Early Wednesday morning, following Fox News’s projection that he would win the US election, Donald Trump took to the stage as the crowd chanted “USA, USA” and proclaimed: “We are going to turn our country around. Make it something very special. It lost that little thing called special. We are going to make it so great. It is the greatest country and potentially the greatest country in the world by far . . . We are going to make it the best it has ever been.”

My point here is that Trump speaks to an underlying belief system that I call the hegemonic state of mind. This is embodied in the phrase “make America great again”, which is so much more than a slogan.

Hegemony is used in international relations to describe a country whose power is unrivalled in international affairs. It is, quite simply, the heavyweight champion of the world.

The US has held this position since the end of the cold war, but its influence is waning.

In 1981 Robert Gilpin, the American political scientist, explained that the most harmful aspect of “hegemonic decay” is that the people within the hegemonic country view their position at the apex of the pyramid as a God-given right. As the natural order of things. From this perspective it is inconceivable to think that the world should be ordered a different way.

Trump’s promise to the American people is that he is the guy to stop the rot and put America back where it belongs — on top. Whether it’s the row over the border, the economy or the Middle East, choose whatever policy issue you like, it all comes back to the same thing — the hegemonic state of mind. The underlying belief that America should lead the world and that Donald Trump is the best chance of delivering such a prospect.

This helps us understand why so many different types of Americans, from all ages and ethnicities, voted for him and why they all share one thing, the hegemonic state of mind.

Adrian Gallagher
Professor in Global Security and Mass Atrocity Prevention, University of Leeds, Leeds, West Yorkshire, UK

Nissan has said it will lay off thousands of workers as it slashes global production to tackle a drop in sales in China and the US.

The Japanese car making giant says it will cut 9,000 jobs around the world in a cost saving effort that will see its global production reduced by a fifth.

Nissan did not immediately respond to a request from BBC News for details on where the job cuts will be made.

The company employs more than 6,000 people at its manufacturing plant in Sunderland, North East England.

The company also cut its operating profit forecasts for 2024 by 70%. It was the second time this year that the firm has lowered its outlook.

“These turnaround measures do not imply that the company is shrinking,” said Nissan’s chief executive Makoto Uchida.

“Nissan will restructure its business to become leaner and more resilient.”

Nissan’s shares were trading more than 6% lower on Friday morning in Tokyo.

Growing competition in China has led to falling prices, which has left many foreign car makers there struggling to compete with local firms like BYD.

In November last year, Nissan and its partners announced a £2bn ($2.6bn) plan to build three electric car models at its Sunderland factory.

The firm said it will build electric Qashqai and Juke models at the plant alongside the next generation of the electric Leaf, which is already produced there.

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Within a few hours of Donald Trump securing his victory in the US, Japanese media was using the term matatora — the third Trump-related entry in Japan’s dictionary of escalating disquiet at his possible return.

The first word in the sequence, moshitora (“what if Trump”), was current in the latter months of 2023 and set a tone of background nervousness in government, corporate and market circles. The second, hobotora (“most likely Trump”), has been in widespread use this year, demanding more serious fretting around geopolitics, inflation and trade risk. Matatora (“Trump is back”) grants a general licence to gasp. 

For some, though, the word has unleashed a bullish snort and an argument that — absent embroilment in regional conflict or some other unforeseen calamity — Japan may be better placed than almost any other developed market outside the US to flourish over the next few years. 

Tokyo stocks, declares Neil Newman, a strategist who has been covering Japan since the 1980s, have rarely been so primed for ignition. If anything, he says, the political paralysis to emerge from Japan’s messy general election last month, and the implied guarantee of no bad policymaking, should only make the market more attractive to big global funds.

It is a beguiling argument, given an extra sparkle by the various volatile knee-jerk market moves in Tokyo that accompanied Wednesday’s news: gains for exporters (on assumptions of an even weaker yen), defence industry stocks (Trump will demand allies spend more on their militaries), banks (inflation will rise and so will interest rates) and companies that stand to benefit from the (probably accelerated while Trump is in power) reshoring of Japan’s semiconductor industry.

Nicholas Smith, a strategist at CLSA, also sees the prospect of a six-month boost for Japan as animal spirits lift the financial sector. Global capital spending, frozen in the run-up to the US election, should now thaw quickly, favouring Japan.

The longer-term case for Japanese equities under Trump, though, depends on two main lines of reasoning. The first is that Shanghai and Hong Kong’s loss will be Tokyo’s gain. US-China relations under the Biden administration have not been good, and there is reason to expect them to worsen under Trump. US pension funds have already come under pressure to stop or withdraw investment, while China-based dealmaking led by US private equity has all but fallen silent. Some US pension money may have returned to Hong Kong and China in recent months, but that could quickly reverse under Trump. Critically, the flows may well divert to Japan by default as the only developed market in Asia with the breadth and depth to absorb them. 

A second argument is that Japan’s recent descent into political stasis — the ruling Liberal Democratic party and its leader, Shigeru Ishiba, have yet to pull together a working government — is not, for the stock market, a big problem. Ishiba and his party are too weak to disturb the economy’s momentum, or unravel the progress on corporate governance reform and restructuring that appeals so strongly to foreign investors. 

There are clearly powerful counter-cases to all this, not least the chance that the Trump administration is associated with such elevated levels of geopolitical uncertainty that investors retreat to the sort of trading patterns that flee risk and tend to reduce exposure to Japan.

And though Japan may indeed be geared to global growth, a significant chunk of that is exposure to China. Even if Japanese companies can navigate their way through higher tariffs and intensified “pick-a-side” rhetoric from Washington, China itself could be far less rewarding than in the past.

On the political front, the risks around Ishiba’s dismal gamble on a general election could prove much greater than Newman and other bulls suppose. The price paid for the prime minister’s weakness — an inability to communicate Japan’s importance to Trump, or present himself as likely to be around long enough to be worth Trump caring about — will be high.

Since early 2024, when the Nikkei 225 Average finally surpassed the record set in 1989, the brokers’ mantra has been that Japan is Back. A succession of big US and European long-only funds have come to Tokyo to check for themselves that the sales pitch holds true. A growing number appear to have returned convinced but without the sort of comfort levels needed for a really big reallocation to Japan. They had in any case been holding fire until after the US election. 

Trump is Back may ensure that Japan stays Back. It may also set Japan way, way back.

leo.lewis@ft.com