The imposition of tariffs on imports from two bordering nations, Canada and Mexico, has quickly prompted uncertainty in supply chains and global markets. President Trump’s decision to enact tariffs — which are taxes by another name — has caused some people to ask why friends would penalize friends and invite retribution along the same lines.
Announced tariffs on imports from Canada (the nation’s leading trade partner) and Mexico (second in total dollars) as well as China (third) has left some observers wondering which nation might be next on Trump’s list.
My bet after a recent visit to the Chicago area is it will not be the fourth-largest trade partner, Japan. In fact, there are signs the United States and Wisconsin may benefit from stronger economic and cultural ties with that East Asian power. Japan’s enduring status as a leading foreign investor in the United States, and its plans to invest more, is one such indicator.
Representatives from Wisconsin companies and institutions were guests at a dinner hosted by Jun Yanagi, the counsel-general for Japan in Chicago, to discuss a planned resurgence of the Japan-America Society of Wisconsin. The society, one of 40 in the United States, has roots dating to the 1950s in Milwaukee and a formal statewide presence since 1991.
While many of its functions are “people-to-people” events around anything from cooking to language lessons to seasonal celebrations, the main function of a rejuvenated Japan-America Society of Wisconsin would be to serve as Japan’s chamber of commerce in the state.
A strong foundation is already in place. Companies such as Kikkoman, which opened its first U.S. production plant for soy sauce in Walworth in 1972, continues to thrive in Wisconsin. Toshiba America Energy Systems Corp., Komatsu Mining Technologies, Yaskawa America Inc., and IRS USA are among other Japanese companies with Wisconsin facilities.
There are many other examples nationwide of Japan’s investment in the United States, as evidenced by a mid-2024 report from the U.S. Bureau of Economic Analysis. It showed Japan as the leading foreign investor through 2023 as defined by “ultimate beneficial owner,” meaning, who was really behind the investment versus money passing through a third-party nation.
Japan stood at $783.3 billion through 2023, followed by Canada ($749.6 billion), Germany ($657.8 billion), and the United Kingdom ($635.6 billion). In 2020, Japan ranked among the top three foreign investors in all 50 states and first in 39 states. The U.S. Department of Commerce has reported a tripling of Japanese investment in the United States in about 15 years.
There are signs of more investment to come. Trump met with Japanese Prime Minister Shigeru Ishiba in the White House about a month ago and issued a joint statement declaring a “new golden age for U.S.-Japan relations” in areas such as Indo-Pacific security, technology, energy, and space exploration. The statement also noted: “As close economic partners, the United States and Japan provide the largest amount of foreign direct investment and create high quality jobs in each other’s countries.”
Is $1 trillion in Japanese investment on the horizon? Perhaps, although there are still some wrinkles to be ironed out. In late 2023, Nippon Steel announced plans to purchase U.S. Steel in a transaction valued at $14.9 billion. President Joe Biden blocked the deal before leaving office this year, saying it was a threat to national security.
Trump has said he’s fine with a major investment by Nippon Steel in U.S. Steel, but not a full takeover; Nippon’s leadership continues to pursue full ownership.
The effects of U.S. tariffs on goods from Canada, Mexico, and China have yet to be fully felt, and there’s no guarantee Trump won’t seek to tax imports from other nations. For now, however, the U.S. relationship with Japan appears solid … and that will benefit Wisconsin over time as well.
