Prime Minister Shigro Ishiba weakened power after his liberal democratic party (LDP) and coalition partner, Cometo, lost his majority in the Japanese Senate elections on July 20.
The vote is a historical transformation: for the first time since 1955, the Democratic Democratic Party does not control the parliament of Japan. While Ishiba pledged to stay, the pressure is escalated inside the LDP. The former Prime Minister who suffered from similar defeats resigned within months; Many competitors now put themselves to challenge driving.
Decreased LDP power has mixed effects. The Tokyo Stock Exchange remained closed to spend a public holiday after the elections, but the yen was a little strengthening, indicating that the markets have been priced in the loss. However, political uncertainty can complicate commercial negotiations, tax reform and monetary policy, especially since the opposition parties are pushing for aggressive spending that can limit the Bank of Japan’s room to maneuver.
US Treasury Secretary Scott Bessin, speaking about CNBC, after a visit to Japan the next day of the elections, underestimated Japan’s volatile policy, saying that Washington was focusing on securing commercial deals, which happened on July 22, when the United States agreed to 4.5 % of the fees by 15 %. But these things that are still wrigging from Japanese cars and the wider exports can still destabilize bilateral relations if the weak Ishiba government fails.
The elections also revealed the growing local tensions. The general frustration of inflation, especially the high prices of rice, in addition to the stagnation of wages, has eroded confidence in the leadership of the liberal Democratic Party. Farright Sanseito has risen from one seat to 14 in the House of Advisors, and a anti -immigration platform riding indicates the growth of hostility towards foreign workers and residents.
Sanseito’s rise is concerns of the 3.77 million foreign people and a record number of tourists who have visited the country so far in 2025. While the economic contribution of these groups is vital-it lost the roaming spending alone 32 billion dollars this year-Sansito’s speech includes proposals to acquire a number of residents abroad and restrict them.
Concerned observers say that the Eishiba leadership is known and the populist forces are gaining ground, Japan is entering a period of uncertainty, says close observers. Currently, Laayoune remains in the next step for LDP, and whether the new Prime Minister is more effective in restoring economic and political confidence.
