Japan’s political landscape changed significantly on 20 July 2025 with the triennial upper house elections delivering a stinging blow to the ruling Liberal Democratic Party (LDP) and its coalition partner, Komeito.

For the first time in its seven-decade history, the LDP in power has lost its majority in both houses of the national Diet – the upper House of Councillors and the more powerful lower House of Representatives.

This defeat marks an unprecedented turning point, plunging Japan into an era of political fragility, with the spectre of  revolving door prime ministers looming once again. Prime Minister Shigeru Ishiba, not even a year into his tenure, now finds himself governing without a parliamentary majority. The political ground beneath his feet is shaky, with whispers of leadership change already circulating. Though Ishiba has insisted he will remain in office, his weakened mandate and sagging approval ratings suggest his grip on power is tenuous at best.

Though the lower house retains greater legislative authority, the upper house acts as a vital brake in scrutinising and stalling legislation. Historically,  upper house setbacks have forced prime ministers to resign, as seen with Sosuke Uno in 1989, Ryutaro Hashimoto in 1998, and, most recently, Shinzo Abe in 2007 after poor upper house performances. Ishiba could be the next in line, especially because he has now lost two consecutive national elections.

The deeper concern lies in the legislative gridlock that looms over the Diet. The minority Ishiba Government must now rely on opposition co-operation to pass any bills – an uncertain prospect given the fragmented nature of the opposition and the ideological and policy differences between the ruling coalition and new challengers. Policy paralysis is a real and immediate risk.

The signs of voter discontent were evident well before the election. In June, the LDP  underperformed in the Tokyo Metropolitan Assembly elections – a traditional bellwether for national sentiment. The public’s mood had soured, driven by frustration over rising living costs, stagnant wages and a government that seemed adrift. A Jiji Press  poll conducted days before the upper house election showed a disapproval rate of 55% for Ishiba’s cabinet, far outpacing its 20% approval rate.

Economic concerns dominated the campaign. Inflation, long absent from Japan’s deflation and stagflation-ridden economy, has re-emerged, driving up prices, especially rice, Japan’s staple food. This has deeply affected household budgets whose income has not increased over time. A Japanese survey revealed that nearly 60% of voters considered the economy and living costs their top concern, with only 14% citing national security or foreign policy.

Ishiba’s proposed solution — a one-off cash handout of ¥20,000 to each citizen — was widely seen as insufficient to address the problem. Opposition parties offered alternative policies, such as a reduction in the consumption tax, which resonated better with voters, but may not be possible given Japan’s fiscal health.

The LDP’s woes were further compounded by unresolved scandals. A slush fund controversy and lingering public suspicion over the party’s links to the Unification Church — brought to light in the aftermath of former prime minister Shinzo Abe’s assassination in 2022 — have  continued to tarnish the party’s reputation. These controversies have festered, eroding public trust and reinforcing perceptions of a party out of touch with ordinary people.

Diplomatically, Ishiba’s tenure has been equally challenging. Trade tensions with the US have persisted, with President Donald Trump imposing high tariffs on Japanese exports. Despite numerous diplomatic overtures, Tokyo has failed to secure exemptions or preferential treatment, casting doubt on the value of its longstanding alliance with Washington. Trump has reduced the initially proposed 25% tariff to 15% – a notable concession, though the tariff remains significant for Japan.

Meanwhile, the opposition has capitalised on this moment of LDP vulnerability. Notably, the rise of Sanseito — a new, populist opposition party — has jolted the political establishment. From just two seats, Sanseito has surged to 15, riding a wave of discontent among young, dissatisfied and unaffiliated voters. With its slogan “Japanese First”, the party espouses a staunchly conservative, anti-globalisation agenda and criticises foreign tourism and immigration for driving inflation and social disorder.

Sanseito’s rapid rise is remarkable not only for its seat tally but for what it represents – a clear rejection of traditional party politics. Unlike the Democratic Party for the People, which also gained seats and has roots in Japan’s established political networks, Sanseito is decentralised and internet-savvy, appealing to a generation alienated from established parties.

The presence of such ideologically divergent forces in the Diet complicates governance for the Ishiba minority government. A strong opposition can enrich democracy, but in Japan’s current context — where no single opposition bloc commands a majority — it raises the spectre of dysfunction. Co-operation between the minority government and a fragmented opposition will require compromise, yet ideological and policy fault lines may make it elusive.

Looking ahead, Japan faces a period of uncertainty. The 2025 electoral cycle may usher in further changes, but unless the LDP can rebuild public trust and offer credible policy solutions, it risks continued decline. The Ishiba administration must either reset its approach or prepare for a short-lived tenure.

Ultimately, the LDP’s historic defeat is more than a rebuke of one leader or party – it is a reflection of deep public dissatisfaction with the status quo. Voters want more responsive, transparent, and effective governance. Whether Japan’s political class can rise to this challenge remains to be seen.

Republished from East Asia Forum, 27 July 2025

The views expressed in this article may or may not reflect those of Pearls and Irritations.