Hegseth calls Japan indispensable in the face of Chinese aggression

TOKYO (AP) — U.S. Defense Secretary Pete Hegseth called Japan on Sunday an "indispensable partner" in deterring growing Chinese assertiveness in the region and announced upgrading the U.S. military command in Japan to a new "war-fighting headquarters."

Hegseth, who is on his first Asia trip with Japan as his second stop, also stressed the need for both countries to do more to accelerate the strengthening of their military capability as the region faces China’s assertive military actions and a possible Taiwan emergency.

“Japan is our indispensable partner in deterring Communist Chinese military aggression,” Hegseth said at the beginning of his talks with Japan’s Defense Minister Gen Nakatani in Tokyo. "The US is moving fast, as you know, to reestablish deterrence in this region and around the world."

His comments come as an assurance at a time when Japan has been worried about how U.S. engagement in the region may change under President Donald Trump's “America First” policy, Japanese defense officials said, speaking on condition of anonymity, citing protocol. Trump has also threatened to impose trade tariffs on Japan, a key U.S. ally, sparking more concern.

The two sides agreed to accelerate plans to jointly develop and produce missiles such as Advanced Medium-Range Air to Air Missiles, or MRAAM, and consider producing SM-6 surface-to-air missiles, to help ease a shortage of munitions, Nakatani said. The ministers also agreed to speed up the process involving the maintenance of U.S. warships and warplanes in Japan to strengthen and complement Japanese and U.S. defense industries.

Japan and the U.S. decided in July to upgrade the command and control of the Japanese military as well as U.S. forces in the East Asian country, under the Biden administration, a major structural change aimed at bolstering joint operational and response capabilities. Japan is home to more than 50,000 U.S. troops.

Tokyo last week launched the Japan Joint Operations Command, or JJOC, whose mission is to coordinate Japanese Ground, Maritime and Air Self-Defense Forces, in a significant action to further strengthen capabilities to respond to contingencies and better cooperate with the U.S.

Hegseth announced Sunday the upgrading of its current command, U.S. Forces Japan, by placing a unified operational commander to function as a joint force headquarters to liaise with its Japanese counterpart to serve as “war-fighting headquarters” to bolster speed and capability of their troops’ joint operations.

The Pentagon chief said the reorganization of U.S. troops is a step to better prepare for a possible conflict. America and Japan both work for peace, but “we must be prepared,” he said.

The Japanese defense officials say they are not expecting a significant change in their responsibilities or an increase in U.S. troops in Japan.

Hegseth and Nakatani told a joint news conference that they have also agreed on the need to beef up Japan’s defense posture on the Southwestern islands, which are in critical locations along the disputed areas in the East China Sea and near Taiwan to further step up deterrence against China.

He stressed the need to have “sustaining, robust, ready and credible deterrence” in the Indo-Pacific, including across the Taiwan Strait, as “Japan would be on the frontlines of any contingency we might face in the western Pacific.”

China claims Taiwan as its own territory. The U.S. is obligated under a 1979 law to provide Taiwan with sufficient military hardware and technology to deter invasion, and its arm sales to Taiwan have always drawn strong opposition from Beijing.

On Saturday, he joined the U.S.-Japan joint memorial to honor the war dead in the Battle of Iwo Jima as they marked the 80th anniversary of the end of one of the fiercest battles of World War II, praising the strong alliance between the former enemies.

Before landing in Japan, Hegseth stopped in the Philippines where he also ensured Trump’s commitment to step up ties with the Southeast Asian country that faces maritime disputes with Beijing.

U.S. Secretary of Defense Pete Hegseth gives his opening speech at the beginning of his meeting with Japanese Prime Minister Shigeru Ishiba at the prime minister's office in Tokyo Sunday, March 30, 2025. (Stanislav Kogiku/Pool Photo via AP)

U.S. Secretary of Defense Pete Hegseth, center left, shakes hands with Japanese Prime Minister Shigeru Ishiba at the prime minister's office in Tokyo Sunday, March 30, 2025. (Stanislav Kogiku/Pool Photo via AP)

U.S. Secretary of Defense Pete Hegseth, left, shakes hands with Japanese Prime Minister Shigeru Ishiba at the prime minister's office in Tokyo Sunday, March 30, 2025. (Stanislav Kogiku/Pool Photo via AP)

U.S. Secretary of Defense Pete Hegseth, left, gives his opening speech at the beginning of his meeting with Japanese Prime Minister Shigeru Ishiba at the prime minister's office in Tokyo Sunday, March 30, 2025. (Stanislav Kogiku/Pool Photo via AP)

U.S. Secretary of Defense Pete Hegseth, left, shakes hands with Japanese Prime Minister Shigeru Ishiba at the prime minister's office in Tokyo Sunday, March 30, 2025. (Stanislav Kogiku/Pool Photo via AP)

Japan's Defense Minister Gen Nakatani, right, and U.S. Secretary of Defense Pete Hegseth attend a joint news conference at the Ministry of Defense in Tokyo Sunday, March 30, 2025. (Kiyoshi Ota/Pool Photo via AP)

Japan's Defense Minister Gen Nakatani, right, and U.S. Defense Secretary Pete Hegseth, second left, meet at the Ministry of Defense in Tokyo Sunday, March 30, 2025. (Kiyoshi Ota/Pool Photo via AP)

Japan's Defense Minister Gen Nakatani speaks with U.S. Defense Secretary Pete Hegseth, unseen, during their meeting at the Ministry of Defense in Tokyo Sunday, March 30, 2025. (Kiyoshi Ota/Pool Photo via AP)

U.S. Defense Secretary Pete Hegseth speaks with Japan's Defense Minister Gen Nakatani during their meeting at the Ministry of Defense in Tokyo Sunday, March 30, 2025. (Kiyoshi Ota/Pool Photo via AP)

Japan's Defense Minister Gen Nakatani, right, and U.S. Defense Secretary Pete Hegseth shake hands while posing for photographs prior to their meeting at the Ministry of Defense in Tokyo Sunday, March 30, 2025. (Kiyoshi Ota/Pool Photo via AP)

Japan's Defense Minister Gen Nakatani, right, and U.S. Defense Secretary Pete Hegseth meet at the Ministry of Defense in Tokyo Sunday, March 30, 2025. (Kiyoshi Ota/Pool Photo via AP)

Japan's Defense Minister Gen Nakatani, center, and U.S. Defense Secretary Pete Hegseth, foreground, react after reviewing an honor guard during a welcome ceremony at the Ministry of Defense in Tokyo Sunday, March 30, 2025. (Kiyoshi Ota/Pool Photo via AP)

Japan's Defense Minister Gen Nakatani, left, and U.S. Defense Secretary Pete Hegseth, right, review an honor guard during a welcome ceremony at the Ministry of Defense in Tokyo Sunday, March 30, 2025. (Kiyoshi Ota/Pool Photo via AP)

Japan's Defense Minister Gen Nakatani, left, and U.S. Defense Secretary Pete Hegseth, right, review an honor guard during a welcome ceremony at the Ministry of Defense in Tokyo Sunday, March 30, 2025. (Kiyoshi Ota/Pool Photo via AP)

Japan's Defense Minister Gen Nakatani, right, and U.S. Defense Secretary Pete Hegseth review an honor guard during a welcome ceremony at the Ministry of Defense in Tokyo Sunday, March 30, 2025. (Kiyoshi Ota/Pool Photo via AP)

Japan's Defense Minister Gen Nakatani, left, and U.S. Defense Secretary Pete Hegseth review an honor guard during a welcome ceremony at the Ministry of Defense in Tokyo Sunday, March 30, 2025. (Kiyoshi Ota/Pool Photo via AP)

U.S. stocks are slipping in early trading Wednesday as Wall Street closes out a banner year for markets driven by both optimism and uncertainty.

The S&P 500 was down 0.2%. The Dow Jones Industrial Average fell 111 points, or 0.2%, as of 10:07 a.m. Eastern time. The Nasdaq composite fell 0.2%. The stock indexes are coming off a three-day losing streak.

Trading is expected to be light ahead of the New Year’s Day holiday, when markets will be closed. With just one trading day left before the year ends, most big investors have closed out their positions for the year and trading volume has been very thin.

Even after their mini post-Christmas pullback, the indexes are on pace for strong gains for the year.

The S&P 500 is up more than 17% this year, it’s third straight double-digit annual gain. The Nasdaq is up 21.3% and the Dow has gained 13.7%.

Wall Street’s 2025 gains came as investors embraced the optimism surrounding artificial intelligence and its potential for boosting profits across almost all sectors. But the market had no shortage of turbulence along the way amid President Donald Trump’s on-again, off-again tariffs on imported goods worldwide and uncertainty over the trajectory of interest rates.

The S&P 500 plunged nearly 5% on April 3, it’s worst day since the 2020 COVID crash. It fell another 6% a day later, after China’s response raised fears of an escalating trade war. Worries also gripped the U.S. Treasury market.

Trump eventually put his tariffs on pause and negotiated agreements with countries to lower his proposed tariff rates on their imports, helping calm investors’ nerves.

Strong profit reports from companies and three cuts to interest rates by the Federal Reserve also helped drive markets higher.

Still, the AI frenzy that drove markets in 2025 did not come without concerns. Chief among them is the worry that artificial intelligence technology may not produce enough profits and productivity to make all the investment worth it. That could keep the pressure on AI stocks like Nvidia and Broadcom, which were responsible for much of the market’s gains this year.

And it’s not just AI stocks that critics say are too pricey. Stocks across the market still look expensive after their prices climbed faster than profits.

On top of concerns that stocks are overvalued, the ongoing impact of the wide-ranging U.S.-led trade war threatens to add more fuel to inflation in the U.S. Despite the Fed cutting rates over concerns about the labor market, inflation remains solidly above the central bank’s 2% target.

Wall Street is betting that the Fed will hold interest rates steady at its next meeting in January.

Traders got an update on the state of the job market Wednesday. The Labor Department reported that fewer Americans applied for unemployment benefits last week with layoffs remaining low despite a weakening labor market.

Technology and communication services stocks were among the biggest weights of the market Wednesday.

Broadcom fell 1.1% and Micron Technology was 2% lower.

Treasury yields were mostly higher in the bond market. The yield on the 10-year Treasury rose to 4.14% from 4.13% late Tuesday. The yield on the two-year Treasury, which moves more closely with expectations for what the Federal Reserve will do, rose to 3.46% from 3.45%.

Trading in precious metals continued to be volatile as the year winds down. Silver swung back to a big loss, giving back more than 6% early Wednesday after Tuesday's gain of more than 10%. Following Friday's 7.7% jump, silver lost nearly 9% on Monday. It's still up more than 140% this year.

Gold was down 0.6%, but is still up 65% in 2025.

Elsewhere, global stock markets including Germany, Japan and South Korea were closed Wednesday for the New Year's holidays, while trading was mixed in those that remained open.

U.S. crude picked up 39 cents to $58.34 per barrel. Brent crude, the international standard, added 36 cents to $61.69 per barrel.

Hajime Moriyasu, the head coach of Japanese national soccer team, rings the bell during a ceremony to mark the last trading day of the year on the Tokyo Stock Exchange Tuesday, Dec. 30, 2025, in Tokyo. (AP Photo/Eugene Hoshiko)