In 2013, for the first time in 21 years, the most foreign direct investment in the US originated from Japan. For a three-year period, through 2015, the average investment amount reached USD 37.8 billion, second only to Luxembourg. Since there is a lot of investment from large corporations who make use of the advantageous tax structure in Luxembourg, in a sense, Japan has continued to hold the top position in the amount of investment from its own domestic companies. As of the end of the 2014 fiscal year, the total amount of direct investment from Japan was USD 372.8 billion, putting Japan in second place behind the United Kingdom, which has a “special relationship” with the US
In comparison, exports from Japan to the US have stagnated. Dollar-denominated export value, export volume, as well as the value of US imports from Japan have all decreased for three consecutive years, since 2013. Furthermore, the value of imports has only increased by 6% during the 20-year period since 1995, and is shifting to something that is closer to a long-term decline. During this period, imports to the US from throughout the world tripled in value, while Japan’s share dropped sharply from 17% to 6%. In the late 1980s, Japan was the largest import partner of the US Today, Japan is in fourth place, well behind China, Mexico and Canada.
Looking at the economic relationship between the US and Japan from the Japanese perspective, the point that stands out is the floundering exports to the US One of the big reasons is the disappearance of IT related products, like computers and phones, and electronic products, like televisions, which used to be some of Japan’s main export goods. This is due to a significant decline in the competitiveness of these products, which is also a serious problem in Japan. Compared to this, it may seem surprising that there is recently so much foreign direct investment. Since the US is only showing moderate economic growth, it is difficult to regard it as an especially attractive investment opportunity, and the effects for Japan are not clear at this time.