On Tuesday, U.S. president Donald Trump will be in Tokyo for his first trip to Japan since 2019. They are discussing security and trade.

On the agenda are:

RARE EARTHS

On Tuesday, Trump and Takaichi agreed to a framework that would secure the supply of critical minerals and rare earths.

The White House stated that Japan and the U.S. will use economic policy tools, coordinated investment and "diversified, fair and liquid markets for critical minerals" to develop "diversified and fair markets in rare earths and critical minerals".

The agreement follows China's tightening export controls on rare Earths in October. This prompted Washington to threaten 100% tariffs on Chinese products in response. Rare earths can be found in everything from fighter jets to smartphones.

Trump said Monday he hoped he would strike a deal with President Xi Jinping on the sidelines the Asia-Pacific Economic Cooperation Summit in South Korea, on Thursday.

SHIPBUILDING

A source familiar with this plan has confirmed that Japan and the U.S. are set to sign a Memorandum of Understanding for Tokyo to expand U.S. Shipbuilding Capacity as part of an earlier $550 billion deal.

A joint working group is tasked with hammering out the details. This includes collaboration between Japanese-American firms in order to increase competitiveness and standardise designs of ships and their components.

Power Infrastructure

In an interview with the Asahi, U.S. commerce secretary Howard Lutnick stated that power generation infrastructure was another area where Japan could invest. He said that artificial intelligence drives electricity demand. The U.S. therefore needs to build more power stations.

PICKUP TRUCKS

Sources familiar with the preparations of the talks said that Japan intends to buy more Ford F-150 trucks. This idea was floated by Trump.

In August, Trump stated that Japan is ready to buy "the beautiful Ford 150." On Tuesday, a Ford 150 was parked in front of the Akasaka Palace as Takaichi met him.

The sources claimed that the F-150s were too wide and fuel-hungry to be used by most Japanese drivers as snowplows.

SOYBEANS

Tokyo is also planning to increase its imports of U.S. soya beans, which will help compensate for the losses that American farmers have suffered since China cut back on purchases.

Sources said that Lutnick asked his Japanese counterpart Ryosei Acazawa to increase imports during a phone call they had last week.

Last month, U.S. soybeans exports to China dropped to zero for the first time since nearly seven years. Japan buys 70% of its soya beans from the United States, and could have to reduce Brazilian imports in order to accommodate more U.S. soybeans.

TOYOTA CARS

NHK, the public broadcaster, reported that Toyota Motor could announce plans to import U.S. made vehicles into Japan when Trump makes his three-day trip.

It said that Chairman Akio toyoda would outline the plan during a meeting with other Japanese business leaders.

This plan would be in line with Japan's efforts, especially with respect to cars, to reduce its trade surpluses with the U.S.

NHK reported that the government was also looking at easing regulations so U.S. vehicles could be sold in Japan with no additional testing. Toyota stated that the report is not based upon any official announcement by the company.

NATURAL GAS

Sources earlier reported that Japan would offer to increase U.S. imports of liquefied gas, but not from the proposed $44 billion Alaska LNG Pipeline championed Trump.

In an interview with the Nikkei, Lutnick said that Alaskan could be a good candidate for the investment deal of $550 billion.

Scott Bessent of the U.S. Treasury Department, who was traveling with Trump, urged Tokyo, in a letter, to stop buying Russian LNG. This still accounts for about 9% (mostly from Sakhalin-2) of Japan's fuel imported.

Early termination of contracts for these supplies could result in penalties.

DEFENCE SPENDING

Takaichi will likely tell Trump that Japan is prepared to take on a greater security burden, after last week's pledge to accelerate the biggest defence buildup in Japan since World War Two.

Japan is already home to the largest concentration of U.S. military forces in the world, including a Marine Expeditionary Unit, an aircraft carrier and dozens fighter jets.

She will not be able to commit herself firmly, as her coalition in power does not have a majority of seats in the parliament.

Takaichi, however, is unlikely to commit Japan to spending more than 2% GDP, as set by her predecessor, due to her fragile position in parliament. (Reporting and editing by Lincoln Feast, John Geddie, Tim Kelly and Anton Bridge.

(source: Reuters)