Japan-U.S. Tariff Parleys in Limbo After Elections Leave Ruling Party without Majority

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Written by Paul Wiseman for Industrial Info Resources (Sugar Land, Texas--With U.S.-Japan trade negotiations in the balance, July 20 elections for the upper house of the National Diet of Japan dropped Prime Minister Shigeru Ishiba's ruling Liberal Democratic Party (LDP) into a precarious position. The LDP and its coalition partner, Komeito, are now three seats short of the 50 seats they need for a majority.

Prime Minister Ishiba has promised to remain in power during the talks, with 25% tariffs on goods imported to the U.S. from Japan currently slated to begin August 1, up from the current 10%. The nation's exports to the U.S. are led by vehicles, machinery and electronics, with games a large portion of the latter.

In April, Nintendo (Kyoto, Japan) had delayed taking preorders by about three weeks for its Switch 2 due to tariff concerns. Tariffs have been threatened for U.S. imports from both Japan and Vietnam, both of which are locations of Nintendo factories.

The lack of a majority could complicate decisions on trade negotiations. Ryosei Akazawa, Japan's chief trade negotiator, is scheduled to be in Washington, D.C. this week to continue talks.

Remaining as prime minister without a majority in the upper house is possible in Japan, but getting the 50 votes needed to pass legislation could require one or more temporary liaisons with one or more third parties, analysts say. It lacks power to choose a prime minister, schedule a no-confidence vote, or stop budget legislation. But with the ability to block or delay other legislation, it could bring gridlock in certain policy decisions.

However, this is the second consecutive election setback for Ishiba's coalition, which also lost its majority in the lower house on October 27, 2024, shortly after he took the prime minister role. It then achieved 215 seats, 18 short of the 233 necessary.

After the current vote on July 20, 2025, Yoshihiko Noda of the Constitutional Democratic Party (CDP), who is Japan's main opposition leader, is said to be considering a no-confidence motion there.

In the upper house the ruling coalition lost 19 seats, mostly to more right-leaning parties. That would include the Japan-first Sanseito, which catapulted from just one seat to 14. Its leaders have been associated with the far-right element of the U.S. Republican Party. Sanseito's anti-immigration campaign resonated with an increasing number of voters.

This is the first time in decades--since 1955--that a prime minister from the venerable LDP will face leadership without a majority in either house. Some analysts are seeing a wave of dissatisfaction with ruling parties in general, especially among young urban voters. This is leading to the rise of Sanseito, along with the main opponent, the CDP, which finished second with 22 seats, and populist Democratic Party for the People, which landed 17 seats--the latter more than four times their current four. Inflation (the cost of rice has doubled in the last 12 months) has challenged the government, with questions about raising interest rates, dropping sales taxes on food items, and stimulus packages all up for debate among the parties.

Worldwide, elections over the past 18 months have often seen long-ruling parties or coalitions either voted out or lose considerable leverage. Notable exceptions have been key U.S. trading partners Canada and Australia. In the former, the conservative party had been leading in early polls, but a series of Trump administration announcements, including tariffs and a threat to annex the entire nation, turned voters back to the previously down-polling Liberal Party. Australian voters also switched away from Trump-friendly candidates.

Energy issues for most parties appear to be a low priority, with immigration and taxes leading the list. Only the CDP, which promises to reduce or eliminate nuclear power and move toward green initiatives, has energy listed in their platform.

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