Japan’s Prime Minister Resigns After Historic Election Defeat

Japanese Prime Minister Shigeru Ishiba announced on Sunday that he will resign as leader of the ruling Liberal Democratic Party (LDP) and instructed the party to hold an emergency leadership election, while saying he will continue performing prime ministerial duties until a successor is chosen.

Ishiba’s decision follows successive electoral defeats that left the LDP without majorities in both chambers of Japan’s parliament and comes after his administration negotiated a trade protocol with the United States that addressed Washington’s tariff measures—developments analysts say deepen political uncertainty for the world’s fourth-largest economy.

Why It Matters

Ishiba’s resignation heightens the risk of a prolonged period of policy gridlock at a time when Japan faces slow growth, rising living costs and regional security challenges, and when markets have already reacted to political uncertainty.

What To Know

Ishiba, 68, became prime minister in October 2024 and led the LDP into elections in which the ruling coalition lost its majority in the lower house for the first time in 15 years and then lost its majority in July’s upper house vote for the first time since the party’s founding in 1955.

In late August and early September, Ishiba’s government completed negotiations with the U.S. that resulted in an agreement reducing tariffs on many Japanese auto exports and an executive order by U.S. President Donald Trump to lower certain levies—an outcome Ishiba cited as a reason to step down now.

At a Sunday news conference, Ishiba said: “With Japan having signed the trade agreement and the president having signed the executive order, we have passed a key hurdle.” He added: “I would like to pass the baton to the next generation.”

Potential successors include the 44-year-old Agriculture Minister Shinjiro Koizumi, who would become the country’s youngest prime minister, and Sanae Takaichi, according to economist Kazutaka Maeda, who also said in an interview with Reuters that markets would scrutinize a shift toward looser fiscal or monetary policy.

Takaichi narrowly lost to Ishiba in last year’s party run-off leadership election and is known for her expansionary fiscal proposals and skepticism of the Bank of Japan’s rate increases. She would be Japan’s first female prime minister if she were to succeed her erstwhile rival. Chief Cabinet Secretary Yoshimasa Hayashi is another possible successor.

What People Are Saying

Kazutaka Maeda, an economist at Meiji Yasuda Research Institute told Reuters: “Given the political pressure mounting on Ishiba after the LDP’s repeated election losses, his resignation was inevitable.”

What Happens Next

Whoever leads the LDP next will confront a fragile economy and the aftermath of the tariff negotiations with the U.S. With no majority in either house, the LDP must also navigate a legislative environment that requires negotiation and compromise with fragmented opposition allies to pass bills.