This is a critical moment for the leadership of Shigeru Ishiba, the new Prime Minister of Japan. He’s judging the success of opening up tariff negotiations with the United States. After a humiliating loss for his ruling coalition in last week’s upper house election, Ishiba now finds himself mulling resignation from his post. The pressure is building as he considers his choices. He emphasizes the importance of providing stability during this transformative period. With Japan trying to navigate treacherous trade negotiations with the US, this stability is critically important.
As for Ishiba, he intends to negotiate face-to-face with US President Donald Trump, seeking to cut concrete deals. He recently expressed his readiness to communicate with Trump after receiving a briefing from Japan’s top trade negotiator, Ryosei Akazawa, who has been actively involved in negotiations in Washington. The result of these ongoing negotiations has the potential to reshape Japan’s long-turbulent economic scene—and Ishiba’s political future—far more than any quiet administrative repositioning.
Trade Deal Highlights
In perhaps the biggest news of 2018, President Trump announced a new trade agreement. He asserts it will save and create jobs by pushing Japan to invest over $550 billion into the United States. This investment will be accompanied by a 15 percent reciprocal tariff on Japanese products. This rate would be a notable decrease from the 25 percent Trump had suggested. The President made a strong case that this deal will promote job growth on both sides of the Atlantic, saying,
“This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it.” – Donald Trump
Moreover, Trump made Japan’s promise to “open” its economy to American products — especially the autos and rice — a centerpiece of his success. The consequences of this agreement are deep, concerning not just US-Japan relations, but the effects on the world stage and on global trade relations in general.
As Ishiba considers his own political future, he needs to study the agreement’s fine print before leaping to any conclusions. He stated in a recent news conference,
“I can’t say until I scrutinise the outcome of the agreement.” – Shigeru Ishiba
This careful approach reflects Ishiba’s desire to avoid creating a political vacuum that could hinder Japan’s ability to navigate ongoing trade challenges.
Internal Political Pressures
Ishiba is encountering growing resistance from within his own Liberal Democratic Party (LDP) in the wake of the coalition’s lackluster election performance. He has made promises that he will not relinquish power. At the same time, party heavyweights will meet in order to determine what the election results mean for their respective parties. Ishiba is under pressure from dissent within, as he grapples to consolidate his new leadership. Simultaneously, he is leading the all-important trade negotiations.
The Prime Minister has shown willingness to call for unity and firm action in addressing this bizarre political climate. As he prepares for conversations with Trump, he must confront the expectations and concerns of his party members regarding his leadership amidst growing discontent.
Ongoing Trade Negotiations
Akazawa Ryosei is likely to be a key architect behind the aggressive Japanese negotiating stance in TPP. For example, he personally charms important people in Washington like US Commerce Secretary Howard Lutnick and current Treasury Secretary Scott Bessent. These kinds of discussions are particularly important for Japan. They affect the larger, slowing negotiations over US-China trade relations.
Bessent has set an impressive vision to change the American economy by increasing manufacturing capacity. This change will both further boost total consumer spending in China. He remarked,
“If we could do that together, we do more manufacturing, they do more consumption. That would be a home run for the global economy.” – Scott Bessent
As US tariffs on Chinese goods remain high, Japan’s negotiations could set a precedent for international trade practices and relationships moving forward.
