Japan’s Prime Minister Rejects Resignation Rumors Amid Trade Agreement Victory

On July 23, Japan’s beleaguered Prime Minister Shigeru Ishiba rejected claims of a forthcoming resignation, emphasizing that there was ‘no iota of truth’ in predictions that he would vacate his position in the weeks to come, primarily stemming from undisclosed sources. These reports threatened to overshadow an unexpected bilateral trade agreement achieved with America just a few hours prior, which successfully lowered the tariffs from a hefty 25 per cent to a significantly manageable 15 per cent.

Although Ishiba staunchly denies rumors of his resignation, it becomes increasingly evident that his circumstances are far from stable. His governing party, the Liberal Democratic Party (LDP), suffered a notable setback in the Upper House election held on July 20, marking the unfortunate continuation of their massive defeat in the Lower House voting procedures in October 2024.

This sweeping electoral deficiency has created considerable unrest, potentially spelling the end for Ishiba’s political career, as the LDP now, in coalition with Komeito, does not hold a majority in both the Upper and Lower Houses of Japan’s dual-chambered Parliament. The future impact of the US trade agreement, which was overwhelmingly celebrated by both investors and economists, on the subtle power struggle within Ishiba’s party remains uncertain.

The newly established trade agreement delivered more than just a sigh of relief—it presented the most favourable tariff rate yet amongst the nations maintaining a trade surplus with the US, whilst also allowing Japan to keep major concessions in two of their vitally important industries: automotive and agriculture, specially relating to rice. Yet, this achievement does not obliterate the established tendency of Japanese leaders stepping down in response to electoral shortcomings, something Prime Minister Ishiba is currently resisting.

During his news conference on July 21, Ishiba repeatedly pointed to ‘responsibility’, ten times to be precise, as he defended his role. Faced with allegations of dualistic standards due to his indulgence in past criticisms towards the former Prime Minister, Shinzo Abe, following their coalition’s loss of the Upper House majority back in 2007, Ishiba held firm in his stance.

In reply to these allegations, Ishiba emphasized his primary request from Abe was for him ‘to provide candid justifications for his continued term’ – an effort Ishiba believes he is currently undertaking. Further, Ishiba affirmed that despite the election results, the LDP remains the principal political party in the Diet. He also drew attention to the so-called ‘national crisis’ prompted by US trade tariffs, imposing the necessity to stave off a political void in the nation.

Following the mitigation of this perceived ‘national crisis’, diverging opinions within the LDP are arising. Some members believe the unexpectedly advantageous terms of the trade agreement, executed in light of ‘national interests’, could persuade the winds of political fortune to favour Ishiba’s continued leadership, especially if future polls reflect improved public sentiment. Yet, the dominant opinion favours Ishiba’s strategic exit post the trade agreement triumph, culminating his challenging nine-month tenure on an uplifting note.

If Ishiba remains adamant on his position and refrains from voluntarily stepping down, the momentum to oust him is intensifying among certain quarters, led notably by young and middle-tier lawmakers such as Yasutaka Nakasone and Takako Suzuki. Local prefectures from the north of Hokkaido to the south of Kochi, have submitted formal requests insisting on Ishiba’s resignation.

As per the LDP’s internal regulations, a party presidential election can be induced if the majority of lawmakers and delegates from prefectural areas demand it. The individual heading the party’s election strategy, Seiji Kihara, insists that a comprehensive overhaul is required to regain public trust, even going so far as to suggest that the LDP should yield power to the opposition.

Thereafter, Ishiba called for a unique meeting with former prime ministers – Taro Aso (2008-2009), Yoshihide Suga (2020-2021), and Fumio Kishida (2021-2024). He clarified to media that the topic of his political future never made it to the agenda during these 80-minute discussions.

In this light, Ishiba maintained, ‘I have never indicated that I would resign. The media reports do not hold any credibility’. He further hinted that they discussed the critical situation faced by the LDP, the need to avoid a party divide, and agreed on their mutual concern.

Ishiba also unveiled that he plans to concentrate his immediate efforts on familiarizing himself with the nuances of the trade agreement, given the expansive range of over 4,000 items that Japan exports to the United States, and to ensure the affected industries receive the due support.

Given this, Japan plans a robust investment of some US$550 billion into various sectors in the US, including but not limited to semiconductors, ships, and steel. Regardless of these efforts, political observers, including Toru Yoshida, a political scientist at Doshisha University, anticipate behind-the-scenes negotiations with opposition parties, regardless of whether Ishiba retains power or relinquishes it.