Japan risks entering a renewed phase of policy stasis just as the world prepares for the possible return of former US president Donald Trump to the White House — and the pressure that would bring on key US allies.
An election on Sunday left Japan without a clear winner for the first time since the 1990s, all but guaranteeing that a weak government will run the world’s fourth-largest economy.
For now, that will be headed by Japanese Prime Minister Shigeru Ishiba, who on Monday indicated that he has no plans to step aside even after his ruling Liberal Democratic Party (LDP) failed to win a majority for the first time since 2009, when the main opposition group won in a landslide.
A wobbly administration — even if it is helmed by Ishiba, a self-professed “defense nerd” — raises doubts about whether Japan would continue to take more of a leadership role on global issues like the war in Ukraine and supporting Taiwan against a more assertive China. It might also slow down Japan’s efforts to return to more orthodox policy making after decades of overreliance on monetary and fiscal stimulus, moves that helped roil markets this year.
Ishiba gambled on a snap election shortly after his victory in a party leadership race last month, but after being installed as prime minister on Oct. 1, he now faces a stiff challenge to avoid becoming the country’s shortest-serving post-World War II leader. The prime minister needs to find 233 votes in the lower house to keep his job after his coalition won only 215 seats.
A vote to decide the post of prime minister will come as early as Nov. 11, according to local media reports.
The extra votes could come from a smaller opposition party such as the Democratic Party for the People (DPP), which has enough seats to keep Ishiba in power.
DPP head Yuichiro Tamaki yesterday reiterated that he was not seeking to join any LDP-led coalition, although he is willing to consider cooperation on some issues such as an expansion of non-taxable income allowances — a rule change that would benefit lower-income workers while reducing tax revenue.
For now he said he would put his own name forward when parliament votes for the prime minister.
The prospect of efforts to appease coalition allies indicates that Japan will continue to lean on spending measures and extra budgets. Ishiba has already vowed to put together a bigger economic package this autumn than former Japanese prime minister Fumio Kishida did last year, adding to Japan’s spending bill.
The Bank of Japan might also find it more difficult to press ahead with interest rate hikes if Ishiba is swayed by calls by the DPP and other parties to provide more assistance to struggling households and small businesses. The initial response of markets was a weakening of the yen, which led to stock gains despite the uncertainty over the Ishiba’s ability to form a stable government.
Compared with former Japanese prime minister Shinzo Abe, who was in power for nearly the entirety of Trump’s presidency, Japan’s next leader will not have a lock on parliament to help respond to any demands if the Republican candidate regains the White House in an election next week.
Beyond Trump’s stated goal of imposing tariffs of 10 percent on goods from every country and blocking Nippon Steel Corp’s acquisition of US Steel Corp, he has also repeatedly called for Japan to pay more for the presence of US troops. An agreement over the costs is scheduled to be renewed in 2026.
“You may have talks about Japan’s contributions to defense with a coalition government or a minority government that does not have the clout to do this,” said Mireya Solis, the Knight Chair in Japan Studies at the Brookings Institution. “Those kinds of negotiations may be harder.”
While Japan had been known for a “revolving door” of prime ministers during the 1990s and early 2000s, Abe’s second stint as national leader from 2012 to 2020 marked a shift to a more stable government and confident presence on the international stage, a trajectory extended by Ishiba’s predecessor, Kishida.
That period of stability allowed Abe in particular to develop personal ties with Trump, with the two leaders meeting dozens of times, sometimes during a round of golf. Even now, Trump speaks regularly on the campaign trail about his friendship with Abe, who was assassinated in 2022, even as he vows to continue pressing Japan on trade.
“It may be difficult to expect serious engagement by Ishiba or a successor in personal diplomacy with the next US president, for example, or with the Chinese or South Korean governments,” Tobias Harris, founder of Japan Foresight LLC, wrote in a note to clients.
Still, there is unlikely to be any major shift in US-Japan ties. All of the mainstream parties in Japan support Tokyo’s alliance with Washington. Like Ishiba, some want some of the alliance agreement details to be reviewed to ensure they are fair to both sides.
“This snap election wasn’t a referendum on the US-Japan alliance, which remains as strong and certain today as it was before the election,” US Ambassador to Japan Rahm Emanuel said. “In fact, it’s clear that there is a consensus in Japanese politics that the ever-deepening cooperation between our two nations is critical to the security and collective deterrence of the Indo-Pacific region and beyond.”
One question is how Japan will pay for the nation’s biggest increase in defense spending since the end of World War II. In 2022, Kishida vowed to boost outlays by 60 percent over five years, a level that would put Japan among the world’s biggest spenders on military power.
Ishiba has said he aimed to reach a decision on the timing of tax increases to fund ramped-up spending, but that goal might have to be sacrificed to ensure a weakened minority government stays in power.
“We still don’t know what kind of government will be formed, but it will be very hard for anybody to give the go-ahead for a defense-spending tax hike,” said Katsuya Yamamoto, program director of securities studies at the Sasakawa Peace Foundation. “When there is this kind of political instability, it inevitably gives other nations the impression that Japan’s leadership has weakened.”
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