Can The US-Japan Trade Deal Save Ishiba?
For now, maybe, but Japan may return to revolving-door premiers
By: Rupakjyoti Borah
The recent drubbing of the ruling LDP-Komeito alliance in Japan in the recent Upper House elections last Sunday has sent the country’s politics into disarray, with the governing alliance having lost its majority, now holding only 122 of the 248 seats and leading to calls for Prime Minister Shigeru Ishiba’s ouster, which could pave the way for fresh elections or a change in leadership.
Although Ishiba has touted mounting economic pressures, trade tensions and negotiations with the United States and the risk of major natural disasters as justification to remain in office and raised the bogey of “political stagnation,” analysts fear the result will lead to prolonged political instability and usher in political indecision as Japan confronts a range of domestic and foreign policy challenges including a stagnant economy, an aging population, fiscal imbalance, incoherent climate change policies, slow adaptation to technological change and the need to reduce its overreliance on China for trade and supply chains, given geopolitical uncertainties.
With his cabinet’s approval rating at a dismal 22 percent, it appears that the only thing that can save the 68-year-old Ishiba is that his LDP allies are willing to stick with him for now partly because there are few obvious party successors and because they don’t want a power vacuum while the details of the trade agreement signed earlier this week with the US are being mopped up. A resignation could also trigger a return to the era of revolving door prime ministers that plagued Japan prior to the rise to power of the late Shinzo Abe, who served from 2006 to 2007 and again from 2012 to 2020.
The trade deal dragooned Tokyo into accepting a 15 percent tariff on goods shipped to the US while being forced into investing US$550 billion into the US, which will retain 90 percent of the profits from any Japanese ventures, with the White House directing where the money will be invested. It is hardly an attractive outcome, which is being jammed down Japan’s throat, but Japan is relieved that it escapes the 25 percent tariff on cars that Trump had threatened, and it is in line with what several other Asian nations are forced to accept. Auto exports accounted for 28.3 percent of all Japanese shipments to the U.S. in 2024.
Also, there could be differences related to the trade deal, with Trump indicating that Japan has promised to buy military hardware from the US while the Japanese side has indicated that was certainly not the case. While Japan has been buying more weaponry from the US, there's no evidence of a formal, explicit promise to buy specific hardware that contradicts their public statements. Both sides are seeking greater integration while also navigating sensitive industrial concerns. Past disputes have arisen over technology transfer and industrial participation in joint projects such as the FS-X fighter development.
While Japanese media outlets initially reported that Ishiba would be throwing in the towel, he has countered by saying that he never offered to resign and would decide later in August, since there is a series of events, including memorial ceremonies of the 1945 dropping of the nuclear weapons on Japan on August 6 and August 9 and the end of the Second World War (on Aug 15). In addition, the TICAD (Tokyo International Conference on African Development) is to be held in Japan later in August which he would be attending as the Prime Minister.
One option for Ishiba to stay in power would be for the LDP-Komeito combine to stitch together a coalition with some opposition party, but that would be very unwieldy. The other option is to reach out to the different factions within the ruling LDP, which have been baying for his blood. Factionalism within the LDP is rife, and it is the first time in the history of the LDP that it has lost its majority in both houses of the Japanese Parliament. Its coalition partner, the Komeito, didn’t fare well either. Even in the LDP intraparty polls last September, Ishiba narrowly scraped through, defeating his main rival, Sanae Takaichi, at the elections.
One of the main factors that led to the dip in the electoral fortunes of the LDP-Komeito combine was that it was seen as dithering on key issues, especially the economy. In addition, it seemed to have lost touch with the general populace, especially with the younger generation of voters. In addition, the LDP heavyweights are not seen as savvy with social media and this is where parties like Sanseito have taken advantage.
The ultra-nationalist party framed immigration as a central issue, using the inflammatory slogan “Japanese First” and playing on the fact that Japan’s foreign population reached a record high of 3.77 million in 2024, representing a 10.5 percent increase from the previous year. The party won 14 seats in the 248-seat chamber, a substantial jump from the single seat it won in the 2022 election. Although immigration seems to have become a major issue, the total population of foreigners is still below 3 percent of the total population.
The road ahead
Even Ishiba’s exit isn’t likely to help the LDP-Komeito combine arrest the downslide in its fortunes. So, while the trade deal with the US could give a breather, it’s unlikely to save Ishiba in the long term. Japan could be facing another round of elections in the not-too-distant future. The writing is clearly on the wall when it comes to Ishiba’s political future. At best, the trade deal with the US can only delay the inevitable. How long he will be able to cling on to power, will depend on how the next few days proceed. However, what is clear is that this may not last for long. The knives are already out. Even what Trump has described as the “the largest trade deal in history” may not be able to help PM Ishiba stay in office for long.
Dr Rupakjyoti Borah is a Senior Research Fellow with the Japan Forum for Strategic Studies, Tokyo. The views expressed here are personal.