“Japan has been a stable democracy for decades, but the forces of upheaval roiling nations worldwide arrived in Tokyo Bay on Sunday. The ruling Liberal Democratic Party coalition lost its longtime majority in the upper house of the Diet to a variety of opposition parties.
With most returns in on Monday morning, the ruling coalition had won 47 seats, three short of the 50 seats it needed to retain control of the upper chamber (not counting 75 seats that weren't up for election). The center-right LDP and Komeito coalition lost its lower-house majority last year.
The results are a rebuke to Prime Minister Shigeru Ishiba, who has been in power less than a year.
The campaign was dominated by concern over rising prices, taxes, economic anxiety amid U.S. tariffs, and immigration. Inflation has been 3% or higher for six months, and the price of rice has nearly doubled in a year. Several opposition parties ran on cutting the 10% consumption tax to offset higher prices, which the LDP opposed.
A relatively new right-wing party, Sanseito, campaigned on a "Japanese first" agenda that exploited anxiety about the deluge of foreign tourists, especially Chinese citizens, and foreign buying of Japanese homes. Sanseito looked set to win at least 11 seats, up from only one in the current upper house.
Mr. Ishiba acknowledged what he called the "harsh result." But he vowed on Sunday to remain as Prime Minister, even as senior LDP voices said he should step down after two straight election setbacks. Mr. Ishiba stressed the importance of the trade talks with the Trump Administration, now at a critical stage, to avoid a 25% U.S tariff on Aug. 1.
The Trump tariffs are a major concern in Japan, where inflation and slow growth have become barriers to a better standard of living for the young.
The main opposition Constitutional Democratic Party has ruled out a grand coalition with the LDP. Mr. Ishiba's coalition has managed to govern in the lower house by patching together ad hoc majorities by issue. The main economic concern for the rest of the world is financing Japanese debt, which after decades of failed Keynesian spending sprees is now nearly 250% of GDP.
Also at stake is Mr. Ishiba's plan to increase defense spending to 2% of GDP from 1% only a few years ago. This is crucial to deterring China in the East and South China seas. China's new and fast-expanding blue-water navy is venturing farther than it ever has in waters long dominated by the U.S. Navy.” [1]
Challenges facing the Japanese ruling coalition
Economic woes: Voters are frustrated with rising prices, especially for staples like rice, and stagnant wages.
Corruption scandals: Past scandals have damaged the LDP's reputation and undermined trust in the government.
Political gridlock: The coalition's minority status in both houses may make it difficult to pass legislation and implement its agenda.
These things didn’t get Mr. Ishiba’s attention. He did instead:
Regarding US tariffs
Ishiba has been actively engaged in negotiations with the US to secure a trade deal and avoid the implementation of further tariffs on Japanese goods, particularly a 25% tariff set to take effect on August 1.
He has stressed the need for a mutually beneficial agreement and has called for fair and frank discussions with the US, even expressing the belief that President Trump may be misinformed on some tariff-related issues.
Japan, under Ishiba's leadership, is attempting to navigate the complexities of US trade policy under the Trump administration, which has embraced tariffs as a key economic and foreign policy tool.
Regarding China's navy and security environment
Japan's recent defense white paper, approved by the Ishiba cabinet, has highlighted China's military activities as a potential "serious impact" on Japan's security.
Ishiba has also previously expressed concerns about Chinese incursions into Japanese airspace and the need for a stronger defense posture, mentioning in particular the presence of Chinese Coast Guard ships near the disputed Senkaku Islands.
In the context of regional security, Ishiba has proposed strengthening Japan's defense capabilities and has even floated the idea of an "Asian NATO" to deter threats from China, North Korea, and Russia, although the feasibility of such a concept is debated by analysts.
It seems that blaming the US tariffs or China’s navy doesn’t work for Mr. Ishiba. Hard lesson for West European leaders.
1. The Populist Wave Hits Japan. Wall Street Journal, Eastern edition; New York, N.Y.. 21 July 2025: A16.
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