Japanese Politics Updates – February 16, 2025

Hello fellow Japan Hands, and welcome to your weekly update on what we discussed last Sunday. This of course is just a synopsis and much is lost in making this crisp for you, so please tune-in to the live version on Sunday morning (Tokyo). In particular, the Q&A section produces the most heat-and-light (longer than the actual briefing, in fact). Anyway, here are the latest developments you should be aware of. Broadcasting from the deck of the good ship Gryms, Tokyo Bay:

• Week ended at ¥/$152.33, weakening slightly from last week’s ¥/$151.38;
• PM Ishiba now back in Tokyo since Monday from his meeting with President Trump. He reported to the Diet on Wednesday and took questions;
• 13 days left to settle on the 2025 Budget. The opposition parties are playing hard to extract maximum concession…  but the CDP swooped-in to pull a brilliant move just Friday to secure the passage (and reap the credit for doing so);
• The Abe Faction Accountant failed to appear in the Budget Committee (as expected). As a result, the CDP (Budget Committee Chairman, remember?) seems to have decided to move onto other weightier issues. Still this leaves plenty of mud-on-face;
• LDP-Komeito reportedly discussing mutual endorsements of competing candidates in anticipation of the upcoming June 22 Upper House campaign. Komeito is regretting having endorsed candidates in the last round who proved to have taken in money from the slushfund scandal… so their reluctance is straining an already tattered relationship;
• The surname issue is bubbling to a boil inside the LDP, pitting the conservative wing against the progressive wing. This is a really serious issue: already signals internal trouble;
• Shunto negotiations now heading into full swing: Toyota’s labor union insisted on 6.28% pay raise across the board this week. This is huge, and impacts what other labor unions will seek. Likely, given the current dynamics, labor will get what they seek or close to it;
• The Ministry of Agriculture announced a release of rice stockpiles to quench the rising prices due to limited availability (i.e., hoarding by producers).  Rice prices have surged 70% over the last 12 months!

PM Ishiba’s First Meeting with President Trump

Prime Minister Ishiba met with President Trump last week in Washington, accompanied by key cabinet members. Their discussions covered a range of topics, including defense, the economy, trade, and tariffs, with a strong emphasis on strengthening U.S.-Japan relations. The meeting was well received, with both leaders displaying good chemistry. PM Ishiba took a diplomatic approach. He offered praise to Trump, which many believe to produce good results when engaging with him. Despite concerns over looming tariffs, Japan remains a key ally of the United States.

PM Ishiba and Cabinet Approval Ratings

PM Ishiba’s approval rating saw a notable increase, rising 5 points from 39% to 44% according to NHK polling. Meanwhile his disapproval dropped by five points. However, the Cabinet’s approval rating remains at 28.5%, still below the 30% “danger zone” threshold. To solidify his position, Mr. Ishiba needs to secure 13 additional votes to pass the budget. In doing so, he needs to build a stronger coalition with opposition parties. A breakthrough came on Friday, as negotiations between Ishin no Kai and the ruling LDP over education funding and tax thresholds showed progress. The Constitutional Democratic Party strategically submitted an alternative budget proposal, likely securing the Budget’s passage and sidelining the other opposition groups. A brilliant move by Mr. Noda.

US Administration’s Trade Policy

Trade relations with the U.S. remain a pressing issue, particularly as Trump’s new tariffs on steel and aluminum pose a significant challenge for Japan, a major player in global steel production. Japan exports a substantial amount of auto parts to the U.S.. This makes potential reciprocal tariff adjustments concerning for the economy here. The country also faces a stark trade deficit in food imports from the U.S., importing far more than it exports. Meanwhile, digital trade, including payments for U.S.-based services like Google and Microsoft, has grown to the point where it now equals Japan’s annual oil spending, highlighting a major economic shift.

Japan’s Defense Spending 

On the defense and economic fronts, Japan did not commit to increasing defense spending during the Ishiba-Trump meeting. It will maintain steady investments in U.S. industries. The Japanese government continues to explore new industries, such as semiconductor production, AI, and a defense industry, as part of a strategy to revitalize its stagnant economy. At the same time, it remains aligned (at this stage) with the former U.S. policy on Ukraine and Gaza, Climate, the EU, NATO, etc., reinforcing its commitment to international stability. So now what is it supposed to do?

Mizuhara Sentenced in the US

In sports news, Shohei Ohtani former interpreter, Ippei Mizuhara, was sentenced to four years and nine months in prison for bank fraud. Mizuhara pilfered (reportedly without Otani’s knowledge) $17 million from Ohtani, claiming a gambling addiction. In addition to jail time, he must repay $18 million in restitution and fines. Following his release, he is expected to be deported back to Japan.

Looking Ahead 

The next two weeks will be pivotal for Japan. The ongoing budget negotiations and trade relations with the U.S., compounded by tariff discussions, economic shifts and the like, propel political maneuvering which will shape the country’s direction under the Ishiba administration. Stay tuned because next week’s update will be critical in understanding where Japanese politics is heading short and medium-term. As it stands, the LDP is in an increasingly weakened position. It could get worse / it could get better.

Questions from the Audience Answered exclusively During the briefing

• Regarding the CDP breakthrough you reported, does it look like a political dispute or a policy decision made through dialogue?
• Should the Constitutional Democratic Party form a coalition with other opposition parties to challenge the LDP, or is the game to work with the LDP to advance their own policies and gain voter support?
• What was the strategy behind the Constitutional Democratic Party’s recent move?
• How does this affect the other opposition parties?
• What impact will this have on the upcoming Upper House election. Does it enhance the possibility for a double-election in July?
• The Budget must pass through the Lower House by March 2, which are 10 workdays! Will there be a deal?