Name: Japan Just "Declared War" on the U.S. Dollar
Uploaded: 2025-08-31T17:58:01.000Z
Duration: 11 min 35 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Future simple

Donald Trump has humiliated Japan by forcing it to sign a trade deal that will completely destroy the Japanese economy.

To-infinitive

So Japan is desperately trying to save its economy.

The comparative

And that's why it's trying to build closer ties with countries such as China, India, and the rest of the BRICS countries.

It might mean that Japan might be preparing itself to join BRICS.

The whole purpose of BRICS is to dethrone the dollar as the global reserve currency.

So by joining BRICS, Japan might stop using the dollar and will move to alternative currencies.

It might start using its own currency or maybe other currencies in global trade instead of the US dollar.

So the real question is that, will Japan join BRICS?

If you are ready, give this video a thumbs up and let's find out.

To understand what's happening, we have to understand how the entire Japanese economy works.

The Japanese economy was built upon the shoulders of American consumers.

The business model after 1945 was very simple that Japan is going to build cheaper, better products and will sell them in the United States.

And American companies could not compete with Japanese companies because Japanese simply made better products and sold them at a cheaper price.

The Japanese GDP quickly grew tremendously and became the second world's largest economy.

But in 1980s, the United States realized that this cannot continue.

Japan has dominated the entire American consumer market.

And that's because the dollar was very strong, so we have to weaken the dollar.

But Ronald Reagan was a very smart president.

He knew that if we are going to weaken the dollar without the consent of other major economies, it is going to hurt them and it can potentially threaten the dollar as the global reserve currency.

So Ronald Reagan invited the leaders of the largest economies back in 1980s and they have signed the plaza accord.

They weakened the dollar against other major currencies.

And it was impossible without the consent of Japan.

Because back in 1980s, Japan was the second largest economy.

And if it wasn't for Japan, this deal would not be possible.

Suddenly, the Japanese yen is much stronger compared to the dollar, which means that Japanese products now are much more expensive.

You can see that the Japanese GDP even increased by 50% or 100% in a very short period of time and turned into a bubble and completely devastated the entire Japanese economy.

Because the business model no longer worked, Japanese cars were no longer as cheap as they were in the past, which destroyed the entire foundation upon which the Japanese economy was built.

Japan hasn't recovered from that crisis yet.

Even in the last 5 years, the Japanese GDP has fallen from 5 trillion dollars to 4 trillion dollars.

Can you imagine the US GDP losing 20% of its value in the last 5 years?

We would call that a complete disaster, but that's what's happening in Japan.

But as long as the United States opened its market for Japanese companies, Japan was very happy to use the dollar because it could actually keep sustaining its economy to a certain extent.

But here is the fundamental problem with the Japanese economy.

If you look at the largest companies in the United States, you will primarily see software companies, Microsoft, Apple, Alphabet, Amazon, Meta.

But if you look at the largest companies in Japan, you will see the exact same companies that dominated Japan back in the 1970s and 80s, Toyota, Mitsubishi, Hitachi, Sony, Nintendo, and most of them are companies that produce hardware, not software.

Because in 1995, when the internet revolution took place in the United States, Japan was facing the biggest crisis in its modern history.

It was as big as the crisis of 2008 in the United States.

And that's why it missed the internet revolution and it could not build even a single major technology company in the world.

The largest Japanese company is Toyota that is valued at 250 billion dollars.

The largest company in the United States is Nvidia which is valued at 4.5 trillion dollars and soon will become a 5 trillion dollar business.

But the problem is that Japan is about to miss the AI revolution as well.

The only way to take advantage out of AI is either build the software, which is the final product, Chad GPT, Grok, or DeepSeek.

Have you ever heard of a single Japanese software company in AI?

Either it's from the United States or it's from China.

The second way to profit out of the AI is to build the infrastructure for it, by designing the chips or manufacturing the chips.

The largest company in the world, which is Nvidia, designs the chips that empower AI.

But it's not enough to design the chips, you have to manufacture them.

And that's why TSMC worth a trillion dollars, 5 times or 4 times more than the largest company in Japan because it manufactures the chips that power AI.

But besides TSMC, there is a South Korean company called Samsung.

And Japan completely missed this boat and they aren't either designing or manufacturing any of those chips, which means that in the foreseeable future, the Japanese economy is not going to recover and is not going to take advantage out of the biggest revolution that is happening right in front of our eyes.

But that also means that Japan is not intending or is not going to change its business model that made it rich in the first place.

Build cars and basic electronics in Japan, ship them to the United States and sell them at a cheaper price.

Get all those US dollars and continue maintaining the Japanese economy.

But the problem with the deal that Trump has signed with Japan is that it entirely destroys that business model.

Japan builds, sells in the United States, receives the dollars and buys resources from the rest of the world.

For example, oil from the Middle East or other products from the rest of the world because Japan doesn't have a lot of resources.

Prior to the tariffs, it made sense to buy Japanese cars.

Because if you look at an American car and a Japanese alternative, the Japanese alternative would almost always be cheaper by 5-20% depends on the model.

And the Japanese car is as reliable as an American car if not more reliable.

In fact, Japanese cars are even more fuel efficient, so it made sense for you to buy the Japanese car.

But now the US government artificially increased the price of their Japanese cars, which means that the American consumer will pay the exact same price either for the American car or a Japanese car.

Which means that the demand for Japanese products in the United States over time is going to go down.

The second part of that deal was that Japan will invest in the United States 500 billion dollars.

The only question is that where Japan is going to take that money.

First of all, Japan is not as rich as the United States.

Secondly, the Japanese economy has been struggling for the last 30 years and Japan lost 20% of Do you think Japan has an extra 500 billion dollars?

And thirdly, the entire budget of the government last year was 720 billion dollars.

So that's almost as much as the entire annual budget of the Japanese government.

But if Japan is not going to invest this much money in the United States under Donald Trump's watch, Donald Trump would raise the tariffs to 25%.

So if you think that 15% tariff on Japanese goods is too high, think about how high and how terrible is 25%.

So the real question is that how will Japan's economy continue working when it no longer can sell in the United States because American consumers will not buy Japanese products since their prices are artificially increased by the US government.

Even if Japan is going to try to lower its prices to stay competitive in the United States, it is not going to make any profit.

So what is the purpose of lowering your prices?

So the question is that what exactly Japan can do?

How Japan can save its economy from the catastrophe?

Because we are not talking about Japan growing its economy.

We are talking about Japan maintaining its economy and preventing it from a complete collapse.

There are two things that Japan should do, and Japan perfectly understands that.

First of all, you need to find new markets for your products.

You can't sell them in the United States.

Yes, there isn't a single market that can replace the United States.

Because the US market is so rich, so wealthy, so convenient that there isn't a single country that can replace it.

Especially when India and China and Mexico are also export-driven economies.

But at least partially you can replace the United States, not with a single country, but with multiple countries.

And that could mean that it might make sense for Japan to join BRICS because it no longer benefits from the United States and will benefit as much from BRICS countries.

The second thing that Japan should do is to create leverage against the United States.

The reason that Donald Trump could sign such a deal with Japan is because the United States has so much leverage over Japan.