Japan in political turmoil as PM Shigeru Ishiba quits after crushing election defeats

Japanese Prime Minister Shigeru Ishiba announced his resignation on Sunday, plunging the world’s fourth-largest economy into political uncertainty after a string of humiliating election losses.

Ishiba, 68, directed his ruling Liberal Democratic Party (LDP) to hold an emergency leadership race and said he would remain in office until a successor emerges.

The LDP has dominated Japanese politics for decades, but under Ishiba’s leadership, it has lost control of both houses of parliament amid mounting public anger over soaring living costs.

The embattled premier had resisted calls to step down following July’s upper house defeat, focusing instead on sealing a crucial trade agreement with the United States to ease President Donald Trump’s damaging tariffs on Japan’s auto industry.

“With Japan having signed the trade agreement and the president having signed the executive order, we have passed a key hurdle,” Ishiba said emotionally. “I would like to pass the baton to the next generation.”

His exit triggered jitters in financial markets, sending the yen and government bonds tumbling last week, while the 30-year bond yield hit a record high.

Analysts say the LDP could now face internal upheaval as contenders like Shinjiro Koizumi, the rising-star farm minister, and veteran lawmaker Sanae Takaichi jostle for the top job. Takaichi, an advocate of expansionary fiscal policy and critic of recent interest rate hikes, is seen as a market-sensitive choice.

The next leader may call a snap election to restore legitimacy, though a Kyodo poll on Sunday showed 55% of voters oppose an early vote. Meanwhile, the far-right Sanseito party continues to gain traction, signalling a possible shift in Japan’s political landscape.

Ishiba’s final act in office will be his $550 billion investment pledge to the U.S. in exchange for tariff relief, a deal he hoped would steady an economy already battered by trade tensions and political instability.