe even less about Japan and more about, you know, fears of

Tobias Harris: 00:31:14

China I think are pretty well ingrained.

Tobias Harris: 00:31:16

Um, you know, I think one of the things that, uh.

Tobias Harris: 00:31:20

Japanese, uh, elites and particularly, you know, more right wing Japanese

Tobias Harris: 00:31:24

elites have been convinced of is, you know, China, you know, South Korea,

Tobias Harris: 00:31:28

you know, they're too close to China.

Tobias Harris: 00:31:29

Uh, they're not reli, they're not a reliable partner when it

Tobias Harris: 00:31:32

comes to security in the region.

Tobias Harris: 00:31:35

You know, we can't trust them, and so therefore it's not worth investing

Tobias Harris: 00:31:38

any, you know, real effort in trying to get along with them anyway.

Tobias Harris: 00:31:41

And.

Tobias Harris: 00:31:43

I think the mood in Tokyo maybe has changed a little bit on that.

Tobias Harris: 00:31:46

There's a little more willingness to see that okay, maybe the South Korean

Tobias Harris: 00:31:49

people as a whole are, you know, are, you know, skeptical of China.

Tobias Harris: 00:31:53

They are, you know, that there is the material for uh, kind of broader

Tobias Harris: 00:31:57

security cooperation, um, on that.

Tobias Harris: 00:32:01

Um.

Tobias Harris: 00:32:03

So that might be in the backdrop of, of the kind of new tone that we've

Tobias Harris: 00:32:07

heard from, from President Lee.

Tobias Harris: 00:32:09

I mean, the, the question, you know, in all of this is, I mean, it's easy

Tobias Harris: 00:32:11

to say it on the campaign trail.

Tobias Harris: 00:32:13

It's easy to say it now after you've been, you know, elected and inaugurated.

Tobias Harris: 00:32:17

Uh, the question is, when, when something happens, the test, the

Tobias Harris: 00:32:21

relationship, what that, you know, do you grandstand for your, for

Tobias Harris: 00:32:25

your core supporters or, you know.

Tobias Harris: 00:32:28

Do you do shuttle diplomacy?

Tobias Harris: 00:32:30

You know, and try to, you know, try to get to a situation where cooler

Tobias Harris: 00:32:33

heads can prevail and you can say the relationship is bigger than this.

Tobias Harris: 00:32:37

You know, we have to, you know, we can't let, um, you know, sort of, uh,

Tobias Harris: 00:32:42

you know, a legal case about history, you know, something historical or, you

Tobias Harris: 00:32:45

know, historical claims, uh, derail, you know, cooperation about other issues

Tobias Harris: 00:32:50

or, you know, more kind of tangible future looking, uh, cooperation and.

Tobias Harris: 00:32:56

You know, it's, you know, until we actually see something like that

Tobias Harris: 00:33:00

happen, um, that remains to be seen.

Tobias Harris: 00:33:04

I mean, in some ways it's not bad that, um, um, prime Minister Ishiba,

Tobias Harris: 00:33:13

uh, is in power in that, you know, he is a, he is, you know, in a Japan.

Tobias Harris: 00:33:20

Context on, you know, as far as relations with Korea go, I mean,

Tobias Harris: 00:33:24

he's relatively progressive about it.

Tobias Harris: 00:33:26

I mean, he's been, um, you know, he has called for much more reckoning by Japanese

Tobias Harris: 00:33:33

with what Japan actually did in Korea.

Tobias Harris: 00:33:36

Um, you know, it's something that makes him not particularly especially popular

Tobias Harris: 00:33:40

with the, the right wing of his own party.

Tobias Harris: 00:33:42

Um, you know, it'll be interesting to see, you know, this is of

Tobias Harris: 00:33:46

course a big, um, anniversary year.

Tobias Harris: 00:33:49

Um.

Tobias Harris: 00:33:49

Both, uh, for the, um, you being the, uh, uh, 60th anniversary of normalization

Tobias Harris: 00:33:58

or establishment of diplomatic relations between Japan and South Korea.

Tobias Harris: 00:34:01

Of course, it's also the, um, the 80th anniversary of the end of World War ii,

Tobias Harris: 00:34:06

and, and Yeshiva has made noise about wanting to put out some sort of statement.

Tobias Harris: 00:34:10

It's not clear what sort of legal status that statement will have.

Tobias Harris: 00:34:13

I mean, and there's debate, you know, con, that's been a pretty, uh.

Tobias Harris: 00:34:18

Length debate, uh, in Japan about what kind of statement

Tobias Harris: 00:34:22

Ishiba will be able to make.

Tobias Harris: 00:34:23

But, um, you know, there's some opportunity there for, you know,

Tobias Harris: 00:34:26

a prime minister like Ishiba to maybe, um, say some things on these

Tobias Harris: 00:34:31

occasions that, you know, um, to maybe disarm some South Korean, uh,

Tobias Harris: 00:34:38

skepticism or hostility towards Japan.

Tobias Harris: 00:34:40

You know, having a, a prime minister say that, um, I mean the, the problem.

Tobias Harris: 00:34:45

Um, Farba of course, is that as long as his, uh, political situation is a little

Tobias Harris: 00:34:52

weak, um, he may be limited in what he can say for fear of backlash from his right.

Tobias Harris: 00:34:58

And so, so that's something to consider.

Tobias Harris: 00:35:01

I mean, and, and, you know, he might be the right person, but is not

Tobias Harris: 00:35:05

necessarily in a position where he can just say whatever he wants with,

Tobias Harris: 00:35:08

you know, without fearing for, uh.

Tobias Harris: 00:35:11

Political, you know, political consequences.

Tobias Harris: 00:35:13

So, um, you know, maybe, and maybe ultimately for the long-term stability

Tobias Harris: 00:35:19

of the bio relationship, the best thing would've been if, if someone like

Tobias Harris: 00:35:22

Abe could have, um, made some sort of more kind of deeper heartfelt gesture

Tobias Harris: 00:35:29

with a Korean progressive in power.

Tobias Harris: 00:35:31

Um, and that might have maybe resulted in, in some sort of more durable, uh.

Tobias Harris: 00:35:38

Kind of settlement.

Tobias Harris: 00:35:39

But, um, you know, so the potential for friction is there, you know,

Tobias Harris: 00:35:43

even with, uh, with me saying the right things, um, there's, you know,

Tobias Harris: 00:35:49

there's still, you know, there's still plenty of hostility in both

Tobias Harris: 00:35:52

countries, uh, waiting to be inflamed.

Tobias Harris: 00:35:55

Um, so yeah, it's, that's really the thing to watch for,

Tobias Harris: 00:35:59

you know, is, is there a, uh.

Tobias Harris: 00:36:03

You know, a catalyst at some point that really undoes some

Tobias Harris: 00:36:07

of the work that we've seen.

Tobias Harris: 00:36:09

Hmm.

Jacob Shapiro: 00:36:10

That's, that's, uh, cautiously hopeful.

Jacob Shapiro: 00:36:13

Uh, if I'm, if I'm reading your tone correctly, um, let's, let's pivot

Jacob Shapiro: 00:36:17

a little bit now to, to Japanese domestic politics, um, at your advice.

Jacob Shapiro: 00:36:21

Uh, I started, I'm slowly working my way through the nobility

Jacob Shapiro: 00:36:25

of failure by Ivan Morris.

Jacob Shapiro: 00:36:27

Uh, loving it, by the way.

Jacob Shapiro: 00:36:28

And the last time we talked, you mentioned that maybe, uh.

Jacob Shapiro: 00:36:31

Ishiba would, would be, would be a chapter in this book in the future.

Jacob Shapiro: 00:36:35

Uh, and things weren't, did not seem to be going particularly well at the beginning.

Jacob Shapiro: 00:36:39

We could talk about rice prices, we could talk about terrible approval

Jacob Shapiro: 00:36:41

ratings, potential votes of no confidence, but he seems to have turned

Jacob Shapiro: 00:36:46

the ship around a little bit, like his approval ratings starting to inch up.

Jacob Shapiro: 00:36:50

You've got some pretty good pushes on, on trying to lower rise.

Jacob Shapiro: 00:36:53

You've got some deals with the opposition about pension reform.

Jacob Shapiro: 00:36:56

So where, where are you at with Yeshiva?

Jacob Shapiro: 00:36:58

Do you think it's fundamentally the deck is stacked against him?

Jacob Shapiro: 00:37:02

Is he turning it around?

Jacob Shapiro: 00:37:03

Is he still gonna be the tragic hero?

Jacob Shapiro: 00:37:05

Like how are we feeling a couple months in?

Jacob Shapiro: 00:37:08

Um, yeah,

Tobias Harris: 00:37:09

it's, um, you know, things really have changed week to

Tobias Harris: 00:37:14

week, you know, that there've been moments, you know, in the last few

Tobias Harris: 00:37:17

months where things were looking better.

Tobias Harris: 00:37:19

Um.

Tobias Harris: 00:37:21

Then, you know, just when things start looking up, that's when the rug

Tobias Harris: 00:37:24

seems to get pulled out under him.

Tobias Harris: 00:37:26

So we'll see if, if this is really a, uh, a true, uh, new beginning for him or if

Tobias Harris: 00:37:32

it's just a, you know, another false dawn.

Tobias Harris: 00:37:35

Um, but I. The, you know, the story really for Ishiba.

Tobias Harris: 00:37:40

I mean, his, you know, his premiership now has been, you know, fundamentally

Tobias Harris: 00:37:44

shaped by the fact that he is at the head of a minority government

Tobias Harris: 00:37:47

and everything has to be negotiated.

Tobias Harris: 00:37:50

Uh, every, you know.

Tobias Harris: 00:37:52

Everything requires, you know, consulting with multiple opposition

Tobias Harris: 00:37:55

parties, trying to convince at least one of them to support something

Tobias Harris: 00:37:58

that his government wants to do.

Tobias Harris: 00:38:00

And predictably what that has done has forced him to scale

Tobias Harris: 00:38:03

back, back his ambitions.

Tobias Harris: 00:38:04

And, you know, the criticism, you know, you know, even, and especially from

Tobias Harris: 00:38:09

within the LDP has been, well, you know, we don't know what he wants to do.

Tobias Harris: 00:38:13

You know, he has not really, uh, you know, laid out a vision, you know,

Tobias Harris: 00:38:17

and, and I mean, and some of that is just, he's kind of a different sort of.

Tobias Harris: 00:38:22

Politician, you know, for doing like the kind of fox and hedgehog dichotomy.

Tobias Harris: 00:38:26

You know, Abe in, in a lot of ways was something of a hedgehog in that, you

Tobias Harris: 00:38:29

know, was like absolutely fixated on, on this idea of kind of national greatness

Tobias Harris: 00:38:34

and, you know, make Japan great again.

Tobias Harris: 00:38:37

Perhaps we might call it, you know, that, you know that, that, you

Tobias Harris: 00:38:40

know, all out effort to make Japan stronger, to make Japan wealthier,

Tobias Harris: 00:38:44

to to leave behind, uh, the.

Tobias Harris: 00:38:48

You know, the, the frustrations and the difficulties of the lost decades

Tobias Harris: 00:38:52

to make Japan powerful and relevant.

Tobias Harris: 00:38:54

Uh, that's, that's not kind of how Ishiba is.

Tobias Harris: 00:38:57

Ishiba is much more Fox like, you know, much less animated by this

Tobias Harris: 00:39:02

sort of big, obsessive vision.

Tobias Harris: 00:39:05

Um, much more, uh, adapting responsive.

Tobias Harris: 00:39:11

He's not really, he's not terribly ideological ultimately.

Tobias Harris: 00:39:15

Um.

Tobias Harris: 00:39:16

So, um, you know, it's, it's just a reason.

Tobias Harris: 00:39:21

You know, in some ways it makes him well suited to the situation where he has to

Tobias Harris: 00:39:24

negotiate and he has to be willing to compromise and, you know, be extremely

Tobias Harris: 00:39:28

flexible on, uh, what he's willing to concede on when it comes to negotiating

Tobias Harris: 00:39:34

on, on policies with the opposition.

Tobias Harris: 00:39:36

Um, but it does mean that we just don't know, um.

Tobias Harris: 00:39:40

There's not, there's not a huge vision that he's, you know, gonna put all

Tobias Harris: 00:39:44

of his effort into trying to achieve.

Tobias Harris: 00:39:46

I mean, there really is just a sense of he's just trying to survive here

Tobias Harris: 00:39:49

as long as he can and sort of walk this tightrope, um, and, and hope

Tobias Harris: 00:39:53

it, uh, just hope it works out.

Tobias Harris: 00:39:55

And I. You know, for people who are used to watching, you know, you know,

Tobias Harris: 00:40:00

expecting a leader to be like Abe and to lay out this grand vision and you know,

Tobias Harris: 00:40:04

this, this is what we're working towards.

Tobias Harris: 00:40:06

Even if there's gonna be momentary zigs and zags, that's not what

Tobias Harris: 00:40:09

you're getting with Ishiba.

Tobias Harris: 00:40:11

And, um, and so that's, I mean, that's just, that's just the difference.

Tobias Harris: 00:40:16

Um, you know, he's got his big test in about a month when

Tobias Harris: 00:40:21

there'll be upper house elections.

Tobias Harris: 00:40:22

Um, and I. Basically, I mean, it really will be make or break for his

Tobias Harris: 00:40:27

government because if, um, if they can, if the LDP cannot hold, or if the

Tobias Harris: 00:40:32

ruling coalition cannot hold the upper house majority they have now, it's very

Tobias Harris: 00:40:36

hard to see how Ishiba survives that.

Tobias Harris: 00:40:37

So, um, you know, talk, we'll have to, we'll have to revisit things in

Tobias Harris: 00:40:42

a few weeks and see if he's still, uh, if he, if he's still around,

Tobias Harris: 00:40:46

because every, everything for him is going to be writing on that.

Jacob Shapiro: 00:40:50

Talk to us a little bit to close out about rice.

Jacob Shapiro: 00:40:52

'cause probably most listeners don't realize like, what a big story this is in

Jacob Shapiro: 00:40:56

sort of the Japanese political context.

Jacob Shapiro: 00:40:58

Also, a place where Yeshiva has some sort of interesting, like,

Jacob Shapiro: 00:41:02

like you said, not ideological, but.

Jacob Shapiro: 00:41:03

It seems to me he's always had agriculture in the back of his mind,

Jacob Shapiro: 00:41:06

something that he's soft on, and obviously has experience there too.

Jacob Shapiro: 00:41:09

So tell the listeners what's going on in Japanese rice politics

Jacob Shapiro: 00:41:12

and why it's so important.

Jacob Shapiro: 00:41:13

And maybe it'll, maybe it'll determine his fate in, in those

Jacob Shapiro: 00:41:15

elections that you just talked.

Jacob Shapiro: 00:41:16

Uh,

Tobias Harris: 00:41:17

it could, uh, it certainly, um, it, I mean it certainly

Tobias Harris: 00:41:21

I think is now an important determinant of his, uh, of his approval ratings.

Tobias Harris: 00:41:25

Um, so, you know, we've seen over the last, uh, year, I mean

Tobias Harris: 00:41:30

really it started with, um.

Tobias Harris: 00:41:33

Shortages that, uh, you know, appeared last summer where you and

Tobias Harris: 00:41:37

you had some bare shelves and stores were getting cleaned out of rice.

Tobias Harris: 00:41:40

There was a lot of different factors.

Tobias Harris: 00:41:41

Some of it was, uh, you know, climate change resulting in sort

Tobias Harris: 00:41:45

of a poor than expected crop.

Tobias Harris: 00:41:48

Um, you know, there has been, uh, a long-term secular decline in Japanese.

Tobias Harris: 00:41:55

Rice consumption that, you know, people just are not

Tobias Harris: 00:41:58

eating as much as they used to.

Tobias Harris: 00:41:59

I mean, it's still, you know, an absolute staple of the Japanese diet, but it's,

Tobias Harris: 00:42:02

you know, what Japanese people eat now is more diversified than in the past.

Tobias Harris: 00:42:06

So, relatively speaking, they're just consuming less rice.

Tobias Harris: 00:42:08

And so, um, you know, you, you've had that and you know of, as a

Tobias Harris: 00:42:13

result, you know, the farmers are kinda factoring that into their, um.

Tobias Harris: 00:42:18

Each of their calculations when it comes to, to acreage.

Tobias Harris: 00:42:21

And of course, the Japanese government is still, uh, despite reforms in the past,

Tobias Harris: 00:42:25

is still, uh, paying farmers not to grow.

Tobias Harris: 00:42:28

So, you know, there's, there's just, there's not a lot of, uh,

Tobias Harris: 00:42:32

flexibility in the production system.

Tobias Harris: 00:42:34

Uh, another factor that's been cited is that just with the

Tobias Harris: 00:42:37

tourism boom, um, you have lots of foreigners coming and even if, uh.

Tobias Harris: 00:42:44

The Japanese people are eating less rice.

Tobias Harris: 00:42:45

Well, you have all these foreigners come who want to come and eat sushi

Tobias Harris: 00:42:47

and want to eat all this, uh, you know, they want to eat the rice.

Tobias Harris: 00:42:50

So, um, so you had shortages last year and then, uh, and then you just have

Tobias Harris: 00:42:56

prices, you know, steadily start rising.

Tobias Harris: 00:42:58

And, you know, we saw, um.

Tobias Harris: 00:43:01

Prices in April doubled 98% year over year.

Tobias Harris: 00:43:04

And that was, you know, sort of now like the peak.

Tobias Harris: 00:43:07

And that really put this at the center of the agenda, you know, it's

Tobias Harris: 00:43:09

been sort of rising in importance.

Tobias Harris: 00:43:10

And, and with that it was, you know, wow, okay.

Tobias Harris: 00:43:13

Like this is, you know, people really, um, are, are struggling with this.

Tobias Harris: 00:43:17

And also because it's such an important component in a lot of other food, um,

Tobias Harris: 00:43:21

it was, you know, fueling higher than, you know, over, you know, higher, um.

Tobias Harris: 00:43:25

Higher than the 2% inflation target, uh, inflation steadily because, um,

Tobias Harris: 00:43:30

you have this expensive input now that is, that is making other things more

Tobias Harris: 00:43:34

expensive or at least you know, among, you know, depending on which, uh,

Tobias Harris: 00:43:37

type of inflation you're looking at.

Tobias Harris: 00:43:38

Um.

Tobias Harris: 00:43:40

So, you know, clearly a problem, clearly contributing to, uh,

Tobias Harris: 00:43:44

cost of living increases that, uh, new households are feeling.

Tobias Harris: 00:43:48

And, uh, somewhat fortuitously for Ishiba.

Tobias Harris: 00:43:52

His, uh, his agricultural minister, uh, had a, a Marie, I mean, literally

Tobias Harris: 00:43:57

people were calling him, uh, Marie Antoinette for saying this.

Tobias Harris: 00:44:00

You're saying that, uh.

Tobias Harris: 00:44:02

You know, I get so much rice for free for my supporters, uh, that,

Tobias Harris: 00:44:06

um, I don't have to buy any rice and not, not something that went

Tobias Harris: 00:44:09

over terribly well with the public.

Tobias Harris: 00:44:11

And so after a couple days, he was asked and the popular kojiro was

Tobias Harris: 00:44:16

brought in to be agriculture minister.

Tobias Harris: 00:44:18

Uh, and with that, uh, the government basically announced an entirely

Tobias Harris: 00:44:22

new approach to this problem of.

Tobias Harris: 00:44:24

Rising rice prices.

Tobias Harris: 00:44:25

They've been releasing rice from government stockpiles

Tobias Harris: 00:44:27

for, uh, several months now.

Tobias Harris: 00:44:30

But the system that they were using to do that was auctions.

Tobias Harris: 00:44:33

And basically what was happening was that you would be having these, you

Tobias Harris: 00:44:35

know, you, you'd have the auctions to buy government stockpiled rice, uh, and

Tobias Harris: 00:44:40

people would be buying, you know, they basically wholesalers or, or suppliers

Tobias Harris: 00:44:43

rebuying it and then holding onto it, you know, with the ex, you know,

Tobias Harris: 00:44:47

assuming that, okay, well if we just hold onto it the way prices are going,

Tobias Harris: 00:44:50

we'll just sell it, you know, for more.

Tobias Harris: 00:44:53

Um, in, you know, in a month or two.

Tobias Harris: 00:44:55

And so, um, they recognized that that approach wasn't working.

Tobias Harris: 00:45:00

And so what Kazumi announced, basically the day he took office, was that they

Tobias Harris: 00:45:02

were gonna start, uh, making deals with major retailers directly and

Tobias Harris: 00:45:07

start selling, uh, from the government stockpiles directly to the retailers.

Tobias Harris: 00:45:12

And there was a, basically a stampede of major retailers to sign up for this.

Tobias Harris: 00:45:16

Um.

Tobias Harris: 00:45:17

And it, I mean, it's polled very well and the rice is now starting

Tobias Harris: 00:45:21

to arrive in stores and, and overall rice prices are starting to tick down.

Tobias Harris: 00:45:25

So, so far that looks like they've maybe turned a corner.

Tobias Harris: 00:45:27

I mean, it looks like a, a really successful reboot

Tobias Harris: 00:45:30

of their Rice Pro policy.

Tobias Harris: 00:45:32

Uh, there are now bigger structural questions because, uh, lower rice prices,

Tobias Harris: 00:45:37

well, who doesn't like lower rice prices?

Tobias Harris: 00:45:39

The rice producers that are also an important LDP constituents.

Tobias Harris: 00:45:42

So, um.

Tobias Harris: 00:45:44

We're starting to see the beginnings of a bigger debate about.

Tobias Harris: 00:45:48

Japanese agricultural policy.

Tobias Harris: 00:45:50

How do you, you know, how should you subsidize farmers?

Tobias Harris: 00:45:53

How you should protect farmers?

Tobias Harris: 00:45:54

You know, should they just stop discouraging them from

Tobias Harris: 00:45:57

planting rice altogether?

Tobias Harris: 00:46:00

Let them plant more, um, but really do export promotion and really start

Tobias Harris: 00:46:05

trying to sell Japanese rice overseas.

Tobias Harris: 00:46:07

Uh, have other sort of subsidies and so that, that debate is to come

Tobias Harris: 00:46:11

and will be, I think, a major issue, uh, after the upper house election.

Tobias Harris: 00:46:15

Uh, but for now.

Tobias Harris: 00:46:17

You know, the focus really is how do you get more rice into stores and

Tobias Harris: 00:46:20

bring prices down and, uh, you know, so far so good for ishiba and zumi.

Jacob Shapiro: 00:46:27

I think sometimes people operate under the

Jacob Shapiro: 00:46:28

misapprehension that geopolitics is all about great powers in the US

Jacob Shapiro: 00:46:32

and Japan and China and South Korea.

Jacob Shapiro: 00:46:34

When I actually think it's really more about.

Jacob Shapiro: 00:46:36

Rice prices.

Jacob Shapiro: 00:46:37

I think if you really wanna understand things about politics, it's all local.

Jacob Shapiro: 00:46:40

And probably the more local and the more it hurts like local interests,

Jacob Shapiro: 00:46:43

the more you're actually gonna understand what's happening next.

Jacob Shapiro: 00:46:46

Um, Tobias, thanks man.

Jacob Shapiro: 00:46:48

I, I find Japan I are, are you finding you're getting more

Jacob Shapiro: 00:46:50

interest in people in Japan?

Jacob Shapiro: 00:46:52

Because for a long time I feel like Japan has been this, I don't know, not

Jacob Shapiro: 00:46:55

a black box, but it's like I understand China better than I understand.

Jacob Shapiro: 00:46:59

Japan.

Jacob Shapiro: 00:46:59

'cause there's just more access to information readily in English about it.

Jacob Shapiro: 00:47:02

And it's like less, I, I don't know.

Jacob Shapiro: 00:47:04

It's, it's easier to read.

Jacob Shapiro: 00:47:05

Have have you noticed a significant uptick in interest in what you're

Jacob Shapiro: 00:47:07

doing, or is it still, still relatively quiet when it comes to Japan?

Tobias Harris: 00:47:11

No, I, I, I think there is, um, I think, you know,

Tobias Harris: 00:47:14

and probably that'll probably only continue to grow, just as you know,

Tobias Harris: 00:47:20

the, the shape and the patterns of the global economy continue to change.

Tobias Harris: 00:47:24

I mean, I think Japan is, uh.

Tobias Harris: 00:47:27

Well positioned in that, in important ways.

Tobias Harris: 00:47:29

You know, I, I think, uh, you know, for better or worse too, you know,

Tobias Harris: 00:47:33

just as, uh, money flows shift and as the, the global bond market shifts,

Tobias Harris: 00:47:39

we're seeing maybe interest, you know, maybe concern about Japan.

Tobias Harris: 00:47:42

I mean, all of that I think is now weighing on, on people's minds.

Tobias Harris: 00:47:46

So, uh, no, definitely I have noticed.

Tobias Harris: 00:47:48

You know, for my business, Japan foresight, you've definitely

Tobias Harris: 00:47:50

noticed more, uh, more interest, more inquiries about it.

Tobias Harris: 00:47:54

And I welcome those inquiries of course.

Tobias Harris: 00:47:56

But, uh, yeah, no, it feel, it feels like a good time to be watching Japan.

Jacob Shapiro: 00:48:01

Yeah.

Jacob Shapiro: 00:48:01

Alright, well hopefully we'll have you back on soon.

Jacob Shapiro: 00:48:04

Thanks, man.