Ruling, Opposition Parties Deepening Confrontation over Economic Policies after PM Ishiba Announces He Will Step Down

The Yomiuri Shimbun

18:09 JST, September 8, 2025

The gaps in opinions between the ruling and opposition parties will likely deepen further as Prime Minister Shigeru Ishiba, who has placed importance on measures to cope with rising prices as his administration’s priority issue, decided to step down as president of the Liberal Democratic Party without achieving results.

Although the government has finished the most difficult phase of its tariff negotiations with the United States, the impact of those levies on the business performance of Japanese companies will begin to surface from now.

The government is facing a mountain of challenges over economic policy.

“To have a policy take root in which wage increases exceed rising prices, it is necessary to accelerate measures to deal with the issue,” Ishiba said at a press conference on Sunday.

Real wages, which reflect price fluctuations, in July rose 0.5% from a year ago, as an interim figure, marking the first increase in seven months. However, the rise was mainly due to an increase in summer bonuses.

Many economists predict that real wages will decrease again from now.

One of the reasons why real wages have not increased remarkably is because prices continue to rise.

The national consumer price index, excluding fresh food prices that tend to fluctuate greatly, in July rose 3.1% from a year ago, marking the eighth consecutive month of an increase at a rate above 3%. Rice prices rose especially high: as much as 90.7%.

Although the Ishiba administration had tried to halt increases in rice prices by releasing government-stockpiled rice, prices of the staple grain in the market have still remained high.

In the latest House of Councillors election, the ruling camp of the LDP and Komeito presented an election pledge to provide ¥20,000 per person of cash benefits to all the people of the country, and the amount would be ¥40,000 per person for children and adults in households for which resident taxes are waived.

In August after the election, the prime minister changed his stance to agreeing with the Constitutional Democratic Party of Japan to hold discussions between the ruling coalition and the opposition party. In doing so, Ishiba was enthusiastic about realizing his policy goal.

However, opposition parties have insisted that the consumption tax rate should be lowered, or the tax itself should be abolished, as a measure to cope with price rises.

In regard to this point, the gaps in the opinions of the ruling and opposition parties are still wide.

Confrontational stances have also deepened between the ruling and opposition camps over how to secure alternate sources of government revenue to abolish a temporary additional tax rate on gasoline prices and details in designing a system to make high school education free of charge.

In the tariff negotiations with the United States, President Donald Trump signed an executive order which stipulates that a tariff rate on automobiles imported from Japan will be lowered from the current level of 27.5% to 15%.

The Trump administration also reviewed its “reciprocal tariffs” imposed on various kinds of products imported from Japan.

However, the president’s executive order did not stipulate a most-favored-nation treatment that tariff rates on medicines and semiconductor products imported from Japan do not surpass tariff rates on those products imported from other countries.

Regarding $550 billion (about ¥80 trillion) in investment in the United States that Japan agreed upon with the administration, Trump secured the right to select destinations for the money, which is to be invested by the Japanese side.

In addition, the U.S. government has suggested that if Japan does not honor the deal, tariff rates on imports from Japan will be raised.

In Japanese business circles, an increasing number of people hold deepening concerns that domestic price rises and the high U.S. tariffs will worsen corporate business results.

The new administration that emerges from the LDP presidential election will likely step in quickly to implement economic stimulus measures, but those need to be truly effective.

A source at a major company told The Yomiuri Shimbun on Sunday, “I do not want [Diet members] to prolong a political vacuum.”

Yoshinobu Tsutsui, chairman of the Japan Business Federation (Keidanren), issued a comment on Sunday, saying, “We have a mountain of important policy tasks regarding domestic and foreign affairs for which no time can be wasted.”

“I want a new leader [of the LDP] who is chosen in the party presidential election to establish a stable political situation and speedily implement policies,” he added.