Mind the Gap: Time for Japan to Level Up its Foreign Aid in the Indo-Pacific

Logan Rolleigh, Japan Affairs Director - 2/17/25

Image Source: Nikkei Asia

As the new Trump administration prioritizes domestic federal resizing initiatives, recalibrating  US foreign aid, and steering the US along an America First policy, an opportunity for Japan to increase its soft power through investments, information campaigns, and multilateral diplomatic efforts lies in the Indo-Pacific. The first official meeting between President Trump and Japanese Prime Minister Shigeru Ishiba occurred on February 7. During the following press conference, both leaders committed to engaging in mutually beneficial economic and energy cooperation. Explicit commitments included Ishiba’s pledge to drive Japan towards a target investment goal of $1 trillion in the US and Trump's addressing of new liquid natural gas exports from Alaska to Japan. 

This timely meeting follows the Trump administration’s blitz of diplomatic and domestic efforts. On the foreign policy front, Secretary of State Marco Rubio set the tone for the administration with two diplomatic moves. The first was a joint statement from Quad members emphasizing their shared “conviction to international law, economic opportunity, peace, stability, and security in all domains, including the maritime domain.” 

The second was a brief trip across Latin America with particular attention paid to Panama and El Salvador. The former has been the subject of Trump’s ire, and tensions are still simmering despite Panamanian capitulation in the form of removing itself from China’s Belt and Road Initiative. The latter has been a conservative, rule-of-law success story in the eyes of the administration and others.

Both of these moves come amid a domestic situation that has seen America’s principal humanitarian and developmental aid provider to other countries, the US Agency for International Development (USAID), preparing to be veritably gutted by an administration overwhelmingly focused on reducing the size of the federal government and its annual spending bill. Regardless of the legality of these moves by the Trump administration, it has shaken America’s soft power abilities within the Indo-Pacific region. These are necessary to wield if a state desires to be perceived as a beneficial friend, partner, and ally in a vigorously contested region.

Such contestation comes in the form of an active and defiant China, which has a history of pushing back on Trumpian policies. China is currently countering Trump's fresh tariffs with their own economic coercion moves. On February 4th, China launched an antitrust investigation into Google, adding US companies Tommy Hilfiger and Calvin Klein to an “unreliable entity list.” In addition to its focused economic moves against Trump, China has recently welcomed various high-ranking East Asian personages such as Sultan Hassanal Bolkiah of Brunei and Thai Prime Minister Paetongtarn Shinawatra. As a final cherry on top of their so far very active 2025, the Chinese Coast Guard has, for over three weeks, actively challenged Filipino rights to contested islands in the South China Sea with their largest cutter: a 12,000-ton “monster.” 

It does not appear that the competition between the two largest adversaries in the Indo-Pacific will lessen anytime soon. This allows Japan, however, to exploit an opportunity to increase its regional influence. Before the inauguration of the second Trump administration, the FY25 President’s budget requested $2.1 billion in discretionary foreign assistance and $2 billion in mandatory funding across the State Department and USAID to focus explicitly on the Indo-Pacific region. A January 20th executive order realigning US foreign assistance, however, has put the previous FY25 amounts in limbo or otherwise disrupted them. 

Given the vacuum of US assistance going to a region vital in the ongoing competition with China, the Ishiba government should immediately prioritize increasing its foreign assistance projects and budgets. Additionally, it should focus more energetically on the Indo-Pacific region, including Oceania. In 2022, Japan’s Official Development Assistance amounted to $17,499.94 million (¥2,300 billion), with just under $11 million going directly to Asia and just over $248 million to Oceania. These amounts pale in comparison to the US’s previously allocated amount; however, any increase in assistance to the region will have long-term beneficial effects for the recipients and Japan.

Exploiting this opportunity and increasing foreign aid to the Indo-Pacific will accomplish several favorable outcomes. First, it will increase Japan's respect and influence with nations across the Indo-Pacific. This will pay dividends when friends are needed to counter Chinese efforts at regional hegemony. Second, it will deliver a foreign policy win to the Ishiba government and his Liberal Democratic Party, which they can use as an example of Japan’s rising regional leadership. Lastly, it will keep strong and fruitful diplomacy open with nations who are in the middle of a tug-of-war between the US and China. 

On the other side of the Pacific, the Trump administration should welcome increased foreign assistance efforts. It will allow his executive branch to focus on areas of interest such as the “America First” foreign policy, increased diplomatic efforts in the Western hemisphere, and the restructuring of the government’s expenditures. If they do not contest it in any way, shape, or form, it will enhance US–Japan relations and relations with the rest of the region. 

If there was ever a time for the Japanese cabinet and its vast bureaucracy to move with speed, that time would be now. Ishiba should immediately exploit the vacuum of aid that disruptions in US executive policy have created. Furthermore, the US should welcome the increase in Japanese foreign assistance going to nations that stand on the fence between the US and China because it has been a unilateral overwhelming beneficiary for too long. It is time for other nations to assist more in efforts where the US has traditionally led. In all, these efforts would be mutually beneficial measures to increase the international standing of not only Japan but all Western nations.