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Japanese Prime Minister Shigeru Ishiba announced on Sunday that he will resign as leader of the ruling Liberal Democratic Party (LDP) and instructed the party to hold an emergency leadership election. He stated that he would continue performing prime ministerial duties until a successor is chosen.
Ishiba’s decision follows several electoral defeats, leaving the LDP without majorities in both chambers of Japan’s parliament. His administration negotiated a trade protocol with the United States addressing Washington’s tariff measures, which analysts say deepen political uncertainty for the world’s fourth-largest economy.
Why It Matters
Ishiba’s resignation increases the risk of prolonged policy gridlock at a time when Japan faces slow growth, rising living costs, and regional security challenges. Markets have already reacted to the political uncertainty.
Japanese Prime Minister Shigeru Ishiba became prime minister in October 2024 and led the LDP into elections where the ruling coalition lost its majority in the lower house for the first time in 15 years and then lost its majority in July’s upper house vote for the first time since the party’s founding in 1955.
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In late August and early September, Ishiba’s government completed negotiations with the U.S., resulting in an agreement reducing tariffs on many Japanese auto exports and an executive order by President Donald Trump to lower certain levies. Ishiba cited these developments as reasons for his resignation.
At a Sunday news conference, Ishiba said: “With Japan having signed the trade agreement and the president having signed the executive order, we have passed a key hurdle.” He added: “I would like to pass the baton to the next generation.”
Potential successors include Agriculture Minister Shinjiro Koizumi, who would become the country’s youngest prime minister at 44, and Sanae Takaichi. Economist Kazutaka Maeda said in an interview with Reuters that markets would scrutinize a shift toward looser fiscal or monetary policy.
Takaichi narrowly lost to Ishiba in last year’s party run-off leadership election and is known for her expansionary fiscal proposals and skepticism of the Bank of Japan’s rate increases. She would be Japan’s first female prime minister if she were to succeed her erstwhile rival. Chief Cabinet Secretary Yoshimasa Hayashi is another possible successor.
What People Are Saying
Kazutaka Maeda, an economist at Meiji Yasuda Research Institute, told Reuters: “Given the political pressure mounting on Ishiba after the LDP’s repeated election losses, his resignation was inevitable.”
What Happens Next
Whoever leads the LDP next will confront a fragile economy and the aftermath of the tariff negotiations with the U.S. With no majority in either house, the LDP must also navigate a legislative environment that requires negotiation and compromise with fragmented opposition allies to pass bills.
