Prime Minister Shigeru Ishiba has announced his resignation, marking the end of his short tenure in Japanese politics. He took office in October 2024 with promises of reform, but less than a year later, his leadership collapsed under the weight of historic election defeats. The ruling Liberal Democratic Party , long known for its dominance in Japanese politics, lost control of both the lower and upper houses of parliament during the July 2025 elections.
Defeat Leaves Japan’s Ruling Party Struggling for Direction
Many Japanese voters expressed frustration with rising living costs, slow economic reforms, and a lack of trust in political leadership. Ishiba, despite his reputation as a policy thinker and a seasoned politician, failed to connect with younger voters and urban communities who demanded change.
His resignation not only marks the end of his leadership but also leaves the LDP in a weakened position, struggling to rebuild its image and win back public support. The political landscape in Japan is now more unpredictable than it has been in decades.
Trade Victory With the U.S. Came Before Resignation
Before leaving office, Ishiba secured one of his biggest policy wins: a major trade agreement with the United States. The deal lowered tariffs on Japanese exports, particularly automobiles, a sector that has been the backbone of Japan’s industrial economy. For years, Japanese automakers had faced tariffs of around 25 percent in the U.S. market.
Under Ishiba’s leadership, negotiators brought that rate down to 15 percent, a move that could help boost Japan’s struggling economy. Ishiba explained that he delayed his resignation until this deal was finalized because he wanted to leave office after achieving something that would benefit Japan’s future.
Choosing to Resign Instead of Facing Internal Revolt
Ishiba’s resignation was not only about election losses it was also about avoiding further division inside his own party. LDP members had scheduled a leadership review that many saw as a no-confidence vote. Rather than risk open confrontation, Ishiba chose to step down voluntarily.
In his resignation speech, he admitted that continuing in office would only deepen divisions within the LDP at a time when unity was urgently needed. His choice to walk away may soften tensions inside the party, but it also opens the door to a fierce leadership race.
Battle for New Leadership in the Liberal Democratic Party
With Ishiba gone, the LDP is preparing for a high-stakes leadership contest. Several names have already emerged as frontrunners. Shinjiro Koizumi, the charismatic Agriculture Minister and son of former Prime Minister Junichiro Koizumi, has also gained popularity, especially among younger voters.
Another likely contender is Chief Cabinet Secretary Yoshimasa Hayashi, who is seen as a moderate voice and someone capable of building alliances in a divided parliament. The leadership vote, expected in early October, will determine who takes charge of Japan at a time of political and economic uncertainty.
Markets React With Uncertainty as Yen Weakens
Japan’s financial markets responded immediately to Ishiba’s resignation. The yen weakened against major currencies, reflecting investor concerns about instability in Tokyo. Long-term government bond yields also rose as markets prepared for a period of political unpredictability.
Shigeru Ishiba’s resignation closes a short but dramatic chapter in Japan’s political story. He came into power with hopes of reform, but the combination of election defeats, internal pressure, and shifting voter expectations forced him out in less than a year. While he left office after securing an important trade victory, his departure leaves Japan facing new challenges.
Japan braces for more heat after hottest July on record 
Japan’s Trick to Reverse Population Collapse