From Hudson Institute Weekend Reads <[email protected]>
Subject Economic and Security Implications of the Japanese Election
Date October 4, 2025 1:00 PM
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Weekend Reads

Japan’s Leadership Transition: Implications for Japan and the United States [[link removed]]

Today Japan’s Liberal Democratic Party (LDP) is electing a new leader, who will almost certainly become the country’s prime minister—a decision that will have significant implications for the United States.

Read below for key insights from Paul Sracic [[link removed]] and William Chou [[link removed]] on possible election outcomes and why they matter to Washington. Or, read their full policy brief here. [[link removed]]

Hudson also reached out to LDP leadership candidates to share their foreign policy platforms. Read the candidates’ responses here. [[link removed]]

Key Insights

1. The LDP’s electoral struggles threaten to damage US-Japan security cooperation.

The US-Japan alliance is essential to maintaining regional security and countering China’s multidimensional aggression. Economic and political instability could compel Japan to prioritize domestic consolidation over foreign commitments, delaying joint defense initiatives. And prolonged LDP turmoil could result in policy paralysis, diminishing Japan’s global role.

2. The recent US-Japan trade deal is an important step. But it has electoral implications for the LDP.

Averting higher tariffs is a diplomatic victory for outgoing LDP Prime Minister Shigeru Ishiba, who pushed to increase Japanese investment in the US to stave off the White House’s punitive measures. This might bolster the party’s image among business leaders and exporters, stabilizing economic sentiment in favor of the LDP. But opposition parties have criticized the agreement, arguing that it exacerbates economic woes such as inflation and the yen’s weakness. No LDP or opposition candidate is likely to seek to renegotiate the deal once in office. But debates over the agreement reflect the public’s unhappiness with rising costs of living.

3. Strong, stable Japanese leadership is important to US interests.

The upcoming LDP leadership election is a critical inflection point that will test the resilience of Japan’s long-dominant party and, by extension, the stability of the US-Japan alliance. Ultimately, the stability and decisiveness of Japan’s domestic leadership are the most vital guarantors of a strong alliance, and US policymakers should prepare to navigate a period of potential instability as Japan searches for a path toward renewed political and economic strength.

Read the full policy brief. [[link removed]]

Quotes may be edited for clarity and length.

Go Deeper

LDP Leadership Election: Candidates Discuss the Future of Japanese Foreign Policy [[link removed]]

Hudson asked LDP leadership candidates to describe their visions [[link removed]] for US-Japan relations, peace and stability in the Indo-Pacific, the Japanese economy, and more.

Read their responses here. [[link removed]]

Investing in Security and Success: Analysis of the US-Japan $550 Billion Strategic Investment Fund [[link removed]]

In a Hudson policy memo [[link removed]], William Chou [[link removed]] examines the terms of the US-Japan trade agreement and identifies how Washington and Tokyo can mutually benefit from the $550 billion investment fund.

Read here. [[link removed]]

Industry, Security, and Community: Senator David McCormick on the Nippon Steel–U.S. Steel Deal [[link removed]]

“When you think about America’s future . . . a partnership with Japan is a key part of our security,” said Senator David McCormick (R-PA) at Hudson [[link removed]]. He explained the importance of the US-Japan relationship and how Nippon Steel’s investment in U.S. Steel furthers both nations’ interests.

Watch the event, listen to the podcast, or read the transcript here. [[link removed]]

More from Hudson Institute [[link removed]]

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