The global economy has been jolted by a new round of Trump tariffs. The U.S. has proposed a flat 10% import tariff, along with an additional “reciprocal tariff” pegged to bilateral trade imbalances. For Japan, this would result in an effective cumulative tariff of 34%. While implementation of the reciprocal tariff has been delayed for 90 days, the underlying tensions remain unresolved.
Japan now finds itself in a critical window of negotiation. Washington may push Tokyo to increase agricultural imports or influence currency policy to strengthen the yen. But a more strategic and mutually beneficial path lies in the energy sector—a domain where U.S. and Japanese interests align naturally.
Rather than viewing these tariffs as a threat, Japan should treat them as a wake-up call to reassess its energy and industrial policy. The country’s current “Green Transformation” (GX) initiative aims to achieve net-zero carbon emissions by 2050, heavily investing in solar and wind energy, as well as electric vehicles.
However, these sectors are overwhelmingly dominated by China. Over 90% of the world’s solar panels and more than half of its wind turbines are produced there. In effect, Japan’s green energy push is subsidizing Chinese industry—while reducing demand for fossil fuels, much of which could be supplied by the United States.
Redirecting energy imports toward American oil and gas would simultaneously enhance Japan’s energy security and improve the U.S. trade balance—directly addressing one of the Trump administration’s key concerns. Given Washington’s ongoing economic decoupling from China, a Japanese pivot away from China-centered green energy technologies would be welcomed.
The Japanese government plans to mobilize a staggering ¥150 trillion ($1 trillion)—roughly 3% of national GDP—in public and private investment over the next decade to support the GX initiative. Yet, such massive capital deployment will likely enrich Chinese manufacturers while further eroding Japan’s industrial base.
Rather than funneling resources into sectors dominated by China, Japan should reallocate this investment into fossil fuel infrastructure such as natural gas power, in coordination with American energy companies. Such a shift would strengthen bilateral ties and serve the broader strategic interests of both nations.
Washington has repeatedly signaled its interest in increased Japanese investment—especially in U.S. energy development. Japan, with limited natural resources of its own, stands to gain by taking equity stakes in American fossil fuel projects, including oil, gas, and even coal.
Alaska’s gas fields have been floated as one potential joint venture. Even if individual projects prove financially uncertain, the broader opportunities in U.S. energy are plentiful. Japan already imports American LNG, oil, and coal. Scaling up these imports and expanding supporting infrastructure across the Indo-Pacific would create a mutually beneficial supply chain.
Japan’s world-class engineering ability would help building energy infrastructure for the high-growth markets throughout Indo-Pacific, thereby providing opportunity for American energy producers. This would directly support Washington’s “Energy Dominance” doctrine—to unleash the U.S.’s vast energy resources for the prosperity and alliance-building, dominating the potential adversaries.
Any large-scale pivot toward fossil fuels would inevitably mean major deviation from the existing net zero policy by Japan, but it will be welcomed by the U.S.. The Trump administration and Republican leadership—including figures such as Secretary of State Marco Rubio, Treasury Secretary Scott Bessent, and Energy Secretary Chris Wright—have made it clear that they reject the climate agenda of the Biden era. For them, “Energy Dominance” is inseparable from national prosperity and global leadership.
Japan’s current climate policy—including targets of a 46% emissions cut by 2030 and 73% by 2040—mimics the now-abandoned goals of the Biden administration. These commitments neither serve Japan’s economic interests nor its geopolitical reality.
Just as the U.S. under President Trump withdrew from the Paris Agreement, Japan should do the same. Leaving the agreement would free Japan not only to pivot toward fossil energy domestically, but re-engage in overseas fossil fuel development projects—many of which are currently constrained by treaty obligations—and signal to Washington that Japan is serious about strategic realignment.
While Trump has often zeroed in on trade imbalances, his broader team understands a deeper truth: a strong, resilient Japan is critical to U.S. defense strategy in the Indo-Pacific.
Undersecretary of Defense Elbridge Colby has emphasized Japan’s importance as a manufacturing and defense partner to complement the U.S. capacity. Washington does not want to see Japanese industrial capacity decline—it wants Japan to thrive. Last year, Vice President J.D. Vance openly criticized Germany’s heavy reliance on renewables, blaming it for deindustrialization and national vulnerability. He would likely view Japan’s path with similar alarm.
Instead of spending 3% of GDP annually on green technologies sourced from China, Japan should co-invest with the United States in expanding fossil fuel production and infrastructure both at home and across the Indo-Pacific. American energy producers would thrive, Japanese manufacturers would regain momentum, and a stronger, more secure alliance would emerge. >>>