Japanese Politics Updates – February 9, 2025

Hello Japan-Hands and welcome to the 209th episode of Japanese Politics One-on-One; here are the latest developments in Japanese politics:

• Week ends at 151.38¥/$;
• PM Inshiba back from Trump visit;
• LDP continues to court opposition parties in hopes of securing the extra 13 votes needed to pass The Budget;
• Budget Committee Chair Jun Azumi (CDP for the first time in 30 years) insisted that former Seiwakai (Abe faction) Accountant testify before the Committee, though as a private citizen and NOT a Diet Member, he is under no obligation to do so;
• In a rare move, the Committee Chair also summoned Ministry bureaucrats to testify to the Committee & defend their budget requests;
• Deadline for smooth-passing of The Budget remains March 2nd.

Trump and Ishiba’s Meeting: Diplomacy, Deals, and Political Theater

Donald Trump hosted PM Ishiba at the White House, marking the second high-profile meeting after Israeli leader Benjamin Netanyahu’s blockbuster meeting on Monday. The Ishiba meeting carried symbolic weight. It echoed the precedent set by former Prime Minister Shinzo Abe, who was the first foreign leader to meet Trump after his election in 2016. While there was significant anticipation leading up to the event, the overall outcome was smooth, with no major controversies, slip-ups or policy clashes.

The meeting was a diplomatic success for both leaders, largely characterized by mutual praise and a friendly atmosphere. Ishiba was highly complementary of Trump, a strategy that has proven to work well in meetings with the U.S. president. Trump, in turn, responded positively, calling Ishiba a great leader. He also emphasized how well he was respected in Japan, and even making personal remarks about his handsome appearance. While these exchanges may have seemed performative, they effectively solidified a sense of partnership between the two leaders, which Ishiba will undoubtedly leverage back home.

Beyond the optics, several important topics were addressed. Japan reaffirmed its commitment to investing over $1 trillion in the United States through foreign direct investment. This is a move that aligns with Trump’s economic agenda. There were also discussions regarding the controversial Nippon Steel – US Steel deal. Although the Biden Administration had previously blocked progress on this issue, Trump signaled his intent to revive discussions in a way that would be mutually beneficial for both the U.S. and Japan. Meetings between Trump and steel executives will probably to continue in the coming weeks.

Trade was a major undercurrent of the discussion, though Trump and his administration have not announced any new tariffs. However, concerns remain about the broader implications of U.S. trade policies, especially regarding Canada and Mexico. Japanese manufacturers have significant operations in those countries, meaning any U.S. tariffs imposed on its North American partners could have ripple effects on Japan’s economy. There is currently a 30-day window before certain trade policies take effect, depending on how Canada and Mexico respond, which leaves some uncertainty about potential impacts on Japanese businesses.

Security commitments were another focal point, with Trump reaffirming the full spectrum of U.S. military support for Japan, including defense over the Senkaku Islands. While no explicit discussions about the U.S. military presence in Okinawa or the Henoko base relocation were made public, such topics were likely discussed behind closed doors. The meeting also reinforced Japan’s ongoing commitment to increasing its defense spending, with the possibility of raising it beyond the current 2% of GDP target. Additional purchases of U.S. military equipment and energy resources, particularly LNG, were also on the agenda.

Another significant aspect of the meeting was Japan’s position on international accords and global initiatives, particularly in the wake of Trump’s previous disengagement from the Paris Climate Accord, the World Health Organization, and USAID. Japan has committed to achieving carbon neutrality by 2050 and has set ambitious targets for 2030. Questions have arisen about whether Trump’s return to power would shift international priorities and potentially influence Japan’s approach. The discussion also touched upon Japan’s role in filling leadership gaps left by U.S. disengagement from certain global commitments.

Lastly, the meeting briefly covered security concerns in the Asia-Pacific. While Trump has expressed interest in rekindling diplomatic engagement with North Korea, it remains unclear what specific steps his administration would take. The unresolved issue of North Korea’s abduction of Japanese citizens remains a longstanding concern for Japan, one that Trump has previously acknowledged.

Overall, the meeting was a success for both leaders. It offered Ishiba political momentum at home while allowing Trump to showcase his deal-making prowess on the world stage. The lack of major controversies or policy disputes made this a smooth diplomatic engagement. However, the real test will be in how the commitments made during the meeting translate into actual policy actions in the coming months.

LDP Battles for a Budget Majority

The Liberal Democratic Party still faces a hefty challenge to get its Budget Bill through the Diet. Unlike in past years, where negotiations with opposition parties were often only symbolic, this time the LDP must genuinely bargain to secure votes. The deadline is tight—within three weeks, the Lower House must pass the Bill and send it to the Upper House, which will then have 30 days to review it. However, the Lower House ultimately has the final say, meaning the Bill would pass automatically if the Upper House does not approve or reject it outright.

The LDP, even with its coalition partner Komeito, lacks the necessary votes for a Lower House majority, falling 13 votes short of the required 233. Furthermore, cracks are forming within Komeito, whose “clean government” stance makes continued alignment with the scandal-ridden LDP increasingly questionable. A major concern is the potential testimony of Junichiro Matsumoto – the former Seiwakai Accountant. He could expose the depth of financial misconduct within the ruling party, damaging its reputation even further.

Opposition parties see an opportunity: the Constitutional Democratic Party (CDP) holds 148 seats, Ishin-no-Kai has 38, and the Democratic Party For the People (DPFP) holds 28. The LDP is attempting to court Ishin-no-Kai with promises of free school lunches and the DPFP with an increase in the tax-free income threshold. However, progress has been minimal. Meanwhile, the opposition parties are exploring the possibility of forming a grand coalition to oust the LDP.

The coming weeks will be critical. If the LDP can peel off opposition votes, it may salvage its Budget and retain dominance. But if opposition forces hold together, a dramatic political realignment could be on the horizon. With negotiations intensifying, this battle over Japan’s Budget could mark a turning point in the country’s governance.

Ishiba’s Balancing Act

The Trump visit was significant, but Prime Minister Ishiba’s most pressing concerns remain the economy and political alliances. While his diplomatic success with Trump bolstered his standing, economic struggles and a fragmented Diet pose serious challenges.

Real wages declined for the third consecutive year, dropping 0.2% in 2024. Inflation remains a major issue, with the Consumer Price Index rising 2.7%. This again exceeds the Bank of Japan’s (BOJ) 2% target. BOJ Governor Ueda appears increasingly resigned to missing that target in 2025 as well. Inflation pressures continue, with fresh food prices soaring by 17.3% in recent months and core inflation reaching 3% in December. Forecasts suggest inflation will climb to 2.4% post-March, further straining households.

Politically, Ishiba still lacks a reliable partner to secure a majority in the Diet. With the possibility of a double election looming, the ruling LDP faces mounting pressure. Some voters may prefer continuity, fearing that an inexperienced opposition government would struggle to manage Japan’s complex bureaucratic machinery. Others, frustrated with persistent scandals and economic stagnation, may push for change.

Impeachment of Philippine Vice President Sara Duterte

The Philippine Lower House has impeached Vice President Sara Duterte, the daughter of former President Rodrigo Duterte. This comes amid growing tensions between her and President Bongbong Marcos, whose family’s political ties also weigh heavily on the country’s leadership. The impeachment motion passed with 215 votes in favor out of 306 members of the Lower House. The matter now proceeds to the Senate, where a trial will determine her political future.

Duterte, who harbors presidential ambitions, now faces significant challenges to her path to power. This is within the view of her father’s controversial tenure, which was marked by aggressive anti-drug campaigns. The developments could have broader implications, as the Philippines remains a key ally to both the United States and Japan in military cooperation. This includes joint training programs, the donation of Coast Guard vessels, and shared defense initiatives. These are all part of broader geopolitical strategies concerning China and Taiwan.

Japan Resurrects ‘Active’ Cybersecurity Legislation

Japan’s Diet has once again approved a significant piece of cybersecurity legislation. It is a measure that had failed to pass during the Extraordinary Diet Session last year. The bill grants Japan the authority to preemptively counter cyberattacks. The government’s renewed push for the bill is a crucial step in strengthening the country’s cybersecurity defenses. If passed, the law will go into effect by April 2026, although it will take time for the full regulations and operational frameworks to be established.

This legislative move comes in response to the increasing frequency of cyberattacks targeting Japan’s critical infrastructure. This includes hospitals, government ministries, waterworks, and private companies. The majority of these attacks—about 94%—are believed to originate from outside Japan. Russia and North Korea are frequently cited as the primary sources. As cyber threats continue to rise, this legislation aims to better equip Japan to defend against attacks. It allows Japan to also potentially preemptively thwart foreign cyber adversaries.

Shunto: Japan’s Spring Labor Offensive Sees Wage Demands Amid Inflation

Shunto, Japan’s annual spring labor offensive, has officially kicked off. This spring, workers pushing for higher wages to keep pace with rising inflation. This tradition sees labor unions and corporate management meet to negotiate pay increases, with this year’s demands being particularly notable. Wage hikes of up to 5% are on the table for many major companies. This is a significant jump from the usual 1-2% annual increases. It reflects the growing pressure of inflation, which stands at 2.7%.

However, these increases are expected to primarily benefit large corporations employing over 500 people. Meanwhile, Japan’s numerous small companies—many with fewer than 100 employees—are less likely to see such an impact. Despite this, the larger companies and government ministries often set the tone for wage negotiations, influencing smaller firms’ decisions. Shunto typically concludes by late April or May, often with large demonstrations before the negotiating sides reach a final deal. Then the process settles until the next cycle.

Questions from the Audience Addressed Exclusively During the Briefing

• How are political parties reacting to the fall in real wages throughout Japan?
• To what extent has the death of Soka Gakkai leader Daisaku Ikeda impacted the direction and/or voting behavior of Komeito?
• Can you comment on the references to Taiwan in the US-Japan joint statement? Don’t they appear to be a significant step-up from previous positions?
• What are your thoughts on the collapsed deal between Nissan and Honda? Now Nissan has been approached by a Taiwanese electronics producer? How politicized is this issue likely to get?