US Secretary of State Marco Rubio and Defence Secretary Pete Hegseth had been expected to meet Japan's Foreign Minister Takeshi Iwaya and Defence Minister Gen Nakatani in Washington on July 1 for annual security talks.
But according to the Financial Times, Tokyo scrapped the meeting after the US asked Japan to boost defence spending to 3.5 per cent of gross domestic product, higher than an earlier request of 3 per cent.
Japan's Nikkei newspaper reported on Saturday that President Donald Trump's government was demanding its Asian allies, including Japan, spend 5 per cent of GDP on defence.
An unnamed US official told Reuters that Japan had "postponed" the talks in a decision made several weeks ago. A non-government source familiar with the issue said he had also heard Japan had pulled out of the meeting but not the reason for it doing so.
The Financial Times said the higher spending demand was made in recent weeks by Elbridge Colby, the third-most senior Pentagon official, who has also recently upset another key US ally in the Indo-Pacific by launching a review of a project to provide Australia with nuclear-powered submarines.
In March, Prime Minister Shigeru Ishiba said other nations do not decide Japan's defence budget after Colby called for Tokyo to spend more to counter China, during his nomination hearing.
Japan and other US allies have been engaged in difficult trade talks with the United States over Trump's worldwide tariff offensive.
The paper said the decision to cancel the July 1 meeting was also related to Japan's July 20 upper house elections, expected to be a major test for Ishiba's minority coalition government.
Japan's move comes ahead of a meeting of the US-led NATO alliance in Europe next week, at which Trump is expected to press his demand that European allies boost their defence spending to 5 per cent of GDP.
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