Japan

NHK | English | News | Jan. 23, 2026 | UndeterminedPolitics and Elections

British Prime Minister Keir Starmer is expected to meet with Japanese Prime Minister Takaichi Sanae in Japan during the latter half of next week. This will be Starmer's first visit to Japan since taking office, with arrangements for the trip currently underway according to multiple Japanese government sources.

The leaders are anticipated to focus on enhancing cooperation in economic security and defense, including discussions on strengthening supply chains. Prior to visiting Japan, Starmer plans to travel to China. The meeting will likely include exchanges on issues related to Beijing, with Takaichi seeking Starmer's understanding of Japan's stance amid worsening Japan-China relations.

In November, Takaichi and Starmer previously met during the G20 summit in South Africa. Despite the upcoming Lower House election campaign starting next Tuesday in Japan, Takaichi intends to continue engaging in summit diplomacy during this period.

The Mainichi | English | News | Jan. 23, 2026 | UndeterminedTaxes

Japanese Prime Minister Sanae Takaichi announced on January 19, 2026, that the ruling Liberal Democratic Party will propose eliminating the consumption tax on food and beverages for two years in the upcoming House of Representatives election campaign. This measure aims to ease the financial burden on middle- and low-income earners amid persistently high food inflation.

Takaichi plans to fund the tax cut by reallocating existing subsidies, special tax measures, and non-tax revenue rather than issuing deficit-financing bonds. She emphasized the need to consider impacts on financial markets, including interest rates, exchange rates, and local government finances. The timing of the tax cut was not discussed during the press conference despite prior speculation about a potential reduction around September.

The tax reduction is expected to cause an annual revenue loss of about 5 trillion yen ($31.6 billion), with roughly 2 trillion yen ($12.6 billion) impacting local governments. This has raised concerns about fiscal deterioration, reflected in rising government bond yields and potential yen depreciation, which could further increase inflation through higher import costs.

The opposition Centrist Reform Alliance advocates for a permanent zero consumption tax on food and beverages, making tax reduction a realistic prospect regardless of the election outcome. However, some economic officials warn that continued fiscal loosening by both major parties risks long-term fiscal collapse.

２５年の貿易赤字２・６兆円 対米輸出は４・１％減

Tokyo Shimbun | Local Language | News | Jan. 23, 2026 | UndeterminedTrade Issues and Numbers

Japan recorded a trade deficit of 2.6507 trillion yen in 2025, marking the fifth consecutive year of deficit. However, the deficit decreased by 52.9% compared to the previous year. Exports to the United States declined by 4.1% to 20.414 trillion yen, the first drop in five years, largely due to high tariff measures imposed during the Trump administration. Notably, automobile exports to the U.S. fell 11.4%.

Globally, exports rose 3.1% to 110.448 trillion yen, the highest since 1979, supported by increased shipments of electronic components such as semiconductors to Asia and engines to the U.S. Imports increased slightly by 0.3% to 113.0987 trillion yen.

Other exports to the U.S. also decreased significantly, including semiconductor manufacturing equipment down 30.2% and automobile parts down 10.7%. Imports from the U.S. rose 1.6% to 12.8926 trillion yen, resulting in a U.S.-Japan trade surplus of 7.5214 trillion yen, though this surplus decreased by 12.6%.

On January 22, the yen traded in the low 158-yen-per-dollar range in the Tokyo foreign exchange market.