An editorial calls for Japan to lead in preventing the free trade system from drifting as the United States appears set to relinquish its post-World War II role after 80 years. It warns of risks to financial markets from the Trump administration's aggressive tariffs and advocates expanding the CPTPP.
After 80 years since the end of World War II, the United States is poised to relinquish its leading role in the global economic order that has underpinned prosperity, according to a Yomiuri Shimbun editorial. To avert further turmoil, Japan should take the initiative to keep the free trade system on course.
Free trade and the dollar-based currency system have formed the bedrock of global development, allowing nations to specialize in their strengths and foster mutual benefits through imports and exports. However, U.S. President Donald Trump harbors a strong sense of victimhood, claiming that globalization under the World Trade Organization has allowed countries like China to exploit America, leading to job losses and a decline in domestic manufacturing—a view that resonates widely.
This perspective justifies Trump's unilateral high tariffs in his second term, which are more aggressive than in his first. Japan and the European Union have earned praise for negotiating reductions to mitigate impacts. The global economy shows resilience despite lingering effects; the Organization for Economic Cooperation and Development projects 2.9% real growth this year, a 0.3 percentage point drop from last year. The U.S. is forecast at 1.7%, the eurozone at 1.2%, and China at 4.4%, down 0.6 points, amid its ongoing real estate slump.
Trump's trade war with China ended in a temporary truce, but his unpredictability persists. The U.S. Supreme Court could deem his tariffs illegal. Doubts about globalization are rising worldwide, with unstable employment fueling populism.
In this context, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), led by Japan, is gaining appeal. Involving 12 countries including Australia, Britain, and Vietnam, it nearly eliminates tariffs among members. Costa Rica, Uruguay, Indonesia, the Philippines, and the United Arab Emirates have shown interest. Weary of U.S. tariffs and China's economic coercion, diverse nations see CPTPP as a free trade bulwark. Japan should expand it, strengthen EU ties to deter China, and possibly prompt U.S. reconsideration.
The Japan-U.S. alliance remains vital amid security challenges. Japan must advance the $550 billion (about ¥86 trillion) investment agreed in tariff talks, prioritizing national interests in areas like liquefied natural gas, nuclear power, semiconductors, rare earths, and shipbuilding.
The next Federal Reserve chair, taking office in May, faces pressure from Trump to cut rates for economic stimulus. Hasty reductions risk reigniting inflation and disrupting currency markets. The U.S. stock market shows overheating signs, with AI expectations driving funds to IT firms and Nvidia's market cap once exceeding $5 trillion—surpassing Japan's GDP. Preparing financial safety nets is essential against a potential bubble burst.
(From The Yomiuri Shimbun, Jan. 4, 2026)
(248 words)
