Japanese Politics Updates – July 13, 2025

Weekly Briefing — Episode #231

Location: Misaki Port, Miura Peninsula

Highlights of Topics

• Yen dropped to 147.43 against the dollar, a ~2% decline from last week. The Bank of Japan’s end-of-month meeting (July 30–31) looms large as concerns mount that the yen’s relative stability may be artificial — masking deeper volatility.
• Prime Minister Ishiba campaigned intensively across Japan and attended a regional conference in Malaysia. There, he had a brief side meeting with U.S. Secretary of State Marco Rubio, who prioritized lengthy discussions with Russia instead. Domestically, Ishiba faces harsh criticism — not just for policy but for perceived weakness and electoral desperation.
• Upper House elections are just days away, and pressure on the LDP is mounting. With 125 seats up, the focus is on whether the ruling LDP-Komeito coalition can hold at least 50. The opposition smells blood, and voter fatigue with LDP missteps is palpable.
• Emperor and Empress visited Mongolia in a groundbreaking weeklong diplomatic and historical move. Coming on the heels of their Okinawa memorial visit, this signals Imperial engagement ahead of the 80th anniversary of Japan’s surrender in World War II.
• Tourism is surging — 3.91 million foreign visitors in April alone, topping the total foreign resident population. While the cash is welcome, social tensions, policy shifts, and behavior concerns are emerging in parallel.
• Trump tariffs take center stage. Japan has been hit with 25% duties. With August 1 enforcement looming, this has become an explosive domestic election issue. The U.S.-Japan relationship is shifting.
• Inheritance tax trap for foreigners in Japan. Timothy offered a detailed preview of an upcoming Langley Esquire piece exposing the reach of Japan’s inheritance system — which can seize global assets even years after a foreign resident departs.

Main Talking Points

The Yen Weakens — But to What End?

The yen closed at 147.43, down about 2% from the previous week. While that may seem moderate, it’s a signal with outsized importance. Japan’s currency traditionally acts as a safe haven in geopolitical storms — yet it’s drifting lower even as global volatility rises. Traders suspect the BOJ may be intervening to stabilize the rate ahead of its July 30–31 meeting. Analysts expect discussion of tweaks to yield curve control or a further rollback of negative interest rates. But if the yen keeps sliding, it could spark imported inflation — a nightmare for Japanese households whose wage gains have been more than erased by rising costs. It’s a dangerous balancing act between monetary sovereignty and global market pressure.

Prime Minister Ishiba: Campaigning Abroad, Cornered at Home

Ishiba’s Malaysia trip brought him briefly face-to-face with Secretary of State Marco Rubio. While symbolic, it paled in comparison to Rubio’s 90-minute sit-down with Russian officials. And while Ishiba tries to project strength abroad, he’s struggling to connect at home. Critics say he lacks presence. Even his own party allies are quietly counting seats, not successes. As one pundit said this week, ‘It’s hard to win elections with one hand shaking hands and the other clutching a resignation letter.’

Upper House Elections: Watching for the Magic 50

With 125 seats in play, the LDP and Komeito need to hold at least 50 to retain legislative control. But polls suggest growing voter fatigue with LDP scandals, factionalism, and economic stagnation. Even longtime LDP strongholds are showing signs of softening. The wild card? Voter turnout. Young voters remain elusive but energized by fringe parties like Sanseito, which have capitalized on nationalist sentiment and a digital-first strategy. Sunday’s results may hinge less on policy and more on who feels heard.

The Leadership Question: Who Really Wants This Job?

The race to replace Ishiba is already underway, even if quietly. Names like Kishida, Hayashi, and even Koizumi are being whispered behind factional curtains. But here’s the twist: many potential successors may *want* Ishiba to stay… just long enough to fail harder. Let him own the loss, they reason, then sweep in to rebuild. The LDP’s internal calculus has never been more cynical, or more delicate. If a new leader is chosen in September, the path forward will depend on how clean the transition looks to the public.

Emperor’s Pilgrimage: Memory as Diplomacy

The Imperial visit to Mongolia — a first — carries enormous symbolic weight. During WWII, over 500,000 Japanese soldiers were stranded in the region post-surrender, with more than 15% dying in Soviet labor camps. The Imperial Household has historically avoided the region out of sensitivity. That changed this week. Combined with the Okinawa memorial, where one-third of the civilian population perished in 1945, the visits frame a narrative arc leading to the 80th anniversary of Japan’s surrender. It’s both symbolic and a statement about peace, memory, and Japan’s evolving role in Asia.

Trump’s Tariffs: Strategic Shock Therapy?

With a 25% blanket tariff hitting Japan (and worse for others), trade strategy is now electoral dynamite. August 1 is the enforcement date and no exemptions were secured. Ishiba’s critics say he folded too early, while others warn any pushback risks Trump doubling down. In quiet meetings, Japanese firms are already plotting new export routes to India, ASEAN, and even re-engagement with China. Japan’s economic planners haven’t had to scramble like this in decades. For many, it feels like 1985 all over again only this time, the Plaza Accord isn’t coming to save them.

Immigration: Japan’s Quiet Revolution

Despite political posturing, Japan is quietly liberalizing immigration. From expanded student work privileges to new ‘specified skills’ visas, the number of foreign workers has exploded. This is the case particularly in construction, agriculture, and eldercare. But the government avoids calling it ‘immigration,’ fearing backlash from rural voters. This stealth policy reflects economic necessity and cultural caution. One LDP official quipped, ‘We’re importing labor, not immigrants.’ The contradiction is growing harder to hide, especially with Sanseito stoking xenophobic anxieties on the campaign trail.

Tourism: Boom, But At What Cost?

April brought 3.91 million foreign tourists, more than Japan’s total foreign resident population. Year-on-year, that’s a 28% jump. The upside? Over 10 trillion yen in annual revenue. The downside? Cultural strain, infrastructure pressure, and a rise in anti-tourist sentiment in places like Kyoto and Nara. Koike’s Tokyo is feeling it too. Japan’s balancing act between welcome and overwhelm may define tourism policy for the next decade. The public loves the money but isn’t sure about the noise.

Mount Fuji and the Expo: Soft Power With Teeth

Mount Fuji’s climbing season is now regulated — ¥4,000 entry fees, equipment checks, even drone bans. No more flip-flops and selfie sticks. Meanwhile, Japan’s Expo Day showcased sleek tech, culture, and poise. Meanwhile, China’s number-three leader attended and back-slapped LDP Secretary-General Moriyama. Deals on beef and seafood quietly followed. Behind the smiles lies a hard pivot in soft power diplomacy — where trade and cultural signaling are inseparable.

Inheritance Tax: The Long Arm of Japanese Law

Timothy previewed a powerful exposé on Japan’s inheritance regime, which targets *global* assets of long-term residents, even years after they leave. Foreigners who’ve lived in Japan over five years and die within 10 years of leaving can be taxed as if they never left. For many, it’s a ticking financial time bomb. Wills help. Planning helps more. But as one client reportedly asked, ‘Why does Japan get to tax my house in Canada?’ The answer lies in cross-border legal ambiguity and Tokyo’s appetite for untapped revenue.

Q&A Highlights

• Has Japan done any real planning for its role in a potential U.S.–China conflict over Taiwan?
• What is the real reach and resonance of Sanseito’s nationalist messaging?
• Could Prime Minister Ishiba’s criticism of Trump’s tariffs be an election ploy? Could it backfire?
• Who is holding Japanese Upper House candidates accountable for misinformation in campaign rhetoric?
• Could Japan’s shift in trade alignment — toward China or India — threaten its U.S. alliance?

Final Thoughts

As we barrel toward the July 21 Upper House elections, the ground beneath Japanese politics is clearly shifting. Domestic discontent, foreign pressure, imperial diplomacy, and economic recalibration are converging — and voters are paying attention. If the LDP stumbles this Sunday, it may trigger not just a reshuffling of seats but a redefinition of leadership, alliances, and long-standing assumptions about Japan’s global posture. The choices made in the coming week by voters, parties, and allies will ripple far beyond the ballot box.

We’ll be back next Sunday with real-time reflections on the election and what it could tell us about Japan’s next chapter. Please subscribe for this newsletter (The Synopsis) to be delivered to your in-box. Also, have a look at this special article by Langley Esquire on the inheritance law in Japan and what foreigners need to know.