Tariff Trouble Ahead? Ishiba's Election Loss Puts US-Japan Trade Talks On Shaky Ground

(MENAFN- Live Mint) Japanese Prime Minister Shigeru Ishiba 's ruling coalition failed to secure a majority in the 248-seat upper house during a key parliamentary election on Monday, according to NHK public television.

Ishiba's Liberal Democratic Party (LDP) and its junior partner, Komeito, needed to win 50 additional seats to maintain their majority, building on the 75 they already held. However, with just one seat left to be called, the coalition had secured only 47, falling short of the target.

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Prime Minister Shigeru Ishiba had bet that his firm stance in trade negotiations with US President Trump would strengthen his fragile hold on power, following an electoral setback last fall and less than a year in office.

“Want to speak with US President Donald Trump at the earliest date possible to seek a solution on trade,” said Ishiba after losing the election.

He noted that Japan will strive to reach a deal with the US on tariffs while protecting national interests, as reported by Reuters.

Meanwhile, polling revealed that Japanese voters were more concerned with domestic issues like inflation and immigration than with the threat of U.S. tariffs.

What about US-Japan trade talk?

Ishiba's removal from office could trigger political turmoil weeks ahead of the August 1 deadline to reach a trade agreement with Washington, or face a 25% tariff on Japanese exports to the US Economists warn that such a sharp hike in duties from Japan's largest trading partner could push the country's export-reliant economy into recession, according to a report by the Wall Street Journal.

“We are currently engaged in truly down-to-the-wire tariff negotiations with the U.S.,” Ishiba said Sunday in a television interview as the results were coming in.“I myself have met face-to-face with President Trump twice and spoken with him numerous times on the phone. This is something we mustn't let go to waste.”

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"The political situation has become fluid and could lead to a leadership change or the reshuffling of the coalition in coming months, but Prime Minister Shigeru Ishiba will likely stay to complete the tariff negotiations with the US for now," said Oxford Economics' lead Japan economist Norihiro Yamaguchi, as reported by the Associated Press.

In his second term, Trump has embraced tariffs as the main tool of his economic and foreign policy and a permanent feature of the US economy. Countries including the UK, Indonesia and Vietnam that have reached agreements with the White House have all had to swallow higher tariffs.

Fueling public frustration is Ishiba's limited progress in staving off the looming 25% U.S. tariffs set to take effect on August 1, an issue that has heightened economic anxiety across the country.

“Had the ruling party solved even one of these problems, their approval might've improved. But we didn't see any real action, and it feels like the U.S. just keeps pushing us around,” said Hideaki Matsuda, a 60-year-old company manager, speaking outside Tokyo's busy Shinjuku Station on Monday morning, AP reported.

“The world has changed. We all live in Trump's tariff world now, and we all have to adjust to that,” said David Boling, director of Japan and Asian trade at Eurasia Group, a consulting firm, and a former U.S. trade negotiator, as reported by WSJ.

Also Read: Japan and US still far apart in tariff talks, says Japanese Prime Minister

Ishiba's Liberal Democratic Party (LDP), which has dominated Japan's post-war politics long with its coalition partner Komeito, secured only 47 seats in the upper house election, falling short of the 50 needed to maintain a majority in the 248-seat chamber, where half the seats were contested.

I will fulfil my responsibility as head of the No. 1 party and work for the country world has changed. We all live in Trump's tariff world now, and we all have to adjust to that.

In response to the outcome, Yoshihiko Noda, leader of the main opposition Constitutional Democratic Party (CDPJ), said on Sunday that he is considering introducing a vote of no confidence against the Ishiba administration, arguing the results indicate a lack of public trust in the government.

The emerging populist party Sanseito has drawn attention for its hardline anti-foreigner stance, promoting a“Japanese First” agenda that includes the creation of a new agency to manage foreigner-related policies. Its platform also features strong anti-vaccine rhetoric, opposition to globalism, and support for traditional gender roles.

(With inputs from WSJ and agencies)

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