Japan's Prime Minister Shinzo Abe will visit President Donald Trump in Washington later this week with the ink of details of his country's rising trade surplus barely dry as the pair head to the golf course for what could be a crucial series of talks on security and the economy.
Japan, the world's third-largest economy, now has the second-largest trade surplus with the U.S. and, at $68.9 billion, is the only member of America's top three trading partners that has improved its position over the past year, according to data released Tuesday by the U.S. Department of Commerce.
What's more, Japan now joins the ranks of Mexico in not only increasing its surplus, but doing so on the back of massive car exports - the very kind of advantage that Trump has complained about since not only taking office last month but also from the very start of his Presidential campaign.
The U.S. notched a deficit on automobile-related goods of $74 billion with Mexico, $52.6 billion with Japan and $23.6 billion with Germany - three nations the President has specifically targeted as either currency manipulators, unfair tariff imposers or, in the case of Japan, both.
All this should make for interesting conversation on the golf course this weekend when Abe and the President share a round near Trump's Mar-A-Largo 'Winter White House'.
"We're going to have a round of golf, which is a great thing," Trump said. "That's the one thing about golf - you get to know somebody better on a golf course than you will over lunch."
So, beyond their Friday meeting at the White House, Abe will have at least a further 18 holes in Florida to argue his case against accusations that the Bank of Japan is deliberately weakening the yen in order to make the country's exports more attractive and reject the President's notion that his domestic auto industry is exploiting an unfair trade structure that prevents the General Motors (GM) and Ford (F) from enjoying access to its market.
The first might take more than nine holes: the yen has fallen more than 20% against the U.S. dollar since the BoJ ramped-up its quantitative easing program in 2013 following the launch of so-called Abenomics that defined his early administration and has had an undoubted impact on trade.
In fact, two of Japan's major automakers have recently revised up its profit forecast for the year ending March citing yen depreciation over the past week: Toyota Motor (T) lifted its net profit outlook from ¥1.7 trillion ($15.2 billion) from ¥1.55 trillion just days after Honda Motor (HMC) said it sees full-year profits of around ¥785 billion for the fiscal year ending in March, a 27% increase from last year and well ahead of the ¥753 billion tally forecast by analysts.
On the back nine, however, Abe can argue that Japan imposes no import auto tariffs, whereas the U.S. slaps a 2.5% charge on cars and 25% levy on trucks. He could also argue that European cars are more popular in Japan than U.S. ones.
The overall sales volume of non-Japanese automobiles has grown at a similar or faster pace than Japanese products since May, according to the country's auto dealers' association and nine of the top ten imported passenger cars registered in Japan last month were European, with Jeep the only U.S. brand to make it onto the list, according to the Japan Automobile Manufacturers Association.
Last Friday, Abe met with Akio Toyoda, the president of Toyota Motor, which Trump has threatened with 'big border taxes' if it goes ahead with its plans to build a new plant in Mexico to sell the Corolla model in the U.S.
Toyoda has said the company would need to rethink its strategies if the U.S. revises its approach on the NAFTA framework.
Abe's strategy, on the other hand, might be more simple: let Trump win.
"I know he loves the game, and we're going to have a lot of fun," the President said this weekend when asked if he would have a bet on the game. "It won't matter. I'll just make sure he's my partner."
The Prime Minister hopes he means not just on the course.