TOKYO, Feb 9 (Reuters) - Japanese Prime Minister Shigeru Ishiba expressed optimism on Sunday that his country could avoid higher U.S. tariffs, saying President Donald Trump had "recognised" Japan's huge investment in the U.S. and the American jobs that it creates.

At his first White House summit on Friday, Ishiba told public broadcaster NHK, he explained to Trump how many Japanese automakers were creating jobs in the United States.

The two did not specifically discuss auto tariffs, Ishiba said, although he said he did not know whether Japan would be subject to the reciprocal tariffs that Trump has said he plans to impose on imports.

Tokyo has so far escaped the trade war Trump unleashed in his first weeks in office. He has announced tariffs on goods from Canada, Mexico and China, although he postponed the 25% duties on his North American neighbours to allow for talks.

The escalating trade tensions since Trump returned to the White House on January 20 threaten to rupture the global economy.

Ishiba said he believes Trump "recognised the fact Japan has been the world's largest investor in the United States for five straight years, and is therefore different from other countries."

"Japan is creating many U.S. jobs. I believe (Washington) won't go straight to the idea of higher tariffs," he said.

Ishiba voiced optimism that Japan and the U.S. can avoid a tit-for-tat tariff war, stressing that tariffs should be put in place in a way that "benefits both sides".

"Any action that exploits or excludes the other side won't last," Ishiba said. "The question is whether there is any problem between Japan and the United States that warrants imposing higher tariffs," he added.

Japan had the highest foreign direct investment in the United States in 2023 at $783.3 billion, followed by Canada and Germany, according to the most recent U.S. Commerce Department data.

Trump pressed Ishiba to close Japan's $68.5 billion annual trade surplus with Washington but expressed optimism this could be done quickly, given a promise by Ishiba to bring Japanese investment in the U.S. to $1 trillion.

On Sunday, Ishiba identified liquefied natural gas, steel, AI and autos as areas that Japanese companies could invest in.

He also touched on Trump's promise to look at Nippon Steel 5401.T investing in U.S. Steel X.N, as opposed to buying the storied American company - a planned purchase opposed by Trump and blocked by his predecessor, Joe Biden.

"Investment is being made to ensure that it remains an American company. It will continue to operate under American management, with American employees," Ishiba said. "The key point is how to ensure it remains an American company. From President Trump's perspective, this is of utmost importance."

On military spending, another area where Trump has pressed allies for increases, Ishiba said Japan would not increase its defence budget without first winning public backing. "It is crucial to ensure that what is deemed necessary is something the taxpayers can understand and support," he said.

(Reporting by Leika Kihara: Additional reporting by Tim Kelly; Editing by William Mallard)

((leika.kihara@thomsonreuters.com; +813-6441-1828; Reuters Messaging: leika.kihara.reuters.com@reuters.net))