Executive Summary

Japan’s April 2026 lift of its arms export restrictions will not likely produce a major new arms-exporting power within the next five years. Instead, Tokyo is building a convertible dual-use industrial base and channeling defense-specific cooperation through trusted allies. Japan will like compartmentalize its exclusively defense-related production through international collaboration in the coming years. Tokyo will likely pair co-production or allied system domestication with domestic mass-scale output of dual-use capacity.

Decades of policy restriction left Japan without dedicated defense primes, scaled production capacity, or export infrastructure. These are gaps the 2026 liberalization does not by itself resolve. METI is instead directing investment toward dual-use capacity in AI, semiconductors, aerospace, and key materials. This is designed to surge into impactful defense output under crisis conditions. In parallel, Japan is deepening co-production with the US, Australia, UK, and Italy, and formalizing ties with the EU and NATO. Meanwhile, broader outreach to partners like India is government-mandated but not yet fully trust-based.