Japan Votes in Shadow of Inflation, Immigration, and US Tariffs

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Japan’s Prime Minister Shigeru Ishiba Faces Trust Taste amid Rising Discontent over Inflation and GDP Contraction

By TRH Global Affairs Desk

NEW DELHI, July 20, 2025 — Voting for Japan’s upper house election kicked off on Sunday across more than 44,000 polling stations, with 125 of the chamber’s 248 seats up for grabs, including 50 allocated by proportional representation and one by-election for a vacant Tokyo seat. As reported by Nikkei Asia, inflation and immigration have emerged as pivotal issues, while the looming threat of US tariffs under President Donald Trump’s second administration adds a layer of economic uncertainty to the electoral landscape.

The ruling coalition, led by Prime Minister Shigeru Ishiba’s Liberal Democratic Party (LDP) and its partner Komeito, faces the risk of losing its upper house majority, a setback that could weaken Ishiba’s position and force him to expand alliances or resign if losses are significant. Recent polls, such as one by Asahi Shimbun, project the LDP to secure 32–46 seats (down from 63) and Komeito 4–10 seats (down from 13), while opposition parties like the Constitutional Democratic Party (CDP) and the right-wing Sanseito could gain ground, with estimates of 23–33 and 9–17 seats, respectively.

Inflation, a persistent concern for Japanese households, has dominated campaign rhetoric. Rising costs for essentials like food and fuel, coupled with a consumption tax debate, have put pressure on the LDP.

The opposition, particularly the CDP, advocates for slashing the consumption tax to ease burdens, while the ruling coalition proposes cash handouts to offset inflation’s impact. Japanese government bond yields have surged, with 10-year yields hitting 1.595% and 30-year yields reaching 3.2%, reflecting investor fears of fiscal strain amid calls for tax cuts.

Immigration has also emerged as a flashpoint, with the right-wing Sanseito capitalizing on growing public unease over rising foreign resident numbers. “Japanese-first” stance is finding tractions in sections of voters, while others warn of its potential to deepen social tensions.

Rintaro Nishimura of The Asia Group noted in a Nikkei Asia interview that the election’s outcome could reshape policies affecting foreign residents, reflecting a broader shift in Japan’s political discourse.

US Tariffs Cast a Long Shadow

The specter of U.S. tariffs, announced by President Donald Trump at a 25% rate on Japanese imports, looms large. Negotiations, extended to August 1, remain stalled, with Japan’s export-heavy economy—particularly its automotive sector, which sends 20% of its exports to the US—facing significant risks. Analysts estimate a potential 0.8% GDP contraction if tariffs persist. On X, @KojiHirai6 warned that an LDP defeat is critical to countering US economic pressure, reflecting sentiment that Ishiba’s handling of trade talks could sway voters. Others argue that tariff fears may bolster opposition parties promising stronger economic protections.

The election’s outcome could reshape Japan’s policy landscape. A weakened LDP-Komeito coalition might struggle to advance trade negotiations or fiscal reforms, potentially destabilizing markets. A stronger opposition, particularly Sanseito, could push for restrictive immigration policies, while the CDP’s tax-cut agenda might gain traction if voter frustration with inflation prevails.

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