A high-stakes trade agreement between Washington and Tokyo, hailed by U.S. President Donald Trump as a “massive deal,” has pushed Japanese Prime Minister Shigeru Ishiba’s political career to the edge. While the deal resolves a bitter tariff dispute, it has failed to quell a domestic political crisis fueled by his party’s recent election losses, with mounting calls from within the ruling Liberal Democratic Party (LDP) for his resignation.
Under the new terms, the United States has agreed to lower its tariffs on Japanese imports from 25% to 15%. In a significant concession, Japan has committed to a staggering $550 billion investment in the U.S. economy, with 90% of the profits from these investments set to remain in America. Furthermore, Tokyo has agreed to open its historically protected markets to American cars, trucks, rice, and other agricultural products, a move expected to anger Japanese farmers, a core electoral base for the LDP.
President Trump celebrated the agreement on his Truth Social platform, framing it as a major victory that addresses a significant trade imbalance, which saw Japan export $142.8 billion to the U.S. last year while importing only $79.7 billion. The deal’s impact was felt immediately as the tariff reduction on Japanese vehicles, which constitute over a third of Japan’s exports to the U.S., triggered a surge in the stock prices of major Japanese automobile companies.
Despite resolving what he had termed a “national crisis,” Prime Minister Ishiba’s approval rating has collapsed to just 23% following the LDP’s humiliating defeat in the recent upper house elections. His fate may be decided at a party meeting on July 29. A resignation could trigger snap elections for the lower house as early as August, creating profound uncertainty over the LDP’s ability to retain power and potentially heralding a sharp turn in Japanese politics.
This political vulnerability is symptomatic of a deeper generational rift in Japan. Widespread discontent among younger generations over high taxes and the established political order has eroded support for the LDP. This has, in turn, fueled the rise of opposition groups and far-right parties demanding stricter immigration controls, reflecting a significant shift in the country’s political landscape.
While the immediate political future is turbulent, the fundamental strategic alliance between the U.S. and Japan is expected to endure. The U.S. remains Japan’s primary security guarantor and its main military foothold in the Asia-Pacific region. However, analysts caution that future tensions may arise from Washington’s persistent demands for Tokyo to dramatically increase its defense spending.