Earlier this week, a pivotal development in Japan’s economic and security landscape unfolded as Goldman Sachs initiated coverage of SKY Perfect JSAT Holdings with a Buy rating. This move, reported by Simply Wall St, signals growing optimism about the company’s future, driven largely by Japan’s recent surge in defense spending—particularly on space programs. The timing couldn’t be more significant, coming just as Japan grapples with a changing relationship with the United States under the second Trump administration, and as Tokyo seeks to balance its longstanding alliance with Washington against a backdrop of global uncertainty and regional threats.
Goldman Sachs’ endorsement of SKY Perfect JSAT Holdings is rooted in the expectation that Japan’s increased defense budget, especially allocations for space, will become a powerful catalyst for the company’s growth. According to analyst projections, SKY Perfect JSAT’s space business could contribute a staggering 90% of its operating profits by the fiscal year ending March 2029. This dramatic shift underscores the extent to which government spending is reshaping the company’s investment narrative and, by extension, the broader Japanese defense sector.
But why the sudden pivot toward space and defense? The answer lies in the complex interplay of international politics and economic imperatives. Since January 2025, Japan has been navigating uncharted waters in its relationship with the United States, as the second Trump administration rolled out a series of aggressive economic policies. On March 26, 2025, the U.S. announced 25% tariffs on Japanese automobiles and auto parts—a sector that accounts for about 21.5% of Japan’s total exports and employs roughly 8.3% of its workforce, according to the Center for Strategic and International Studies (CSIS). The blow to Japan’s economy was immediate and severe, with some estimates suggesting the tariffs could reduce Japan’s GDP by as much as 0.7–0.8 percent. For a country accustomed to modest annual growth rates, this was a gut punch.
Negotiations between Tokyo and Washington moved at a breakneck pace. Prime Minister Ishiba Shigeru, who met with President Trump shortly after his January inauguration, dispatched negotiators to Washington almost weekly. The result was a July 22 agreement that promised the United States up to $550 billion in Japanese investment and reduced tariffs to 15%. Yet, even this deal proved fraught. Implementation snags meant that the U.S. did not lower its tariffs on Japanese cars to the agreed-upon 15% until September 4, costing Japanese automakers an estimated $20 million per day in the interim. A flurry of executive orders and clarifying documents eventually smoothed things over, but not before tensions flared and doubts about American reliability deepened.
These economic shocks have had ripple effects far beyond the auto sector. With public trust in the United States at a historic low—only 22% of Japanese respondents expressed confidence in the U.S. in a June 2025 Yomiuri Shimbun poll, the lowest figure since 2000—Tokyo has been forced to rethink its strategic posture. According to CSIS, a striking 77% of Japanese surveyed do not believe the U.S. would defend Japan in a crisis. This crisis of confidence has prompted Japan to pursue a dual-track foreign policy: maintaining close ties with the U.S. while aggressively strengthening partnerships with other like-minded countries in the Indo-Pacific and beyond.
On the security front, Japan has embarked on a historic increase in defense spending, aiming to reach 2% of GDP by 2027—double the informal 1% cap that had held for decades. This policy shift is not just about dollars and yen; it’s about asserting Japan’s autonomy in an increasingly dangerous neighborhood. Tokyo has ramped up trilateral dialogues with South Korea and the Philippines, deepened its participation in the Quad alongside Australia and India, and inked new defense and economic agreements with partners across Europe and Asia. Notably, Japan’s Mitsubishi Heavy Industries secured a $6.5 billion contract to build warships for the Royal Australian Navy, marking Japan’s most consequential defense sale to date.
Yet, this flurry of diplomatic and military activity comes at a time of profound domestic political upheaval. In July, the ruling LDP-Komeito coalition lost its majority in both houses of parliament for the first time in 70 years, and Prime Minister Ishiba announced his resignation in early September. Populist sentiment is on the rise, and Japanese voters are increasingly anxious about inflation and economic stagnation—problems made worse by U.S. tariffs and global instability. The next leader faces the daunting task of revitalizing the government, addressing voters’ economic concerns, and steering Japan through a volatile international environment.
For companies like SKY Perfect JSAT Holdings, this new era presents both unprecedented opportunities and daunting risks. The company, which provides satellite-based pay TV and communications services across Asia, is now poised to become a linchpin in Japan’s defense and space ambitions. As Simply Wall St notes, recent share price strength suggests that investors are betting on the company’s ability to capture a lion’s share of government contracts. However, the story is far from straightforward. Board turnover and questions about corporate governance remain persistent risks, and the company’s fortunes are tied to the ebb and flow of government spending—a notoriously fickle source of revenue.
Goldman Sachs’ Buy rating reflects a belief that the current surge in defense spending will translate into sustained profit growth for SKY Perfect JSAT. But the analysts also caution that this optimism comes with caveats. If government budgets tighten or political winds shift, the company could face headwinds. Moreover, as the investment community weighs the risks of board instability and the challenge of maintaining above-market growth, the market’s verdict could change quickly.
Meanwhile, the broader question remains: Can Japan translate its current flurry of activity into lasting international leadership? During the first Trump administration, Japan stepped up to fill a void left by U.S. retrenchment, spearheading the Comprehensive and Progressive Trans-Pacific Partnership. But today’s Japan is more politically fragmented and economically anxious. Still, there are glimmers of hope. Japan continues to build coalitions with countries facing similar challenges, and its willingness to invest in cutting-edge sectors like semiconductors, AI, and quantum computing could catalyze deeper collaboration with both traditional allies and new partners.
For the United States, the lesson is clear. As CSIS’s Kristi Govella argues, Washington must avoid letting domestic political squabbles derail vital cooperation with Tokyo. A more flexible, strategic approach—one that reassures Japan of its importance as an ally and offers clear pathways for collaboration—will be essential to maintaining the stability of the Indo-Pacific and ensuring mutual prosperity.
As Japan’s defense budgets soar and its companies like SKY Perfect JSAT Holdings ride the wave of government contracts, the stakes have never been higher. The coming years will test the resilience of Japan’s alliances, the adaptability of its businesses, and the resolve of its leaders. For now, all eyes are on Tokyo—and the world is watching to see whether Japan can seize this moment of uncertainty and turn it into an opportunity for renewal.
