Rattled by Trump, US allies eye Japan’s biggest arms opening since WW2

(Corrected Mitsubishi sales forecast in paragraph 26 following company statement, updated with Chinese Ministry of Foreign Affairs statement)

by John Geddie and Tim Kelly

TOKYO, April 15 (Reuters) – Japan’s upcoming loosening of arms export rules has sparked major interest from Warsaw to Manila, as President Donald Trump wavers on security commitments to allies and wars in Iran and Ukraine strain U.S. arms supplies, Reuters reported.

Prime Minister Sanae Takaichi’s ruling party approved the changes this week as it seeks to revive the pacifist country’s military industrial base. His government will formally adopt the new rules as soon as this month, three Japanese government officials told Reuters.

Although Japan has largely isolated itself from global arms markets since World War II, it is spending $60 billion this year on its own military to maintain a sizeable defense industry capable of producing advanced systems such as submarines and fighter jets.

Potential new customers include the Polish army and the Philippine navy, which are undergoing a modernization process due to regional security issues, according to Reuters interviews with Japanese officials and foreign diplomats in Tokyo. Defense contractors Toshiba and Mitsubishi Electric are hiring staff and expanding capacity to capitalize on demand, executives said, providing previously unreported details.

One of the first deals Takaichi’s government is likely to approve will be the export of used frigates to the Philippines, which is engaged in a naval conflict with Beijing in the South China Sea, according to two Japanese officials. Reuters was the first to report the time frame for the possible sale, which could also be followed by missile defense systems, officials said.

Mariusz Boguszewski, deputy chief of mission at the Polish embassy in Japan, said Warsaw and Tokyo could help fill gaps in each other’s arsenals by cooperating in areas such as anti-drone and electronic warfare systems.

“There are some bottlenecks that we can overcome with Japan’s participation,” he added, without detailing specific agreements. Poland’s WB Group, one of Europe’s largest private defense contractors, signed an interim drone deal with Japanese aircraft manufacturer ShinMaywa last year.

Three other European diplomats said Japan’s easing provided a chance to reduce their heavy dependence on U.S. arms production, strained by the conflict. Trump’s unpredictability, such as his threats to leave the NATO security alliance and invade Greenland, has also increased pressure to diversify, according to the diplomats, who requested anonymity to discuss sensitive issues.

“Offers are coming from everywhere,” said Masahiko Arai, senior vice president in the defense unit of Mitsubishi Electric, which is adding staff in London and Singapore to facilitate defense exports.

Takaichi’s office declined to answer specific questions for this story; instead he referred to a speech seen by Reuters on February 20; Here, Takaichi said Japan was reviewing controls to bolster defense production and strengthen allies’ capabilities.

Tokyo’s export overhaul has previously been encouraged by successive US administrations, including Trump’s, which has urged allies to contribute more to collective defense efforts.

White House spokeswoman Anna Kelly did not respond to Reuters’ questions about the changes in Japanese policy but said the two countries were closer than ever under Trump and Takaichi.

In response to questions, China’s Ministry of Foreign Affairs said governments should be aware that “blindly entrusting their own security to another country, or even tying themselves to another country’s chariot, will only lead to backlash.”

The Philippine defense ministry declined to comment.

RISKY BUSINESS?

Japan’s first steps toward loosening the rules began more than a decade ago, when Takaichi’s mentor, the late prime minister Shinzo Abe, eased a near-total ban on exports to encourage joint arms development with allies to help counter China’s growing military power.

But that effort has largely stalled as many restrictions remain, including lethal equipment. Companies continued to avoid foreign defense sales.

Buoyed by a stunning election victory and bereft of a long-time coalition partner opposed to more radical change, Takaichi hopes the latest easing will encourage arms manufacturers to increase the production capacity Japan needs for a major military build-up.

Some Japanese defense firms say they are ready to take action.

Air defense systems maker Toshiba told Reuters it plans to hire about 500 people over the next three years and is building new testing and production facilities. It also established a new department to deal with defense exports.

“Reputational risk is not what it used to be,” said Kenji Kobayashi, vice president of Toshiba’s defense division.

Some major Japanese brands that operate in the field of defense equipment and also produce consumer goods have expressed concerns that arms sales would put off a wider customer base.

“Instead of worrying about this, we focus on fulfilling our role and growing the business,” Kobayashi said.

A hiring list reviewed by Reuters for Mitsubishi Electric, whose products include refrigerators and missiles, shows the firm is hiring for an overseas sales role covering fighter jets and other military exports.

Mitsubishi Electric defense manager Arai said demand for finished systems is greatest in Asia, while Europe, Australia and the United States offer markets for components and joint development of new products.

The company expects defense sales, including domestic and international, to triple to 600 billion yen by 2031.

However, Latvia’s ambassador to Japan, Zigmars Zilgalvis, said that a gap remained between some companies’ political messages and policies.

He gave the example of automaker Toyota, which turned down an attempt by its Latvian subsidiary VR Cars to purchase an engine and related parts for a military commercial vehicle in 2023.

Zilgalvis said the Latvian mission tried to broker the sale, which failed.

In response to questions from Reuters, Toyota Customization and Development said it could not meet the demand for military vehicles “due to our business scope and policy.” He declined to comment on upcoming revisions to Japan’s arms export policy.

VR Cars said it respected the decision.

While Tokyo is expected to maintain tight controls on arms shipments to conflict zones, even Ukraine has sensed an opportunity.

Kateryna Yavorska, head of Kyiv’s chamber of commerce in Tokyo, told Reuters exclusively that she would soon establish a new industry group of Ukrainian and Japanese drone firms to encourage the development of new technologies, coinciding with the rule changes.

‘OUT OF TIME’ FROM THE SECOND WORLD WAR

The United States has long dominated global military supply chains. It accounted for 95% of Japan’s defense imports, 85% of Australia and the UK’s purchases, and 77% of Saudi Arabia’s purchases between 2021 and 2025, according to a March report by the Stockholm International Peace Research Institute (SIPRI) think tank.

But Washington’s foreign military sales program and its tight control over defense technologies have long been a source of frustration, often blamed for late deliveries and rising costs, officials and analysts said.

A ruling party official involved in drafting security policy said one goal of Japan’s rule changes was to create defense supply chains in Asia that do not rely on the United States.

Neighboring South Korea offers a plan: It has become the largest defense supplier to Poland and the Philippines after steady growth over the past five years, according to SIPRI data.

However, Japan, the world’s fourth largest economy, has greater potential.

“Despite limitations” Japan’s arms industry is on par with South Korea, Germany, Italy and Israel and almost twice the size of India, according to SIPRI analysis of major defense contractor revenues in 2024. But the US industry is 25 times larger.

“Japan was obviously in a bit of a statute of limitations because of World War II. But inevitably they were going to move closer to the center of global politics,” said Andrew Koch, founder of Nexus Pacific, a Tokyo-based defense industry consultancy.

($1 = 159.2100 yen)

(Reporting by John Geddie and Tim Kelly; Adding by Tamiyuki Kihara, Nobuhiro Kubo, Daniel Leussink and Jekaterina Golubkova in Tokyo, Karen Lema in Manila and Trevor Hunnicutt in Washington; Editing by Katerina Ang)