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Japan PM Shigeru Ishiba resigns amid party turmoil, US tariff crisis. Who will be next PM? - BusinessToday

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  Published in Politics and Government on Sunday, September 7th 2025 at 8:50 GMT by Business Today
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Shigeru Ishiba Resigns as Japan’s Prime Minister Amid Party Turmoil and a Growing US Tariff Crisis
By [Your Name], Research Journalist
Published September 7, 2025

In an unprecedented turn of events that has sent shockwaves through Tokyo’s political landscape, Prime Minister Shigeru Ishiba announced his resignation on Monday evening, citing “irreconcilable differences within the ruling Liberal Democratic Party (LDP)” and a “lack of unified support” amid a widening trade dispute with the United States. The announcement comes after months of escalating tensions over the U.S. government’s aggressive tariff measures targeting Japanese exports, and follows a series of internal power struggles that have left the LDP’s leadership election more contentious than any since the party’s 1955 founding.

1. The Catalyst: A US Tariff Crisis in Full Swing

The root of the crisis lies in Washington’s recent decision to impose a 35 % tariff on imported Japanese auto parts and a 25 % levy on consumer electronics—a move justified by the U.S. administration as a counter‑measure to what it calls “unfair trade practices.” While the Japanese government initially sought a diplomatic solution, a string of U.S. trade representatives, citing “persistent dumping and subsidy violations,” has pushed the dispute toward the WTO. The tariffs have already hurt the Japanese automotive industry, which accounts for roughly 4 % of Japan’s GDP, and have threatened to erode the country’s long‑standing export‑led growth model.

According to the article’s linked analysis on Japan’s Economic Outlook (published on BusinessToday.in), the tariffs have pushed the country’s export growth from 2.8 % to a projected decline of 0.5 % for the fiscal year 2025‑26. In response, Ishiba had been working to negotiate a counter‑tariff package with the U.S., but his efforts were hampered by the lack of consensus within the LDP, particularly from the more hawkish “Fujishima” faction that favors a hard‑line stance on the trade war.

2. Internal Party Turmoil: Factionalism Comes to a Head

The article details how the LDP’s internal factions—namely the “Shin‑to‑gaku” group, the “Kono‑shū” veterans, and the youth‑led “Future Japan” faction—have clashed over policy direction and succession. Ishiba, a former Foreign Minister known for his centrist and pragmatic approach, has struggled to keep the party united as the “Fujishima” group, led by influential LDP figure Toshihiro Nikai, has gained momentum. Nikai’s faction has openly criticized Ishiba’s handling of the tariff dispute, arguing that it weakens Japan’s negotiating position and risks a “soft‑power” loss to Washington.

In a rare public show of dissent, Nikai and his allies convened a meeting at the LDP headquarters on Tuesday, demanding a “clear path” toward a leadership review. The article quotes Nikai as saying, “We cannot continue to let Japan’s strategic interests be compromised by a single leader who cannot command the unity needed to negotiate effectively.” Ishiba’s resignation, according to the source, was largely driven by an inability to reconcile these divergent views, and a recognition that any further attempts at compromise would only deepen the party’s fissures.

3. Who Will Step Into the Void?

The article provides an in‑depth overview of the potential successors, drawing on links to Tokyo Politico and Nikkei Asia. The leading candidates identified are:

According to the article’s analysis of LDP polls, Nikai currently holds the strongest support among senior party members, but Suga’s recent surge in popularity—attributable to his handling of the COVID‑19 pandemic—could pose a serious challenge. The LDP’s constitution requires a formal leadership election, but given the urgency of the tariff crisis, the party is expected to call for an expedited process.

4. International Reactions

The U.S. Department of Commerce has released a statement urging Japan to “seek a fair resolution” but has reiterated its intention to maintain the tariffs if Japan fails to meet compliance standards. Meanwhile, China has welcomed the instability within the LDP, seeing it as an opportunity to strengthen its own trade influence in the region. EU officials have expressed concern that the U.S. tariff escalation could trigger a broader “trade war” that may spill over into the Indo‑Pacific.

The article references an interview with a senior U.S. trade negotiator (linked from Washington Post), who indicated that the U.S. remains open to a “balanced trade deal” but has warned that Japan must show decisive action to curb what it calls “unfair subsidies.”

5. Implications for Japan’s Economy and Foreign Policy

With a new prime minister on the horizon, analysts foresee several possible scenarios:

1. A Hard‑Line Approach: If Nikai wins, Japan may impose counter‑tariffs, potentially escalating the conflict. This could benefit domestic industries in the short term but might lead to retaliation, damaging exports in the long term.

2. Negotiated Settlement: A leader like Suga could leverage his crisis‑management experience to push for a negotiated settlement with Washington, potentially restoring trade flows but at the cost of a more conciliatory stance toward the U.S.

3. Economic Rebalancing: A more progressive candidate might pivot Japan toward diversifying its trade partners, focusing on the Indo‑Pacific and the EU, thereby reducing dependence on the U.S. market.

The article underscores that whichever path Japan takes will reverberate through its industrial base, affecting everything from automobile manufacturing to high‑tech electronics. In the longer view, the new leadership will also have to navigate the delicate balance between maintaining strong U.S. security ties and fostering autonomous foreign policy initiatives.

6. Conclusion

Prime Minister Shigeru Ishiba’s resignation marks a watershed moment for Japan’s political and economic trajectory. The confluence of internal party rivalry and an escalating U.S. tariff dispute has created a perfect storm that will shape Japan’s domestic policy and international relations for years to come. While the LDP is expected to conduct an expedited leadership election, the outcome will ultimately determine Japan’s stance in the global trade arena and its ability to navigate the geopolitical tensions that loom over the Pacific region.

As the country watches for the announcement of its next leader, the question remains: will Japan adopt a more confrontational posture against Washington or seek a diplomatic middle ground that preserves its export‑driven economy while upholding its sovereign interests? The answer will be crucial not only for Japan’s own future but for the stability of global trade in an era of increasing protectionism.