Strained Japan Ties May Haunt Trump’s Xi Meeting

(Bloomberg) --

Donald Trump’s four-day visit to Japan was meant to show unity between longstanding allies. Instead, it put a spotlight on cracks in the relationship.

Despite his declaration today that ties between the two countries have “never been stronger,” the U.S. president’s statements were persistently at odds with those of Prime Minister Shinzo Abe and his lieutenants.

Trump said he’s aiming to reach a trade deal by August, while Japanese officials said there was no such talk.

After he brushed off North Korean missile tests earlier this month, Abe called them a violation of United Nations resolutions.

As Trump escalates his trade war with China, the pressure to reach a deal with Tokyo is mounting. Bloomberg economists estimate if tariffs expand to cover all U.S.-China trade, and markets slump in response, the global economy would be 0.6 percent lower by mid-2021 than if there was no dispute.

It’s clear the rift between Washington and Beijing has entered a dangerous new phase, and Japan’s support could be useful to Trump before a planned meeting with Chinese President Xi Jinping at next month’s G-20 in Osaka.

While nobody expected a U.S.-Japan trade deal this week, the session is already looking like a missed opportunity for Trump to bring the two sides closer together.

Global Headlines

Race is on | European Union leaders head for Brussels today to begin the fight over who should lead the next commission. France’s Emmanuel Macron is pushing Brexit negotiator Michel Barnier while anti-trust chief Margrethe Vestager is making a play for the job after her liberals made gains in Sunday’s EU election. Angela Merkel’s backing for the German candidate Manfred Weber is wobbling as the horse-trading intensifies.

Rush to reboot | Democratic presidential contenders Cory Booker and Kirsten Gillibrand raced across Iowa this weekend trying to keep their campaigns alive in a crowded field of candidates. The next few weeks will be critical for the New Jersey and New York senators — who barely score in the single digits in national polls — as they try to avoid relegation when the party’s debates begin next month.

Leadership turmoil | The triumph of Nigel Farage’s Brexit Party in the EU elections is dominating the race to succeed Theresa May as Conservatives’ leader. Contender and Foreign Secretary Jeremy Hunt warned colleagues that pursuing a policy of leaving the EU without a deal in October would be “political suicide” and lead to a general election. Meanwhile, Rob Hutton writes how lawmakers are enjoying the courtship of an expanding field of Tory contestants.

Regional rut | Latin America is on the verge of suffering another lost decade. Still struggling to cope with the end of the commodities boom, the region’s growth has barely kept pace with its population expansion, leaving people poorer today than in 2012. Its biggest economies — Brazil, Mexico and Argentina — have contracted simultaneously for the second time in just over three years. David Biller and Eric Martin examine what’s behind the rot. 

Academic war | China has backed Yale University's s decision to support its international students as the deepening trade tensions between Beijing and Washington spills into academia. China’s foreign ministry said personnel and cultural exchanges should not be politicized after Emory University terminated two Chinese-American professors for failing to disclose ties to Beijing.

What to Watch

• A top Turkish official has suggested for the first time the delivery of a Russian missile-defense system may take place later than planned, giving more time to avoid a looming confrontation with the U.S.
• Canadian Prime Minister Justin Trudeau’s government has given notice — ahead of a visit this week to Ottawa by U.S. Vice President Mike Pence — that it intends to bring forward legislation to ratify the new North American free trade agreement.
• David Mabuza looks set to be reappointed as South Africa’s deputy president, a blow to national leader Cyril Ramaphosa’s drive to clean up his party's image.

And finally ... Vietnam may be one of the world’s fastest-growing economies, yet it’s still in the dark ages when it comes to the global trend toward cashless transactions. Prime Minister Nguyen Xuan Phuc is trying to convince citizens to use digital payments in a country where you can still buy a house with gold bars. That means introducing people to credit cards and bank transfers rather than carrying around piles of cash and bullion for purchases.

--With assistance from Ben Sills, Kitty Donaldson and Shivani Kumaresan.

To contact the editor responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Flavia Krause-Jackson

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