Commentary by Christopher B. Johnstone and Adam P. Liff
Japan’s new PM Takaichi is accelerating defense spending & alliance upgrades. But five major challenges—from funding & politics to industry & U.S. coordination—will test Tokyo’s ambitious security pivot.
Since her historic election as Japan’s prime minister on October 21, Sanae Takaichi has hit the ground running on diplomacy and defense, generating an impressive array of global headlines. At a summit with Donald Trump mere days into her tenure, Takaichi pledged a “new golden age of the Japan-U.S. alliance” and committed to “further enhance [its] deterrence and response capabilities.” This followed her strikingly ambitious announcements to raise Japan’s defense-related spending to 2 percent of GDP two years ahead of schedule and to expedite revision of three major national security documents last updated just three years ago.
On November 7, the security concerns driving Takaichi’s pledges were thrown into sharp relief by Beijing’s exaggerated reaction to her comments in the Diet about whether a Taiwan Strait contingency could prompt Japan to come to the defense of its U.S. ally. Takaichi’s remarks did not change Japan’s long-standing position, but Beijing—and many foreign media and commentators—sought to fan the flames by mistranslating and misrepresenting what she said and the context behind it.
Beijing responded with explicit and implicit threats—its consul-general in Osaka even suggested that Takaichi be beheaded—and economic and military forms of coercion. These events highlight the urgency behind Japan’s ambitious security reform agenda and the essential role of the U.S.-Japan alliance in regional peace, stability, and prosperity. The stakes for Japan, the United States, and the world are immense.
As Takaichi settles in as prime minister, there are many unanswered questions about what the future holds for the U.S.-Japan alliance in the “Trump-Takaichi” era. Takaichi’s high public approval and consolidation of a parliamentary majority in the Lower House (see below) suggest that she may be around for a while. If anything, recent developments have only reinforced domestic support for accelerating Japan’s defense buildup. They could provide a significant tailwind for Japan’s reform efforts and the alliance.
But challenges lie ahead. Japan is attempting to do a lot in a short period of time, and there are manifold uncertainties about the future of U.S. priorities on issues important for Tokyo—as reflected in the Trump administration’s new National Security Strategy, which places priority on the Western Hemisphere, avoids criticizing Russia’s unprovoked invasion of Ukraine, ignores North Korea, and is sharply critical of U.S. allies, especially in Europe.
1.Funding the Buildup
Three years after Japan’s government announced an ambitious new defense strategy and five-year buildup program in 2022, including a pledge to surge defense-related spending to 2 percent of GDP by FY2027, it is well on its way to achieving its goals. These include major investments in long-range strike capabilities—including the acquisition of Tomahawk land attack cruise missiles, which Japan will begin to deploy onto destroyers next year—integrated air and missile defense, space and cyber capabilities, and munitions stockpiles, among other priorities.
The yen’s sustained weakness has undercut the purchasing power of these investments, and Japan is using some creative accounting to achieve the 2 percent target. But by any measure, the buildup is impressive and translates into a historic increase in the capabilities of Japan’s Self-Defense Forces (SDF). The fact that Takaichi’s Cabinet just committed to hitting 2 percent by the end of the current fiscal year provides an additional tailwind.
Even so, ever since the original December 2022 pledge, there have been nagging questions about how Japan is going to pay for and sustain this increasing spending on defense—to say nothing of future increases. Takaichi’s two predecessors did not come up with clear answers, and plans to raise taxes to this end have not been fully realized. On the contrary, Japan’s last two national political campaigns featured multiple parties calling for tax reductions to address inflation and other challenges. It remains to be seen whether tax revenues will decline or increase under Takaichi.
Takaichi’s bold decision to hit the 2 percent target two years ahead of schedule received plaudits in Washington. But it is also likely to raise expectations for even more increases in Japan’s next defense buildup program, now scheduled for release by the end of 2026. Recent pledges by U.S. NATO allies and Japan’s neighbors, South Korea and Taiwan, to take core defense spending to 3.5 percent of GDP may, too.
For an economy already carrying the world’s highest debt-to-GDP ratio among advanced economies—nearly 240 percent—and with myriad other expensive domestic priorities competing for political leaders’ attention, the fiscal and political constraints around continued defense spending growth are very real. Last month’s massive (¥21.3 trillion) stimulus package does little to mitigate these concerns.
2.Uncertain Domestic Politics Still a Critical Variable
Over the past year, Japan’s national politics have been hit by a series of political earthquakes that raise additional questions about the medium and longer term. In particular, it remains unclear what the combined effect of the Liberal Democratic Party’s (LDP) loss of its majority in the Lower House a year ago and the collapse of its 26-year partnership with Komeito this past October will be for the pace, scale, and content of Japan’s defense modernization.
The LDP-Komeito partnership was a fundamental feature of Japanese politics for the past quarter-century—and one which also had a profound if underappreciated impact on defense policy. Put simply, unique features of the two parties’ partnership empowered Komeito and its pacifist support base to constrain the more conservative LDP’s ambitions in defense. The LDP grudgingly tolerated this. Why? Because its leaders knew that Komeito’s support in national elections was a critical but inconspicuous enabler of much of the LDP’s success, including its single-party Lower House majority from 2012 to 2024.
The collapse of the LDP’s coalition with Komeito may be a mixed bag for its defense ambitions. At least in the short term, whereas Komeito acted as a brake on the LDP, its new coalition partner—the Japan Innovation Party (JIP)—may function as more of an accelerant. Indeed, the JIP’s party platform and last month’s Coalition Agreement make clear these two conservative parties have a lot of common ground on defense.
In the longer term, there are open questions about how durable this new coalition will be. The LDP’s invitation late last month to three independent lawmakers to join its in-house group effectively gives the coalition a majority in the Lower House. At least for now, that may reduce both the risk of a no-confidence motion and the need for the LDP and JIP to cooperate with opposition parties to pass a budget. Even so, they enjoy only a razor-thin majority (233 of 465 seats) and lack a majority in the Upper House.
On the other hand, the LDP remains far less popular than Takaichi herself, and the JIP’s support has dropped by half in the past month. Accordingly, there are serious questions about the coalition’s durability and the LDP’s future electoral strength—especially with Komeito out of the picture. Some LDP party members hold out hope that Komeito can be lured back into the coalition—the result of which would be renewed constraints on defense.
3.Japan’s New Defense Spending Priorities
Against the backdrop of successive U.S. administrations’ increased emphasis on allied burden sharing, by any measure, Japan’s track record over the past three years represents a significant contribution to the U.S.-Japan alliance and to peace and stability in East Asia.
Looking forward, policymakers in both countries should not lose sight of the fact that Japan’s spending these resources effectively and efficiently, including in coordination with the U.S. and its other allies and partners, is at least as important as the headline-generating percentage-of-GDP.
Since 2022, Japan has invested heavily in resilience (passive defenses, munitions stockpiles, and readiness and maintenance) and quality of life upgrades for SDF personnel—two examples of money well-spent in long-neglected areas.
Japanese officials have indicated that the next buildup plan is likely to draw lessons from the Russia-Ukraine War, including building out a suite of uncrewed systems under the “SHIELD” initiative: the mass deployment of low-cost surface, sub-surface, land, and aerial drones for coastal defense. Space-based capabilities, including satellites for intelligence, tracking, and targeting, as well as military communications, will be another focus. Enhanced cybersecurity is also getting attention. These initiatives make sense, provided Japan does not try to go it alone.
But some other major programs are more questionable. The Global Combat Aircraft Programme, Japan’s international program to replace the F-2 fighter in cooperation with the United Kingdom (BAE) and Italy (Leonardo), will consume significant resources. Its plan to produce an operational aircraft by 2035 is highly ambitious, at best, and the program may lag.
Will Japanese leaders be willing to consider other options—for example, additional acquisitions of the F-35—if the timeline slips? Similarly, an expert panel advising Japan’s Defense Ministry has recommended nuclear-powered submarines—an exceptionally costly endeavor without a clearly articulated strategic rationale, especially given Japan’s already formidable undersea capabilities.
4.Focus on Strengthening Indigenous Industry Carries Risk
Japan’s 2022 defense strategy justifiably places a heavy emphasis on strengthening the country’s long-neglected defense industrial base, and Takaichi has indicated that she will sustain this focus. Plans to develop Japan’s first-ever defense industry strategy, likely by the end of 2026, are understandable given Japan’s threat environment, relatively small defense industry, and a major lesson of the Ukraine war: that the ability to produce large quantities of defense materiel is essential to deterrence and resilience.
And to be fair, Japan’s desire for more domestic production is also rooted in long-standing frustration with the U.S. foreign military sales program, which is plagued by delays and subject to shifts in Washington’s priorities.
Recent investments are already paying off, and Japan’s defense industry is finally, if slowly, emerging as a global player. Earlier this year, for example, Australia selected Mitsubishi Heavy Industries to build its next-generation frigate. The LDP-JIP’s tentative plans to loosen constraints on defense exports would further enhance prospects for Japan’s defense industry.
But Japan’s instinct for indigenous defense production carries risks. Japanese industry is already stretched by the demands of increased defense spending, 60 percent higher than three years ago. And in some critical technology areas—including artificial intelligence and autonomy, cloud computing, and space-based surveillance and communications—it lags global competition. Inefficient allocation of resources, such as an exclusive preference for Japanese industry in these and other areas, risks higher costs, lesser capability, or both.
5.U.S.-Japan Alliance Dialogue and Urgency Lagging at a Critical Time
Trump’s visit to Japan in late October did much to reassure Tokyo of his administration’s commitment to the security alliance. Secretary of Defense Pete Hegseth has also made two positive visits to Japan. For now, the allies appear to have shelved frictions over defense spending—at least publicly.
But under the surface, the machinery of the alliance has slowed significantly. Concerns in Tokyo about Trump administration policies—not only on tariffs but also on China and Russia—are serious. Recent developments—not only the National Security Strategy but also the remarkable reluctance of the Trump administration to speak up clearly in support of Japan as Tokyo has faced a torrent of coercive action and rhetoric from Beijing—have exacerbated these concerns. Since Trump returned to office, the allies have not convened a “2+2” meeting—secretaries of state and defense and their counterparts—nor have they announced future plans to do so.
Working level meetings continue, but absent the forcing function of regular senior engagements and, more broadly, public announcements of a robust alliance agenda, there is a risk of stagnation. The timing is unfortunate, given the sobering array of shared challenges the allies face and significant unfinished business.
One key issue is the alliance’s command architecture. The Department of Defense continues work to upgrade U.S. Forces—Japan (USFJ) into a Joint Force Headquarters that can serve as a real counterpart to Japan’s new Joint Operations Command (JJOC)—a key initiative announced during the Biden administration and affirmed by Secretary Hegseth. But major questions remain about the day-to-day authorities of the “new” USFJ and its relationship with the JJOC. Similarly, as Japan brings long-range missile capabilities online in 2026, the alliance has yet to develop a clear process for coordinating strike operations. These and other issues require actively engaged political leadership to address and resolve.
Takaichi’s commitment to further enhancing Japan’s national security and defense posture is important and welcome. The work to build Japan’s next defense strategy and a new five-year plan is already underway and will largely be complete by the second half of 2026. As Japan navigates the challenges ahead, a reinvigorated, close, and senior-level dialogue and robust agenda on alliance priorities is essential—and urgent.