Japanese Politics Updates – August 31, 2025

Weekly Briefing Synopsis – Episode #238
Broadcast: Sunday, August 31, 2025
Location: Tokyo

Back in Tokyo, With the World in Motion

This week, I returned to my Tokyo home office after travels abroad and just in time. The political, economic, and diplomatic drama in Japan is heating up once again, with the yen under pressure, the LDP weighing a recall, and Prime Minister Ishiba navigating an increasingly complex global stage. It’s all hands on deck, and the stakes are rising for Japan, the region and the world.

Let’s unpacked the following:

Highlights

• Yen closed at ¥146.82; it is still below 150, but with several Jackson Hole comments building steam and CPI ticking up, pressure mounts on the BoJ and therefore the Prime Minister.
• Prime Minister Modi visited Tokyo, signaling Japan-India solidarity on economic security, before continuing on to China.
• South Korea’s President Lee made Tokyo his first international stop, announcing new visa arrangements and reconciliation goals.
• TICAD diplomacy shines spotlight on Africa as Ishiba promotes Japan’s human capital approach over China’s debt diplomacy. 
• LDP power struggle sharpens as recall vote discussions gain traction; Moriyama Report and Aizawa’s survey expected this week.
• Economic headwinds: gasoline tax repeal hits opposition, stimulus checks stall, exports down sharply in July.
• Defense transformation continues; Ishiba visits JS Kaga and HMS Prince of Wales, with 2% of GDP target firmly in view.
• North Korea, China, and Trump: Pyongyang parades families of martyrs; Lee encourages Trump to pursue talks.

The Yen & the Bank of Japan

The week ended with the yen at ¥146.82 to the dollar, edging closer to the psychological 150 line. August CPI for Tokyo came in slightly hotter, prompting fresh speculation ahead of the September 19–20 BoJ policy meeting. Central bank member Nakagawa Junko speaks Thursday in Yamaguchi, a potential preview of coming policy shifts.

Meanwhile, Governor Ueda attended Jackson Hole, where U.S. Treasury Secretary Bessent voiced concern about yen volatility, reinforcing Washington’s desire for stability in global markets. With wildfires and heatwaves in Europe stoking global inflation, Japan’s inflation story is increasingly a part in a broader climate and commodity narrative.

The PM’s Diplomatic Blitz

In a diplomatic coup, Prime Minister Ishiba welcomed South Korean President Lee Jae Myung to Tokyo, his first overseas destination as president. They announced expanded working holiday visa options and a pledge to continue the reconciliation process.

India’s Prime Minister Modi wrapped up his Tokyo visit Friday. Economic security was the core theme, with expectations high for a new framework on sensitive tech and infrastructure. His onward trip to China sends a deliberate regional signal.

On the multilateral front, TICAD brought 34 bilaterals and a refreshed Japanese push in Africa. Ishiba’s framing of emphasizing human capital development as Japan’s unique edge contrasts sharply with Beijing’s debt-heavy model.

Looking ahead, Defense Minister Nakatani will travel next week to Seoul — the first bilateral defense ministerial in nearly a decade.

The PM’s Domestic Tightrope

Inside the LDP, tensions are mounting. The party’s election committee met twice this past week to explore whether to hold a recall leadership vote on Ishiba.

Ishiba reportedly dined with former PM Koizumi, discussing political survival strategies. Meanwhile, Aizawa Ichiro’s election survey was released Tuesday, and Upper House election blame is expected to land with the Moriyama Report, which could shift factional dynamics. The mystery surrounding Ryosei Akazawa’s cancelled U.S. tripcontinues to generate intrigue.

Economic Turbulence

The government’s August monthly report landed on Friday and the news isn’t great. Ishiba’s proposed ¥20,000 cash payment to citizens may be scrapped, as opposition parties (and even Ishin) refuse to support it.

Gasoline prices remain a flashpoint. The temporary tax repeal, which is costing ¥1.5 trillion, is currently in deadlock. The DPFP argues it can be absorbed without offsets, but fiscal hawks disagree.

July export data showed a 10.1% drop to the U.S., with auto exports falling 28.4% by value. Total exports declined 2.6%, tipping Japan back into deficit. MOF projects long-term rates at 2.6% for FY2026—the highest since 2009—bringing debt service costs past the ¥30 trillion threshold.

Defense, Security & Global Signals

Ishiba boarded the JS Kaga, being converted into a light carrier for F-35B operations, alongside the visiting HMS Prince of Wales: a powerful symbolic image. Defense spending continues to rise to meet Japan’s 2% of GDPcommitment.

In Pyongyang, North Korea staged celebrations honoring wartime families, likely aimed at strengthening internal legitimacy. In an unusual move, President Lee urged Donald Trump to resume peace talks with the North — signaling Seoul’s proactive diplomatic posture.

Other Headlines

• New “Business Manager” visa rules now apply, affecting thousands of investors — especially those from China.
• Japan Post will suspend U.S.-bound parcel deliveries, citing tariff cost and logistics burdens — with major economic ripple effects.
• Spain’s brutal heat and wildfires put Japan’s summer in global context: food security, energy costs, and inflation are now common burdens.

Questions from Viewers

• What are the main reasons for Prime Minister Ishiba’s recent popularity?
• If Japan is truly contributing $550 billion to a U.S. sovereign wealth fund, where is that money coming from—GPIF, foreign reserves, or other sources?
• What will happen to the infrastructure on Yumeshima Island after Expo 2025 ends, and was the Expo intended to elevate Osaka as Japan’s second capital and strengthen Ishin’s role in the LDP-led coalition?
• Do you expect secondary sanction tariffs to be imposed or relaxed under a Trump administration?
• Will the recent U.S. court ruling that some tariffs were illegal apply to Japanese goods, and how are Japanese industry experts reacting?
• Is Japan losing opportunities in Africa to China due to China’s aggressive investment?
• Would Japan do better partnering with the U.K. than the U.S. in developing defense equipment?
• How should we interpret U.S. interest in steel and shipbuilding in light of recent statements suggesting preparation not for defense, but for war, and with whom?
• Isn’t this entire approach to deterrence and rearmament just fear-based thinking?

Final Thoughts

As we close out August, Prime Minister Ishiba is walking a razor’s edge with his political survival uncertain, global diplomacy accelerating, and economic pressures mounting. But he’s showing resolve. And the public, according to polls, may not yet be ready for him to throw in the towel.

With global summits, turmoil in the Middle East, escalating actions in Russia, with China gathering friends & allies, climate events, and the usual domestic political combat all colliding in the weeks ahead, there’s no shortage of reasonsto keep watching Japan closely. Thank you for joining the fun.

We’ll have more in next week’s Episode #239. Until then, stay informed and stay close.