Economic issues like rapidly growing prices of goods within Japan, most importantly rice, and the still looming shadows of the LDP’s funding crisis under the previous PM Kishida were key domestic drivers of dissatisfaction, ultimately leading to the poor election results. These saw the LDP-Komeito coalition only securing 122 of 248 seats in the Upper House and thus narrowly failing to maintain a majority. Another challenge that Ishiba had to address during his term was the return of President Trump and his harmful tariffs and inconsistent foreign policy. Following the detrimental parliamentary elections in July 2025, Ishiba opted not to resign from government immediately, later stating that it was in the nation’s best interest to stay on as Prime Minister for the ongoing tariff negotiations with the US and to act as a stable negotiation partner until a breakthrough could be achieved. Since then, considerable progress has been made. The US has lowered the import tariffs on multiple Japanese goods from the originally announced 25% to 15% on 22 July 2025. Most importantly, Japanese cars fall into this category of reduced tariffs. With this considerable progress having been made, Ishiba stated that now would finally be the right time to react to the election defeats and step down as Prime Minister.
With Ishiba’s resignation, a strong supporter of EU-Japan relations leaves the position of Prime Minister of Japan. During his short term, multiple notable agreements and milestones in the bilateral relations with the EU have been reached. Most significantly, this includes the Strategic Partnership Agreement (SPA), which entered into force in January 2025 and aims at expanding political and economic collaboration between the EU and Japan across various areas like security and energy. Furthermore, at the 30th Japan-EU Summit in July 2025, the partners announced further and increased cooperation towards launching a shared Defense Industry Dialogue, and consented to start official negotiations on a Japan-EU Security of Information Agreement. With EU-Japanese relations under Ishiba having been fruitful and strong, the question that naturally arises is what will be next?
In terms of appointing a new Prime Minister, Ishiba will stay in his current position until his successor is decided upon and approved by the parliament. His Liberal Democratic Party will have to elect a new leader, who will then also become the new Prime Minister and head of the governing coalition. This election is likely to be held in October 2025.
When it comes to who the next Prime Minister will be and what exactly that could mean for Japan and its relations with Europe, it is still too early to tell but a few things seem clear. Firstly, the new Prime Minister will need to demonstrate effective leadership and must be able to unite and excite the nation again, in order to save the struggling LDP. After Kishida, Ishiba is now the second Prime Minister that had to resign over the same funding scandal, with the public clearly having cast a tough judgement on the LDP.
The new coalition leader will face the same issues and challenges that ultimately forced Ishiba to resign and will have to find a way to more successfully address these concerns in order to consolidate power. At the same time, Japan is walking a fine political line between the two major powers, China and the US. While the US remains by far Japan’s closest ally, especially economic relations with China are becoming increasingly important to Japan. In 2022, the Regional Comprehensive Economic Partnership entered into force, with China and Japan both being signatories. Year to date in 2025, the US has been the number one destination of Japanese exports (1.71T JP¥) and China number two (1.55T JP¥), though the tariffs have had a considerable impact on exports to the US, marking a change of -11.4% since 2025 and thus narrowing the gap to China. Simultaneously, Japan’s imports from China have nearly twice the trade volume (2.07T JP¥) as its imports from the US (1.04T JP¥). Navigating this delicate balance between the country’s US alliance and Chinese economic relations will also be a key task for the new Japanese PM.
Simultaneously, a number of worries arise from this. Ishiba’s term as a Prime Minister has only lasted for less than a year. With the next leader set to enter into power with a governing coalition facing a minority in both the Upper and the Lower House, there is a real risk of Japan returning to short-lived revolving door terms and more frequent contests for power.
This leads straight to the second concern, as the LDP’s recent election defeats came largely due to a growing populist votership, strengthening populist opposition parties like the Sanseitō party. This indicates a shift of the public’s preference towards a more populist leadership, or at the very least has to be understood as the public turning against the establishment and ruling government coalition. With the public opinion moving in this direction, the LDP seeking stability and legitimacy it is currently lacking, and the likelihood of more frequent power contests within the party, this offers a potential breeding ground for increased populist influence in such confrontations. Regardless whether it would be because of a return to short(er) Prime Ministerial terms or because of rising influence of populist voices, Ishiba’s resignation marks another waypoint of increased political uncertainty and diminishing stability in Japan, as he has been the third PM already since the end of Abe’s second term in 2020.
Nevertheless, EU-Japan relations are unlikely to be strongly affected by the political impasse in the LDP and are expected to stay solid, friendly and positive in the future. The next Prime Minister, whoever he or she may be, will almost certainly remain an LDP member. While the running candidates for the position have not yet been officially announced, the current Minister of Agriculture and son of former PM Junichiro Koizumi, Shinjiro Koizumi, and the more right-wing candidate Sanae Takaichi are currently considered to be the frontrunners. Ishiba’s successor will be decided by a leadership vote on the 4th of October 2025. Both candidates had already participated in the previous edition of the LDP leadership vote, then won by Ishida. Former Foreign Minister Toshimitsu Motegi has also officially joined the contest to become Japan’s leader.
Not just under Ishiba, but also under his predecessors, the LDP has always supported strong relations with Europe. Additionally, key agreements like the Strategic Partnership Agreement (SPA) and Economic Partnership Agreement (EPA), as well as the EU-Japan Digital and Security Partnerships enjoy cross-party backing within parliament and a continuation of strong cooperation is still within Japan’s strategic interest as Europe remains a vital economic partner, a like-minded actor in upholding the rules-based international order, and a key ally in addressing global challenges. Furthermore, with the United States becoming a less predictable partner under its current administration, Japan has a growing interest in diversifying its international relationships and Europe plays a central role in that strategy. Further, the relations are not only sustained bilaterally, but also manifested within a broader alliance with industrial democracies, still stemming from a parallel history shaped by similar post-war developments due to US reconstruction efforts and a continued strong influence of the US economy.
Therefore, Japan’s willingness to remain a strategic partner to Europe does not seem to be questioned. On the other hand, how stable Japan’s government can be as a partner in the near future may be more unresolved. While the foundations of the EU-Japan partnership remain strong, domestic political dynamics could imply uncertainty in Japan’s priorities—not due to a lack of will, but because of swiftly shifting leadership and growing pressure at home.
Author: Piet Kuhlmann, EIAS Junior Researcher
Photo Credits: WikiMedia Commons
