Japan PM Ishiba refutes reports of imminent resignation after surprise US trade deal

TOKYO – Japan’s embattled Prime Minister Shigeru Ishiba

denied on July 23

that he was about to quit, saying there was “not a single grain of truth” in source-based reports that said he would step down within weeks.

News of a looming resignation, likely after key political events in August, had threatened to eclipse

a surprise trade deal

struck with the US just hours earlier, which shaved “reciprocal” tariffs from 25 per cent down to 15 per cent.

Despite Mr Ishiba’s denials, the reality is that his position is increasingly precarious after his ruling Liberal Democratic Party (LDP)

suffered a historic defeat in the Upper House election on July 20

, following a decisive trouncing in Lower House polls in October 2024.

The crushing outcome has stirred the hornet’s nest and might prove to be a career-ending blow, as the LDP and coalition partner Komeito now lack a majority in both Houses of Japan’s bicameral Parliament.

It remains uncertain whether the US trade deal, which was universally cheered by investors and economists, will quell the brewing civil war within the LDP and offer Mr Ishiba some breathing room.

The Nikkei 225 index rallied, briefly soaring more than 1,500 points to a one-year high before paring some gains to close 1,396 points, or 3.5 per cent, higher at 41,171.32.

The trade deal not only provided significant relief – the 15 per cent rate is the lowest so far among countries with a trade surplus with the US – but also spared Japan from making substantial concessions in its two “sacred cow” industries: cars and rice.

However, it does not erase the precedent of Japanese leaders resigning in disgrace after electoral setbacks,

a fate Mr Ishiba is resisting

.

At a half-hour news conference on July 21, Mr Ishiba used the word “responsibility” 10 times as he tried to justify his leadership.

He held his ground when confronted about apparent double standards, having been vocal for then Prime Minister Shinzo Abe’s resignation in 2007 after the coalition lost its Upper House majority in that year’s election.

Mr Ishiba countered that all he wanted was for Mr Abe to “offer his sincere explanations as to why he should remain” – something he said he was now doing. He added that the LDP remained the largest party in the Diet, and cited the “national crisis” of US trade tariffs as a reason why a political vacuum must be avoided.

Now that this “national crisis” has been averted, two schools of thought appear to have emerged within the LDP. 

One suggests that the surprisingly favourable agreement terms, after a battle that Mr Ishiba said was fought on “

national interests

”, could give him the tailwind to stay on, especially if future polls reflect improved public sentiment.

Yet the prevailing opinion is that Mr Ishiba should depart – on a high note, with the trade victory – after a turbulent nine months in power.

The movement to force him out if he does not quit of his own accord has been gaining traction.

Younger and mid-ranking lawmakers, including political scions Yasutaka Nakasone and Takako Suzuki, are leading a petition for Mr Ishiba to resign. Local prefectural chapters from Hokkaido and Ibaraki, to Ehime and Kochi, have submitted formal letters requesting his resignation.

According to LDP by-laws, members can force a party presidential election if a majority of lawmakers and prefectural delegates demand one. The party’s election strategy chief Seiji Kihara even said that a hard reset was necessary to win back trust, suggesting that the LDP should cede power to the opposition.

Two separate polls by Kyodo News and Yomiuri Shimbun this week, conducted before the trade deal was concluded, indicate that public opinion is divided over whether Mr Ishiba should quit, although a slight majority is in favour of his resignation.

The Mainichi newspaper had cited unnamed sources as saying that Mr Ishiba “will resign by the end of August”, a timeframe chosen with the political calendar in mind. 

Mr Ishiba is slated to preside over war memorial services marking 80 years since the end of World War II, before welcoming top African leaders for a triennial summit on Japan-Africa cooperation. 

In the same month, the LDP will complete its post-mortem into the Upper House election results, which Mr Ishiba is expected to use as a basis for his future decisions.

On July 23, Mr Ishiba sought a rare meeting with former prime ministers Taro Aso (2008-2009), Yoshihide Suga (2020-2021), and Fumio Kishida (2021-2024). 

He told reporters that the subject of his future was never raised during the 80-minute talks.

“Neither have I ever made statements that I will resign. There is absolutely no truth to the media reports,” he averred, adding: “We shared a strong sense of crisis, that a split within the LDP must never occur.”

He added that his immediate priority was to familiarise himself with the trade agreement, given that Japan exports more than 4,000 items to the US, and to ensure affected businesses receive the necessary support.

The 15 per cent tariff rate has been broadly viewed in a positive light, with Ms Asuka Tatebayashi, a senior analyst at Mizuho Bank’s global strategic advisory department, telling The Straits Times that the impact would be “much lower and minimised” than the mooted 25 per cent. 

She added that no quota was set on Japanese car exports to the US, as was feared, while the deal puts an end to months of uncertainty for businesses.

Tariffs on Japanese cars and car parts would be cut from 27.5 per cent to 15 per cent. And as Japan promised to buy more American rice, this would be done by increasing the ratio of US imports under an existing “minimum access” framework that allows 770,000 tonnes of rice to be imported tariff-free per year, above which a duty of 341 yen (S$3) per kilogram is charged.

Meanwhile, Japan would also inject US$550 billion (S$703 billion) of investments into various US sectors, including semiconductors,

ships

and

steel

.

Chief trade negotiator Ryosei Akazawa, on his eighth trip to Washington, admitted that he did not expect to be able to conclude the deal on this visit.

Former Japanese trade negotiator Sota Kato told ST that it was unclear what brought the deal across the finishing line now, adding that the LDP’s Upper House defeat could have been a catalyst.

“The most plausible theory is that the US was in a hurry to seal the deal before the Ishiba administration is brought down and things have to start over,” said Dr Kato, who is now a research director at the Tokyo Foundation for Policy Research think-tank.

He believed the deal’s conclusion would hasten Mr Ishiba’s departure, but wondered if Japan’s next leader will come from the LDP, given that the ruling coalition does not hold a majority in the Diet.

Regardless, political scientist Toru Yoshida of Doshisha University felt that behind-the-scenes horse-trading with the opposition will be inevitable, whether Mr Ishiba stays or goes. Or, he added: “The LDP may try to secure a comeback through a snap election under a new prime minister.”