To the considerable surprise of many, the still-serving Prime Minister of Japan, Shigeru Ishiba, after the defeat of his Liberal Democratic Party (LDP) in the upper house elections, behaved—one might say—not “in a samurai manner” by refusing to resign from the coveted post of head of the Japanese government that he had long desired. According to the unwritten rules of the Land of the Rising Sun, he should have done so as early as last autumn, when his poorly thought-out decision to dissolve the House of Representatives prematurely led to a popular verdict rejecting the continued dominance of the LDP in Japanese politics.
At that time, mired in corruption scandals and unable to resolve the country’s deepening socio-economic problems, the LDP lost its majority in the key chamber. Ishiba and his party were saved only by the fact that the ideologically and politically fragmented opposition failed to unite and form a coalition government. This allowed Ishiba to remain in power by forming a minority government. Even then, voices were raised—not only in the opposition but also among influential LDP figures—questioning his ability to effectively address the nation’s pressing issues and calling for the now lame-duck prime minister to step down.
Nonetheless, he was given one more chance until the upper house elections—which he failed to seize. The Liberal Democrats’ defeat led to a very rare situation in the party’s history: it found itself in the minority in both houses of Parliament, with the next elections not scheduled for another 3.5 years.
It is believed that Ishiba announced his intention to remain as prime minister while in a state of emotional turmoil, without considering the consequences, causing widespread dissatisfaction throughout the country—not just among voters, but also within his party.
Nevertheless, citing their sources, Japan’s leading media began reporting that after a meeting on Wednesday between Ishiba and former prime ministers Taro Aso, Yoshihide Suga, and Fumio Kishida, he had allegedly decided to announce his resignation either at the end of August or even in July. However, the power-clinging politician publicly stated that he had no intention of resigning and that the topic wasn’t even discussed during the meeting with the former prime ministers.
This sparked unrest within the LDP, with talk of a party split. Junior and mid-level LDP lawmakers began collecting signatures to demand a joint party meeting to hold Ishiba accountable, as discontent with the leadership continued to grow in regional party branches.
As a justification for his refusal to resign, Ishiba cited the issue of a “deal” with U.S. President Trump regarding the reduction of recently imposed increased tariffs on Japanese imports—especially automobiles. But this “argument” no longer holds, since a compromise had already been reached in U.S.-Japan negotiations. Let’s take a closer look at this aspect now.
The Japan-Trump Trade Deal
The deal with Trump has stirred just as much concern among Japanese citizens—especially the business community—as the question of who will lead the next government. Angered by the significant U.S. trade deficit with Japan (U.S. exports to Japan in 2024 were $79.7 billion, while imports from Japan reached $148.2 billion), President Trump had threatened Tokyo with the imposition of 25% tariffs on all Japanese imports starting August 1, after a 90-day delay period.
This would have posed serious problems for Japan’s export-oriented economy.
To appease Trump, if not to cancel, then at least to reduce the harsh tariffs, the Japanese government—personally led by Ishiba—agreed to offset U.S. losses through $550 billion worth of Japanese investments in the American economy. President Trump accepted the offer and announced a “massive deal” with Tokyo. According to him, Japan would invest the said amount, and tariffs on Japanese goods would be 15% instead of 25%. Trump added that Japan would also open its market further, including to passenger and commercial vehicles, rice, and some other agricultural products.
Trump claimed that his government struck the biggest deal ever with Japan. As a result, the U.S. will receive 90% of the profits from these investments. He added that the deal would create hundreds of thousands of American jobs. Trump even went as far as to say that Japan made these investments “on my orders.” At a White House event, he stated that he had “just signed the largest trade agreement in history” with Japan, adding that the two countries would also launch a joint LNG project in Alaska.
However, not everyone in Japan considers this project profitable or beneficial for their country.
Ishiba’s Spin on the Deal
Prime Minister Ishiba, clearly trying to present the deal as a personal success in defending national interests, said that the agreement has been reached with the US President. First, the Japanese government agreed on reducing additional automobile tariffs. Furthermore, mutual tariffs on Japanese goods, which were supposed to rise to 25%, will now be 15%.
He emphasized that this was “the lowest rate” among countries with which the U.S. has a trade deficit. However, according to Japanese sources, the agreement does not cover the 50% tariffs imposed by the U.S. on steel and aluminum imports.
Ishiba also noted that the agreement does not require Japan to reduce its own tariffs, including on agricultural goods. He said Japan would increase U.S. rice imports within its “minimum access” quota of around 770,000 tons per year, in line with WTO rules, while adding that no concessions would be made that might harm the country’s agricultural sector.
Speaking on Japanese investments in the U.S. economy, Ishiba explained that Japanese government financial institutions will be able to allocate investments, loans, and loan guarantees amounting to up to $550 billion, aimed at boosting Japanese investment in the U.S. and creating secure supply chains in sectors such as pharmaceuticals and semiconductors.
Reactions and Risks
The Kyodo News Agency assessed the Washington tariff negotiations as the deal triggered a rise in Japanese stocks, although even the lower tariff rates will still negatively impact the world’s fourth-largest economy.
FIshiba, who was under pressure to resign after the national elections dealt a serious blow to his ruling coalition, may face both positive and negative consequences from the deal.He had repeatedly stated that Japan would not rush into an agreement that compromised national interests, specifically emphasizing protection of the automobile sector (a cornerstone of Japan’s economy) and agriculture.
Trump had resorted to tariffs to address trade imbalances, and automobiles became a symbol due to their significant impact on both countries’ economies. According to Japan’s government, in 2024, automobiles awill account for about one-quarter of Japan’s exports to the U.S. in terms ofvalue.
Japanese media note that this Japan-U.S. deal became the fifth such agreement during Trump’s aggressive tariff campaign in his second term—following those with the UK, Vietnam, Indonesia, and the Philippines.