The United States and Japan are the two largest national economies in the world. The United States is the world's largest deficit and debtor country.
Japan is the world's largest surplus and creditor country.
Hence the course of economic relations between the United States and Japan plays a critical role in the world economy as well as a central role in overall relations between the two countries. The economic positions of Japan and the United States have reversed dramatically over the past decade. In the late 1980s, most Japanese and many Americans believed that Japan was on its way to becoming the dominant economy in the world - if it had not already achieved that position. Most Americans and many Japanese believed there had been an fundamental deterioration in the competitive position of the United States. American companies were emulating key Japanese management practices as they struggled to restore their own strength.