The Trump Effect on Takaichi

Results of U.S. Midterms May Overshadow Takaichi’s Policies

 
By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
November 9, 2026

The major setback to the Republicans in the U.S. midterm elections on November 3 may overshadow Japanese Prime Minister Sanae Takaichi’s efforts to implement her policies. We can expect President Donald Trump to pressure Japan to invest even more in U.S. industry and to increase its defense budget to lighten U.S. involvement in Asian security. Takaichi has been focusing on building a personal relationship with Trump. However, she is not ready for Trump as a lame duck.
 
After voting results showed a landslide victory by the Democrats last Tuesday night, the Tokyo Stock Market declined steeply over the rest of the week. The Nikkei 225 marked a historically large drop of 3,643 yen to 57,434 yen on Friday. It sank by nine percent over the three days after the election. The market is concerned that Democrats will hit the brakes on the development of AI technology and semiconductors, including the construction of data centers.
 
Although the Supreme Court has circumscribed the authority of a President to impose tariffs unilaterally, Trump is expected to maintain reciprocal tariffs on goods from Japan – at least until a U.S. court tells him that he cannot. In negotiations over the tariffs, Japan already has promised 550 billion dollar of investment in the U.S. Meanwhile, the war in Iran will continue, pushing oil prices up.
 
Trump’s foreign policy going forward is even more uncertain. Policymakers in Japan suppose that, over his next two years in office, Trump will take bold diplomatic action to build a foreign policy legacy. The boldest – and worst case – scenario is a high-level deal with China and Russia that would supersede U.S. relations with all other countries. Trump has proposed trilateral summit with Russian President Vladimir Putin and Chinese President Xi Jinping, a latter-day Axis powers meeting, in the backdrop of the APEC meeting scheduled for later this month.
 
Trump is willing to build a framework with Putin and Xi to control nuclear weapons.  However sweeping this new world order will be, Japan will be left behind. Takaichi has no leverage with China ever since her remark that hostilities in Taiwan could compel Japan to use force in what would be a “survival-threatening situation.” China might have regarded it as an intervention in Chinese domestic affairs.
 
Russian aggression in Ukraine has exacerbated the already tense Japan-Russia relations. Takaichi has just delivered the usual condemnation to Russia on Putin’s visit to Iturup island, the detention of a Japanese journalist, and the effective confiscation of Japan Tobacco’s offices in Russia. Takaichi has made no meaningful effort to improve relations with China or Russia.
 
With these two countries largely closed off to her, Takaichi’s only alternative is a strong partnership with Trump. In her summit with Trump last March, she praised him as “the only person who can bring peace and prosperity to the world.” How far things will go with Trump remains to be seen. In the meantime, Japan is pushing its own foreign policy: a “Free and Open Indo-Pacific,” a program invented by Takaichi’s political mentor, former premier Shinzo Abe, a decade ago.
 
Takaichi can no longer expect firm international support for this policy, however. The headwinds are getting stronger. In September, Trump and Xi stood shoulder to shoulder as former allies against Japan in the World War II. There is speculation that Trump may approach Kim Jong Un of North Korea to deal with Kim’s nuclear and missile program.  Although Takaichi hopes to have a meeting with Kim as soon as possible, there is no sign that her effort will pay off. At least what she could do is urge Trump to help Japan solve the issue of North Korea’s abduction of the Japanese. The issue presents no monetary incentive to Trump, however.
 
In short, no progress can be expected in the bilateral relationship between Japan and the U.S. over the coming two years. The U.S. keeps on urging Japan to increase its defense budget, including a five-year agreement for host nation support that will expire in four to five months, in March 2027. The Takaichi government is working the rest of this year to formulate the fiscal year 2027 budget and to revise Japan’s three foundational security documents. Takaichi has yet to disclose where she can find the resources to fund a surge in defense spending.
 
One ideal solution for her is increased private investment in the defense industry that will spur economic growth. The Takaichi government has proposed the establishment of a military-industrial complex to encourage such investment. A formal military-industrial complex will ignite a fierce debate in the country since Japan previously has maintained a strict position against involvement in the wars of foreign countries.
 
Without a majority in the Upper House, Takaichi does not have a free hand to put her policies into practice. When the Lower House passed a controversial bill for a consumption tax cut on November 6, four veteran LDP lawmakers walked out of the vote, protesting Takaichi’s unilaterally imposed procedure for the bill. The LDP decided to reprimand those four lawmakers

This move may ignite the same protest in the Upper House when debate starts on November 11. The leading coalition does not have a majority in this chamber nor the support of the opposition to cut the consumption tax. Nor is the Upper House opposition keen on her other domestic and international initiatives. Even if she accedes to Trump’s request for a larger defense budget, Takaichi may not be able to meet his demands with full domestic support.

Asia Policy Events, Monday November 9, 2026

ARMS CONTROL, DISARMAMENT AND NON-PROLIFERATION: CHARTING A PATH AHEAD - A GENEVA SECURITY DEBATE. 11/9, 12:30pm-2:00pm (CET), 6:30-8:00am (EST). HYBRID. Sponsor: Geneva Centre for Security Policy (GCSP). Speakers: William Alberque, Former Director of Strategy, Technology and Arms Control, International Institute for Strategic Studies (IISS); Emilie Sarah Roulet, Deputy Head of Section Arms Control, Disarmament & Cybersecurity, Swiss Federal Department of Foreign Affairs (FDFA); Nobumasa Akiyama, Professor of International Security, Hitotsubashi University, and Director, Center for Disarmament, Science and Technology, JIIA.  

CHINA FORUM 2026: NO SAFE DISTANCE: BEIJING'S GLOBAL REACH AND THE DEMOCRATIC RESPONSE. 11/9-11/10, HYBRID. Sponsor: Victims of Communism Memorial Foundation (VOC). Speakers Include: Sikyong Penpa Tsering, President, Central Tibetan Administration; Josh Rogin, Lead Global Security Analyst, Washington Post Intelligence; Michael Lucci​, Founder and CEO, State Armor; Emily de La Bruyère, Senior Fellow, Foundation for Defense of Democracies; Joshua Kagan, Special Counsel, Kelley Drye & Warren LLP; Adrian Zenz, Senior Fellow and Director in China Studies, VOC.

BOOK TALK: EVERYDAY OCCUPATION: AMERICAN SOLDIERS AND CHINESE CIVILIANS AFTER WORLD WAR II. 11/9, 9:30-10:45am (EST), VIRTUAL. Sponsors: Fairbank Center for Chinese Studies, Harvard University; Harvard University Asia Center. Speaker: author, Chunmei Du, Professor, Department of History, Lingnan University. PURCHASE BOOK

BREAKING THE IMPASSE: SEEKING NEW APPROACHES TO NUCLEAR NEGOTIATIONS AND COEXISTENCE ON THE KOREAN PENINSULA. 11/9, 1:30pm (EST), HYBRID. Sponsor: Stimson. Speakers: Stephen Biegun, Former U.S. Deputy Secretary of State, U.S. Department of State; Sang Hyun Lee, Emeritus Senior Fellow, Sejong Institute; Susan A. Thornton, Trustee & Director of the Forum on Asia-Pacific Security, National Committee on American Foreign Policy; Inwook Kim, Associate Professor, International Relations, Sungkyunkwan University; Rachel Minyoung Lee, Senior Fellow, 38 North Program, Stimson Center; Seong-ho Sheen, Professor & Former Dean of Graduate School of International Studies, Seoul National University; Frank Jannuzi, President & CEO, Maureen & Mike Mansfield Foundation; Jung-Chul Lee, Professor, Department of Political Science & International Relations, Seoul National University.

WHAT COMES NEXT: THE CONSEQUENCES OF THE 2026 MIDTERM ELECTIONS. 11/9, 2:00-3:00pm (EST), VIRTUAL. Sponsor: Center for Effective Public Management, Brookings. Speakers: David C. Barker, Nonresident Senior Fellow, Governance Studies, Center for Effective Public Management, Brookings; Sarah A. Binder, Senior Fellow, Governance Studies, Center for Effective Public Management, Brookings; Moderator: Jonathan Rauch, Senior Fellow, Governance Studies, Center for Effective Public Management, Brookings.

CHINA’S TRAJECTORY AND THE FUTURE OF U.S.-CHINA RELATIONS. 11/9, 3:00-4:00pm (EST), IN PERSON ONLY. Sponsor: Harvard Kennedy School. Speakers: former Deputy National Security Advisor Matt Pottinge; Ambassador Nicholas Burns, U.S. Ambassador to the People’s Republic of China from 2021 to 2025.  

BOOK TALK: CAPITALISM IN SOUTH KOREA, 1945-2025. 11/9, 5:30-7:00pm (EST), IN PERSON ONLY. Sponsor: Institute for International Science and Technology Policy, Elliott School of International Affairs, GWU. Speaker: author, Keun Lee, Distinguished Professor of Economics, Chung-Ang University. PURCHASE BOOK

US, IRAN, AND THE GULF CONFLICT: WHAT COMES NEXT? 11/9, 5:00-7:00pm (CST), 6:00-7:00pm (EST), HYBRID. Sponsor: Rice University’s Baker Institute for Public Policy. Speakers: Mohammad Ayatollahi Tabaar, Ph.D., Fellow for the Middle East, Baker Institute; Danny Citrinowicz, Former head of the Iran Branch in Israeli Defense Intelligence, Nonresident Senior Fellow, Atlantic Council. 

If you would like to see the full week of Asia-relevant events and happenings, subscribe to the weekly Asia Policy Calendar. Only $100/year via this LINK.

Is Japan’s Postwar Pacifism Ending?

Mitsubishi A6M3 Zero Model 22

Takaichi Seeks a Military-Industrial Complex

By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
November 3, 2026

Prime Minister Sanae Takaichi is accelerating connections between defense and business. Her government has proposed a new corporation to enhance the defense industries, which will formally establish a military-industrial complex. The corporation will cooperate with foreign countries to develop weapons. Takaichi dismisses criticism of Japan’s new militarization. Taken to its logical conclusion, her policy will upend 80 years of a national security policy that has with few exceptions kept Japan at peace with the rest of the world.

The Takaichi administration is working on revisions to three foundational defense documents – the National Security Strategy, the National Defense Strategy, and the Defense Buildup Program. The administration plans to finish the work by the end of this year. In a meeting of defense experts on October 27, the administration unveiled an initiative entitled “Positive Cycle of Defense and Economy.” The premise of the initiative is that Japan must have a strong economy to change its national defense strategy – one that is compatible with the rapid development of such technology as AI and drones. .

To prepare for the technology-driven “new warfare” and to strengthen the nation’s capacity to respond, the government intends to strengthen the industrial base for defense. It hopes to launch a new corporation to support defense businesses. With the backing of the Ministry of Defense (MOD) and the Ministry of Economy, Trade and Industry (METI), the corporation will encourage the defense industry to expand production, promote the export of defense equipment, and encourage innovation in defense technology.

This work will require an increase in the defense budget, an action that the United States has vigorously encouraged. It is likely that METI initiated the idea of connecting defense with the economy: for METI, economic growth is everything. For her part, Takaichi welcomes any hawkish agenda to attract her political base. Although promotion of military business faces considerable opposition -- consider former U.S. President Dwight Eisenhower’s warning in his 1961 farewell address against the emergence of a “military-industrial complex” – bravely grappling with a divisive agenda is Takaichi’s selling point as the prime minister.

Takaichi does not rule out a tax increase to fund a greater defense budget. History suggests that an increase is unavoidable. To cover a 43 trillion-yen defense budget for five years beginning in fiscal year 2023, the government raised income taxes, corporate taxes. and the tobacco tax. Currently, however, METI expects higher revenues from the current corporate rate since these revenues have been increasing as corporate profits have improved. The growth of the defense industry as Takaichi has planned could be compensation for business sectors that have suffered from a corporate tax hike.

The Takaichi administration has been exploring a change in the definition of “defense budget” to show that its defense budget was up to two percent of GDP. The government has in the past included expenditures on defense budget research and on construction in 2022 of defense infrastructure. The Takaichi administration is now discussing including costs for energy supplies and for building railroads. These are nothing but measures to meet the demand of the Trump administration that allies increase defense spending.

After it removed the five categories that restricted exports of defense equipment in April, the Takaichi government has been seeking to expand weapons exports. One vehicle for this effort is the Global Combat Air Programme (GCAP), a project that Japan has joined with like-minded countries. The GCAP is a common framework with the United Kingdom and Italy for the development of sixth generation fighter jets to replace the Euro Fighter Typhoon in Europe and the F-2 in the Japan Air Self-defense Force.

Germany hopes to join the GCAP. In the summit meeting with Takaichi in Tokyo on October 28, German Chancellor Friedrich Merz urged Japan to agree to Germany’s participation. Because the UK has encountered domestic financial difficulties for its participation in the GCAP, Germany may be able to accelerate the project if it joins. But Japan has some concerns about adding Germany. German participation will invite an overall revision of member countries’ roles, which may delay future schedules. A military defense framework of Japan, Italy, and Germany, independent of the U.S., might remind one of Tripartite Pact in 1940.

Also on October 28, Japan deepened its security cooperation with the U.S. The Minister of Defense, Shinjiro Koizumi, agreed with U.S. Defense Secretary Pete Hegseth to share information on anti-ballistic missiles and to establish a final assembly and check-out facility for air-to-air missiles in Japan. Koizumi followed up on “Operation Supercharge” to accelerate cooperation on bilateral defense equipment. Koizumi emphasized that Japan’s intent was to strengthen defense capabilities to deter unilateral changes to the status quo. He specifically noted China’s advances in the Pacific Ocean.

Under the name of economic growth, Japan seems ready to unleash its defense industry, disregarding criticism of its advance to a merchant of death. Takaichi is further considering Japan’s possession of nuclear-powered submarines. Japan has never had these vessels since they conflict with its longstanding position as an anti-nuclear country.

Japan has three anti-nuclear principles: no production, no possession, and no introduction. However, Takaichi wants to narrow the interpretation of the “no introduction” principle in the upcoming revision of the three defense documents. Her hawkish coalition partner, the Japan Innovation Party, shares this aim, but most among Takaichi’s own party, the Liberal Democrats are reluctant to weaken any of the three principles. Public protests on Culture Day (November 3), the 80th anniversary of the promulgation of Japan postwar constitution disavowing war emphasized voter opposition. Hard discussions about the three defense documents will be had through the end of this year.

Asia Policy Events, Monday November 2, 2026

WHAT'S HAPPENING BETWEEN THE TWO KOREAS AT THE DMZ? 11/2, 9:30-10:15am (EST), VIRTUAL. Sponsors: Korea Chair, CSIS; The Capital Cable. Speakers: Bruce Klingner, Senior Fellow, Mansfield Foundation; Victor Cha, President, Korea Chair, CSIS; Moderator: Mark Lippert, Senior Adviser (Non-resident), Korea Chair, CSIS.  

CONNECTING STRATEGY TO IMPACT: THE NEED FOR RADIO FREE ASIA. 11/2, Noon-1:00pm (EST), IN PERSON ONLY. Sponsors: Public Diplomacy Council of America (PDCA); Elliott School of International Affairs, GWU; Institute for Public Diplomacy & Global Communication, GWU; Annenberg Center on Communication Leadership & Policy, USC. Speaker: Bay Fang, President and CEO, Radio Free Asia.

BOOK TALK: ILLIBERAL LAW AND DEVELOPMENT: PROPERTY RIGHTS AND CONFLICT OVER LAND IN CHINA. 11/2, 1:00-2:30pm (EST), HYBRID. Sponsor: U.S.-Asia Law Institute (USALI), NYU School of Law. Speaker: author, Susan Whiting, Professor of Political Science, University of Washington. PURCHASE BOOK

AI POWER AND NATIONAL SECURITY CONFERENCE: OPEN MODELS, GOVERNANCE, AND US-CHINA MILITARY COMPETITION. 11/2, 2:00-6:00pm (EST), HYBRID. Sponsor: Hudson. Speakers include: Steve Kelly, President, Perry-Shultz Center for Technology & Strategic Stability, Institute of Security and Technology; Michael Ortiz, Head of International Affairs, Reflection; Sam Bresnick, Research Fellow, Center for Security Emerging Technology, Georgetown University; Moderators: Jason Hsu, Senior Fellow, Hudson; Tsiporah Fried, Visiting Senior Fellow, Hudson; Riley Walters, Senior Fellow, Hudson.

If you would like to see the full week of Asia-relevant events and happenings, subscribe to the weekly Asia Policy Calendar. Only $100/year via this LINK.

Takaichi Hawkish Agenda Behind High Popularity

Year One of the Takaichi Administration

By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
October 26, 2026

One year has passed since the Diet elected Sanae Takaichi as prime minister on October 21, 2025. Takaichi has focused on building a “strong economy” with active investment, but she has yet to produce an obvious economic achievement. On the international front, she revealed herself as a novice in diplomacy, seriously damaging relations with China. Despite all this, she continues to maintain high approval ratings.
 
In her first policy speech to the Diet in October 2025, Takaichi introduced the slogan of “responsible and proactive public finances.” She listed 17 business sectors for investment, including AI, semiconductors, and the defense industry, on the theory that investing in security will spur economic growth in Japan. In April 2026, she opened weapons exports by eliminating the so-called “five categories” of permissible sales of military equipment. She also launched in June a plan for 370 trillion yen in investments by 2040.
 
But Takaichi has not been able to reverse growing price inflation that has been caused not only by wars in Ukraine and Iran but also by the depreciation of the Japanese yen. Her economic policies, including cutting the consumption tax on food, are not fiscally strong since there is so far no other source of revenue to offset the loss of tax revenue. The markets and the media have from time to time speculated that Japan might issue more government bonds, but even this speculation has eroded confidence in the Japanese yen and caused a surge in the long-term interest rate. Takaichi has insisted that she is not implementing a reflationary policy, but the markets remain skeptical.
 
Takaichi’s inability to implement policies is obvious in diplomacy. Since she commented in November 2025 on a contingency that might be triggered by action by China in Taiwan, China has been putting pressure on Japan to retract Takaichi’s statement. China has restricted trade with and tourism in Japan. China recently stressed Japan’s “new militarism,” citing its growing defense budget and the revision of its security policies. Regrettably for Takaichi, U.S. President Donald Trump recalled with Chinese President Xi Jinping a U.S.- China alliance in World War II that fought together to win the war (against Japan).
 
While praising Trump as the “only leader to bring peace and prosperity to the world,” Takaichi’s foreign policies are not always compatible with Trump’s. For domestic political reasons, she confirmed Japan’s support for the International Criminal Court (ICC) when Trump announced sanctions on the court. She was caught between the compassion of the Japanese people and U.S. hostility toward the ICC. She has otherwise tried to find common ground with the U.S. based on an old principle of a Free and Open Indo-Pacific, a term invented by Takaichi’s political mentor, Shinzo Abe.
 
Closely watching the deterioration of Japan-China relations, Russia has put stronger pressure on Japan. Russian President Vladimir Putin made his first trip to one of the islands of Japan’s Northern Territory, Iturup, in August. Takaichi protested the visit, calling it “definitely intolerable.” Russia did not stop there. It detained a Japanese journalist for the Hokkaido Shimbun Press in Sakhalin on suspicion of spying for the Japanese government – a common Russian political tactic. Takaichi has denied that the journalist was a spy, but she has not had any direct communication with Putin so far.
 
Despite all these inadequacies in economic policy and diplomacy, Takaichi has a high popularity rating in the polls. In the poll of Yomiuri Shimbun in October, her cabinet had a 57 percent approval rating with a 30 percent disapproval – a 27 percent margin that politicians in most other countries, including the U.S., would envy. Although the survey was conducted right after the resignation of Minister of Agriculture, Forestry and Fisheries, Kazuo Yana, after the revelation of a scandal threatening local municipalities with budget cuts for roads, that fact did not affect her popularity very much.
 
While the percentage of supporters who like her policies has declined, the biggest reason for supporting her was “because there is no other appropriate person.” She maintains support from younger voters through comments on social media. She does not favor any restrictions on AI technology, hoping to “make Japan the world’s best country to develop and use AI.” But it is a reality in Japan that cyberattacks on PHP through AI have shut down websites of major corporations.
 
Enjoying high popularity, Takaichi pursued a hawkish agenda in her first year. A good example was the enactment of the National Flag Vandalism Act, which garnered right wing support. She also championed revisions to the Imperial House Law, to allow the adoption of males in the male line of former imperial families – a goal of conservative groups that have long worked for imperial succession by males only. Undeniably, voters in Japan gave her this power in the Lower House election last February when Takaichi’s LDP gained an historical victory.
 
The Takaichi administration can be defined as an economy-oriented hawkish regime, which can be likened to the administrations of Shinzo Abe and Jun-ichiro Koizumi. Abe promoted Abenomics, a driving force for a demanding agenda that included the 2015 security legislation. Koizumi pushed for fiscal decentralization in what he called “trinity-in-unity reform,” and he stood with the U.S. in the war on terror. As far as a prime minister takes care of the people’s economic welfare, they will not complain about it.
 
Though she often invokes Abe, her former boss, as a model, Takaichi in fact seems to take Koizumi’s approach, using populism to restore faith in the LDP. The common ground among Koizumi, Abe, and Takaichi is the promotion of a hawkish agenda focusing public eyes on the economy. Perhaps this strategy is a requirement for a long-lasting administration in Japan.

The Trump Trap

Did Takaichi Make A Bad Bet On Donald Trump?

By Daniel Sneider, lecturer in East Asian studies at Stanford University, non-resident distinguished fellow at the Korea Economic Institute of America, and APP Member. 

First Published October 27, 2026 on Toyo Keizai Online.

Of all the leaders of America’s allies, from Europe to Asia, no one has invested more in seeking the favor of Donald Trump than Japanese Prime Minister Takaichi Sanae. She has met Trump three times in person during her first year in office and offered up tens of billions in investment pledges, while keeping mostly quiet when Trump sanctioned the International Criminal Court and its Japanese head and embraced Chinese leader Xi Jinping’s unconcealed attempts to drive a wedge between Japan and the U.S.

Now, if the latest polls are accurate, Trump and his MAGA movement face a potentially devastating political defeat in the midterm elections for the U.S. Congress on November 3. While the scale of defeat remains to be seen, there seems little doubt that Trump will emerge weakened and isolated, both within and outside the United States.

Did Prime Minister Takaichi make a bad bet by snuggling so close to the mercurial American leader?

“No, I don’t think that Takaichi has made a mistake,” eminent American Japan scholar Richard Samuels told Toyo Keizai Online. “From Japan’s perspective, hugging the US and hedging against its abandonment makes sense and seems to be working. She is smart to do this for as long as she can,” said Dr. Samuels, who is the director of the Japan program at MIT, the Massachusetts Institute of Technology.

Even if that is true – and most Japan hands in the U.S. share that view – it does not mean there are not huge risks for Japan that will be the result of the midterm vote. Much depends on what will be Trump’s state of mind if he suffers a serious political defeat.

One possibility, suggests a former senior State Department official, is that Trump will simply focus on cementing his legacy, mainly by building monuments to himself and continuing to enrich himself and his family through corruption, trade and investment deals with foreign powers, and pursuit of his enemies inside America.

“For a president with such a limited, highly personal conception of his role and opportunities, the prospect of spending his next two years in this way may well be quite attractive,” wrote former Economist editor Bill Emmott.

But it is also likely, some American analysts believe, that Trump will use his powers over foreign policy to engage in even more risky and provocative acts than he has already done. Trump’s brazen embrace in recent days of Russian leader Vladimir Putin may be a good indicator of what is to come.

These two alternative pathways are not mutually exclusive, former U.S. Ambassador to NATO Ivo Daalder told Toyo Keizai Online.

“There is definitely going to be legacy Don because that is who he is,” says Daalder, “but he will definitely also be unhinged.”

A weaker and more isolated Trump “will also become increasingly authoritarian and of the view that he and Xi (Jinping) and Putin should rule the world,” predicts the former senior official. Daalder believes that a trilateral summit with Putin and Xi on the sidelines of the November APEC summit in Shenzhen, proposed by the Russian leader, is highly likely. That summit could be focused on trying to impose a surrender on Ukraine on Russian terms, but Trump may just settle for the image of the three great leaders arm in arm.

“Trump needs to project power – and that increases the likelihood of him doing unhinged things,” says Daalder.

Escalation in the Iran war

The greatest challenge facing Trump after the elections – and maybe even before the vote – is how to get out of the quagmire of the Iran war. Trump is incapable of admitting making any mistake so his goal has been to find a way to declare victory and go home. But, says Daalder, the price of victory has gone up from some months ago when a deal with Teheran was at hand.

“Now it becomes more difficult,” argues the former U.S. envoy to NATO. Trump is likely to carry out a big military strike, presumably at the buried Iranian nuclear site at Pickaxe Mountain or the oil terminal on Kharg Island. “Trump may use a tactical nuclear weapon on either or both,” Daalder worries. Israeli Prime Minister Benjamin Netanyahu has openly called for a resumption of large-scale attacks, aimed at toppling the Iranian regime, after the U.S. election.

Escalation against Iran will trigger a widening retaliation against the Gulf states, further undermining global oil and gas markets and disrupting supply chains for chemicals and fertilizers. For Japan, this is a serious threat to economic growth plans, but Trump may not care about the broad economic crisis this could trigger.

After declaring ‘victory,’ Trump can then focus on the Western hemisphere, with an attempt to seize power in Cuba high on his list of targets, the former envoy to NATO predicts. “Even Greenland is not over,” he believes.

Another nightmare for Japan – a summit with Kim Jong Un

Another nightmare for Japan after a midterm defeat may be the increased prospect of a Trump summit with North Korea’s Kim Jong Un. Recent remarks by Trump seemed to dampen the prospects of a meeting and Kim has little incentive to meet with him, most North Korea watchers believe. Recognition of North Korea’s nuclear status is no longer sufficient reason to hold a meeting.

“Trump has nothing he wants, other than the U.S. leaving South Korea,” a former senior State Department official told this writer. It is possible, the official says, that the Chinese and Russians may urge Trump in Shenzhen to seek a meeting with Kim to declare an end to the Korean war and begin to remove U.S. forces from South Korea. “If I were Kim, I would get Putin to carry his water on this and declare it a victory for peace,” the former official speculates. “I can see Trump falling for that.”

China bargain

Takaichi and senior Japanese officials are already alarmed by the prospect for a ‘grand bargain’ between Trump and the Chinese leader that could leave Japan effectively isolated. That bullet was mostly dodged when Xi visited Washington but the two leaders are planning to meet twice after the midterm elections – at the APEC summit in Shenzhen and then at a G20 summit held at a Trump golf resort in Florida.

As is increasingly clear, Trump’s anti-Chinese posture is mostly a performance for his voter base. Steps to engage in a full-scale trade war, and to seriously restrict the flow of high technology to China, have largely been abandoned. U.S. defenses in the Western Pacific have been drawn down, even before the Iran war. Post the elections, there may be little to stop Trump from seeking to cement an axis with China.

“Trump is also a little scared of President Xi and wants his approval,” Phillips O’Brien, a prolific analyst and professor of strategy at Britain’s St Andrews University, wrote recently. “In the end, Trump would be happy to see the Chinese dominate East Asia, especially if he can profit from it.”

Can Congress stop Trump?

Japanese officials may hope that a weakened Trump will face greater resistance after the election from the Congress, not only from victorious Democrats but also Republicans who see him as a political liability heading toward the 2028 presidential election. But some observers argue that Trump will simply go deeper down the road of political retaliation and dismissal of Congressional authority.

“We can expect extreme policies, ignoring of Congressional subpoenas, and rejection or dismissal of court orders as he adopts a highly confrontational approach to governing during his remaining time in office,” former senior State Department official Evans Revere told Toyo Keizai. “He may feel he has nothing to lose, especially since the Supreme Court has given him blanket immunity for his actions as President.”

What can Japan do?

In this post-midterm world, faced with an increasingly risky Trump presidency, what will Prime Minister Takaichi do?

“Japanese are far better off strengthening relations with Korea, with Australia, and with the Europeans,” argues Daalder, embracing the call of Canadian Prime Minister Mark Carney for middle powers to unite in the face of an unreliable U.S. Simply hoping that Americans will return to their leadership role and listen to allies is not enough.

But, he admits, “Japanese are trapped by their dependency, and so are many of the Europeans.” And in the case of Takaichi, the psychology of subordination to Washington is deeply embedded.

“By fawning all over Trump, Takaichi thinks she has him on her side,” Columbia University Emeritus scholar Gerald Curtis told Toyo Keizai Online. “But Trump only respects one thing and that is power. He is reassured she has no power. So he takes her for granted.”

Japan will not be alone in this dependency trap – Europeans are also hoping to keep the alliance alive. The difference, Curtis observes, is that “the Europeans have each other. The Japanese have nobody. Without the United States, Japan is stuck.”

Takaichi's Vulnerabilities

Yana’s Scandal Exposes Takaichi’s Weaknesses

By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
October 18, 2026

After hesitating for two weeks, Prime Minister Sanae Takaichi replaced her Minister of Agriculture, Forestry and Fisheries, Kazuo Yana, with Arata Takebe, a former state minister of agriculture. Takaichi’s two-week indecisiveness about Yana’s status revealed her weaknesses in two things: positioning her staff and Diet affairs. Her inability to act quickly stems from her lack of experience as the supreme leader of Japanese politics.

When the weekly magazines Daily Shincho and Weekly Bunshun (online edition) reported on September 30 on Yana’s speech and his pork-barrel (or reverse pork-barrel) politics, Takaichi, surprisingly, did not consider firing him. She said that he would make amends for the scandal by his hard work as minister. But once the magazines published other scandals that could violate other laws, Takaichi decided to move. It took two weeks for Takaichi to understand the seriousness of Yana’s conduct.

Lack of Close Allies
It is likely that Takaichi appointed Yana in the September reshuffle of her cabinet because he was one of her few allies. When Takaichi was the Chairwoman of the LDP Policy Research Council between 2021 and 2022, Yana supported Takaichi in his capacity as a director on agriculture policy. Takaichi respected Yana’s knowledge about agriculture policies. Yana submitted his proposal to be agriculture minister to Takaichi, and Takaichi accepted it.

Usually, a prime minister orders his or her staff to conduct thorough background checks on the people under consideration for ministerial positions. Yana made his troubling speech in May. Other doubts about Yana’s failure to follow election norms, such as a shuttlebus service to campaign rallies and financial awards to the campaign’s telephone solicitors, had arisen earlier during his election campaign in February. Takaichi could have (and should have) known about Yana’s inappropriate conduct before she appointed him as agriculture minister in September. Her failure must have meant that she did not have a staff to advise her on the backgrounds of her ministers.

While Takaichi was thinking about letting Yana stay at his position, LDP lawmakers were hoping for his quick replacement. Yana’s scandal had the feel of pork barrel politics, which LDP lawmakers are attempting to excise. Takaichi failed to realize that the LDP was concerned that Yana’s scandal would ignite broader criticisms of LDP politics.

During the time when the Ministry of Finance is formulating the national budget for the next fiscal year, ordinarily every December, local business leaders visit Tokyo to meet with their local Diet members to request appropriations for roads, bridges, ports, or other business infrastructure. If their request is granted, the local leaders will work for the lawmaker in his or her election campaign.
The lawmaker can ask the ministries how the budget is being allocated but cannot demand specific favors on the budget. However, consultations about the budget will exert pressure on the ministries. If a ministry has a project that requires the lawmaker’s political support, then the bureaucrats in the ministry can formulate a budget advantageous to the lawmaker. This is an interdependence between the politician and the bureaucrat.

Takaichi does not have experience as LDP secretary general, a position that oversees election and Diet affairs. Takaichi simply described Yana’s cynical speech as “unhip” in her discussions with opposition parties in the Diet. But Yana’s reference to the budget incident in his speech as an example of his influence over the budget was a necessary move for a lawmaker who lost in his single-seat district in the last election, even though it was inappropriate in a moral perspective. It must be hard for Takaichi to imagine Yana’s electoral weakness.

Novice in Diet Affairs
Another failure of Takaichi was that she did not decide to replace Yana until opposition parties united to attack Yana and Takaichi in the Diet. Typically, a prime minister replaces a minister mired in scandal on a Friday before it can affect the schedule and media coverage in the coming week. However, Takaichi let the matter linger and did not fire Yana until Wednesday October 14. She had to face harsh criticism from the opposition parties on the scandal and was held accountable for her appointment of Yana.

The highest priority for Takaichi in this Diet session is passing bills to cut the consumption tax on food. The LDP Diet Affairs Committee has had to scurry to schedule the discussion on the tax cut bill. Takaichi’s late decision on Yana jeopardized the schedule. The LDP Diet affairs team had to negotiate with the opposition parties on a new schedule and managed to reach an agreement to begin the discussion on October 20.

With no career in Diet affairs, Takaichi does not understand the delicacy of negotiations over the Diet’s schedule. The Diet has many unwritten rules. All the parties in the Diet share a common interest in a detailed examination of such significant issues as a consumption tax (and its reduction). The Diet often requires the prime minister’s attendance, which may often become a condition of taking the final voting for a bill. But Takaichi whines about the frequency of her appearances, frustrated that they interfere with her busy life of doing her make up, bathing in the early morning, and cooking.

The leading parties are discussing reducing the amount of time a prime minister must spend before the Diet. But it is up to Takaichi to manage the issues that need detailed consultation with the Diet.

Oddly enough, the approval ratings for the Takaichi Cabinet did not show a steep decline, even after she replaced Yana. Asahi Shimbun reported only a one percentage point decline to 50 percent, while Yomiuri Shimbun showed a two-point loss to 57 percent. These results indicate that many the Japanese do not understand Takaichi’s accountability for the appointment of Yana as agriculture minister.

Asia Policy Events, Monday October 26, 2026

9TH ANNUAL IP DATA AND RESEARCH CONFERENCE. 10/26-28 (UTC), HYBRID. Sponsor: Canadian Intellectual Property Office (CIPO), Centre for International Governance Innovation (CIGI), World Intellectual Property (WIPO). Speakers: Gaétan de Rassenfosse, Associate Professor of Science, Technology, and Innovation Policy, EPFL; Cecilia Jona-Lasinio, Full Professor of Applied Economics at LUISS Business School; Nik Nanos, Chief Data Scientist and Founder of Nanos Research.

UNDERSTANDING CHINA TODAY: COMPARATIVE PERSPECTIVES FROM TAIWAN AND WASHINGTON. 10/26, Noon-1:30pm (EDT), IN PERSON ONLY. Sponsors: China in the World Program, Center for International Private Enterprise (CIPE); Taiwan Foundation for Democracy (TFD). Speakers: Becky Johnson, Chief of Staff, CIPE, Scott Kennedy, Trustee Chair in Chinese Business and Economics, CSIS; Moderator: Catherine Tai, Director of China in the World, CIPE.

US–ROK SHIPBUILDING COOPERATION: TAKING STOCK AND CHARTING THE NEXT STEPS. 10/26, 2:00-4:00pm (EDT). HYBRID. Sponsor: Stimson Center. Speakers: Jung-Gyu Shin, Director, Korea-U.S. Shipbuilding Partnership Center (KUSPC); Sek Hwan “Andrew” Hong, President & CEO, HD Hyundai USA; Rear Admiral Ronald J. Rábago, USCG (Retired), Senior Vice President, Government Services, American Bureau of Shipping (ABS); Lawrence "Larry" Ryder, Senior Vice President, Shipbuilding Business Development, Hanwha Defense USA; Darcie Draudt-Vejares, Fellow, Korea Studies, Asia Program, Carnegie Endowment for International Peace; Matthew Reisener, Senior National Security Advisor, Center for Maritime Strategy (Moderator); Eric Labs, Senior Analyst, Naval Forces & Weapons, Congressional Budget Office; Cynthia R. Cook, Senior Fellow, Defense & Security Department, CSIS; Erik Raven, Managing Director, Defense Practice Area, Beacon Global Strategies. Moderator: J. James Kim, Director, Korea Program, Stimson Center; Lecturer, School of International and Public Affairs (EMPA), Columbia University.

THE NEXT GENERATION OF DEMOCRATIC RESILIENCE: COMMEMORATING 30 YEARS OF TAIWAN’S ELECTORAL SOVEREIGNTY. 10/26, 4:00pm (PDT), IN-PERSON ONLY. Sponsor: Institute of East Asian Studies, University of California, Berkeley. Speakers: David Chih-Hsiang Wu, Director-General of the Taipei Economic and Cultural Office; Evan Dawley, Associate Professor of History at Goucher College; James Lee, Assistant Professor at the Institute of European and American Studies at Academia Sinica; Thomas Shattuck, Senior Program Manager at the University of Pennsylvania’s Perry World House; Heiner Janus, Project Lead and Senior Researcher at the German Institute of Development and Sustainability (IDOS); Moderator: Thomas B. Gold, Professor of Sociology Emeritus at the University of California, Berkeley.

INNOVATION ON STEROIDS: WHAT ARE WE LEARNING FROM THE UKRAINE WAR? 10/26, 4:30-6:00pm (EDT), HYBRID. Sponsor: MIT. Speakers: Erik Lin Greenberg, Associate Professor of Political Science, Co-Director, Wargaming Lab, MIT Security Studies Program; Gene Keselman, Principal Lecturer, Technological Innovation, Entrepreneurship, and Strategic Management, MIT Sloan School.

SECURING THE FUTURE: U.S.-KOREA COOPERATION IN DEFENSE, AI AND TRADE. 10/26, 5:00pm (PDT), 8:00pm (EDT), IN PERSON ONLY. Sponsor: Korea-Pacific Program, UC San Diego School of Global Policy and Strategy. Speakers: Kang Jung, Consul General of the Republic of Korea in Los Angeles; Colin Grabow, Associate Director, Herbert A. Stiefel Center for Trade Policy Studies, Cato Institute; Henry Haggard, Principal, Seekonk Global Strategy Group; Stephan Haggard, Research Professor and Director Emeritus, Korea-Pacific Program, UC San Diego School of Global Policy and Strategy; Munseob Lee, Lawrence and Sallye Krause Chair in Korean Studies, UC San Diego School of Global Policy and Strategy; Stephen D. Sklenka, former Deputy Commander, U.S. Indo-Pacific Command.

THE NEW U.S.-KOREA TRADE RISK LANDSCAPE: RECENT TRENDS IN TARIFFS, EXPORTS CONTROLS AND SANCTIONS FOR KOREAN COMPANIES. 10/26, 8:00pm (EDT), VIRTUAL. Sponsors: Korea Society, Association of American State offices in Korea, and Korea Trade-Investment Promotion Agency. Speakers: Katelyn Hilferty, Partner & Practice Lead, Morgan Lewis; Clinton Yu, Parter & Co-Chair, Arnall Gregory LLP; Moderator: Chris Kim, Managing Director, Stout.

If you would like to see the full week of Asia-relevant events and happenings, subscribe to the weekly Asia Policy Calendar. Only $100/year via this LINK.

Takaichi's Agenda Stumbles

Takaichi Caught Between a Staff Scandal and U.S. Pressure

By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
October 12, 2026

Although Japanese Prime Minister Sanae Takaichi is trying to focus on the economy during the Diet’s fall session, two unexpected issues, one domestic, the other international, have upset her agenda. Irritated about Takaichi’s handling of a scandal concerning the Agriculture minister, opposition parties have slowed the procedures for considering bills. Meanwhile, U.S. sanctions on the International Criminal Court (ICC) have paralyzed Takaichi’s diplomacy with the U.S. despite her unwavering support for President Donald Trump. The prime minister now faces the hardest time since she took the seat a year ago.

In her October 5 policy speech, Takaichi introduced an old Chinese expression called Keisei-saimin [経世済民], which could be interpreted as “Good governance saves the people.” This saying became the etymology of “economy [経済]” in Japan. The faction led by former premier Noboru Takeshita, Keisei-kai [経世会], was named after this phrase. By using the idiom, Takaichi hoped to show her determination to decrease the consumption tax and tackle price inflation.

It was remarkable for Takaichi to refer to the political principle of the former Takeshita faction in the Liberal Democratic Party (LDP) because it had been a political enemy of the former Abe faction, or Seiwa-kai [清和会], with which Takaichi herself had once been affiliated. Takaichi has begun to distance herself from Abe in other ways as well.  

In Diet discussions, she has distinguished her economic policy from past reflation policy. Reflation had been a fundamental element of Abenomics. But U.S. Treasury Secretary Scott Bessent’s demand that Japan stop the reflation has taken precedence. Thus, while keeping with such Abe-oriented diplomatic policies as the Free and Open Indo-Pacific (FOIP), Takaichi is departing from other of Abe’s political stances.

Opposition parties are still skeptical about Takaichi’s economic policy. Komeito and the Democratic Party for the People have requested in Diet discussion a greater distribution of public benefits rather than a consumption tax cut to deal with price inflation. Takaichi has insisted that a consumption tax cut is the best policy in terms of sufficiency and swiftness. However, she has not yet answered the question of how she has found or will find fiscal resources for the tax cut. She has said only, “Don’t worry.”

Although Takaichi had expected to discuss economic policies in the Diet, opposition leaders did not allow it by asking why Takaichi had appointed Kazuo Yana as the Minister of Agriculture, Forestry and Fisheries in her September cabinet reshuffling. Yana had boasted in May that, earlier in the year, he, as an individual Diet member, had cut the national government’s budget for road construction in two municipalities in his electoral district – in retaliation for their mayors’ support of Yana’s rival in the February Lower House election. Admitting his remarks were inappropriate, Yana retracted the comment, inviting further criticism about eating his words.

While a lawmaker can check the policies of ministries, influencing a specific policy may be incompatible with his obligations as a representative of all the people. Yana’s interference in national budget work to take revenge against the mayors was the opposite of that. Yana’s comment ignited a traditional skepticism of pork barrel shenanigans by LDP politicians through shadowy relationships with the ministries.

In response to a request that she dismiss Yana, Takaichi insisted on keeping him in his position, arguing that the budget had in fact been appropriately distributed to local governments. Although the prime minister usually replaces a cabinet member who becomes embroiled in scandal, Takaichi chose the opposite course. [Yana resigned Wednesday, October 14.]

Not only the opposition parties but also members of the LDP question her decision to retain Yana. LDP Executive Acting Secretary General, Koichi Hagiuda, criticized Yana’s speech as arrogant and intolerable. Opposition parties are united in sponsoring a censure motion in both chambers of the Diet. The opposition parties have a tough road ahead in the Lower House since the LDP has a majority, but they may have a chance to pass the censure motion with a majority in the Upper House. The opposition parties have also decided to refuse to discuss bills related to Yana in the Upper House. With this atmosphere it is uncertain whether Takaichi can get a consumption tax cut through the Diet.

Further pressure on Takaichi has come from the U.S. Secretary of State Marco Rubio who announced sanctions on the ICC. “We will ban transactions with this rogue court, cutting off their resources and crippling its ability to operate,” Rubio said in a statement. The sanctions are highly unpopular in Japan ever since the ICC’s Japanese president was targeted with personal sanctions in August.

Takaichi left a short comment on her social media account, expressing a “deep concern” on the sanctions decision of the U.S. Japan also joined the joint statement of foreign ministers of European countries and Canada which regretted and strongly disagreed with U.S. sanctions. Takaichi endorsed the statement but has taken no further action at the leaders’ level so far.

By now, Takaichi is one of the few world leaders who wholeheartedly support Trump. In her meeting with him in October 2025, Takaichi praised Trump as the only leader who could bring peace and prosperity to the world. She even nominated him for the Nobel Peace Prize. Through such unstinting loyalty, Takaichi has put herself in a position in which her criticism of any Trump policy would not make sense.

The Diet begins discussion of economic measures at the Committee on the Budget in the Lower House this week. If Yana remains in place, Takaichi will be asked about her responsibility for naming him agriculture minister in which position he can control the budget for farmers or the price of rice. On the diplomatic side, the Trump administration seems to be aligning the U.S. with Russia in the war in Ukraine. Such a commonality of interests might lead to other coordinated actions, such as opposition to the ICC. Whether Takaichi can find a way to break through and preserve Japan’s independence deserves scrutiny.

Asia Policy Events, Monday October 19, 2026

10/17-19 - Annual Fall Rites held at the Yasukuni Shrine. Visits and offerings by rightwing Diet members and Cabinet officials. PM Takaichi does not visit as she has in the past.

10/19-20 - 25th Shanghai Cooperation Organisation ( SCO ) Prime Ministers ' Meeting, Dushanbe, Tajikistan. Xi and Putin attend.
10/19-29 - Exercise Keen Sword takes place in Japan’s southwest region to rehearse island defense. Largest U.S.-Japan biennial joint drill.
10/20-21 - APEC Finance Ministerial Meeting (FMM), Hong Kong.

BOOK TALK: TECH-GEMONY: UNDERSTANDING THE NEW NATIONAL SECURITY ECONOMY. 10/19, 9:30-10:30am (JST), 10/18, 8:30-9:30pm (EDT), VIRTUAL. Sponsor: Institute of Contemporary Asian Studies (ICAS), Temple University Japan Campus. Speaker: author Brad Glosserman, Senior Advisor, Pacific Forum; Moderator: Robert Dujarric, Co-Director, ICAS, Temple University Japan Campus. PURCHASE BOOK

THE IRAN CRISIS STOCKTAKE: WHO CAN SUSTAIN THE PRESSURE? 10/19, 1:00-2:00pm (BST), 8:00-9:00am (EDT), VIRTUAL. Sponsor: Royal United Services Institute (RUSI). Speakers: Ali Ansari, Senior Associate Fellow, RUSI; Burcu Ozcelik, Senior Research Fellow for Middle East Security, RUSI; Jonathan Hackett, retired US Marine Corps interrogator; Mohammed al-Basha, independent Middle East analyst and founder, Basha Report Risk Advisory; Moderator: Jonathan Eyal, Associate Director, Strategic Research Partnerships, RUSI.

BOOK TALK: THE ROUTLEDGE HANDBOOK OF IDEOLOGY ANALYSIS. 10/19, 10:00-11:00am (EDT), VIRTUAL. Sponsor: Illiberalism Studies Program, George Washington University. Speakers: author Juliette Faure, Professor of Political Science, University of Lille; author, Mathew Humphrey, Professor of Political Theory, University of Nottingham; author, David Laycock, Emeritus Professor of Political Science, Simon Fraser University.  PURCHASE BOOK: https://link.amazon/B06y2GvJJ

RECENT DEVELOPMENTS IN ENERGY AND NUCLEAR POWER IN JAPAN. 10/19, Noon-1:15pm (EDT), HYBRID. Sponsor: Belfer Center for Science and International Affairs, Harvard Kennedy School. Speakers: Hisashi Yoshikawa, Project Professor, Institute for Future Initiatives, University of Tokyo; Nobuo Tanaka, Chairman, Steering Committee, Innovation for Cool Earth Forum (ICEF); Moderator: Joseph E. Aldy, Professor, Harvard Kennedy School.

AUSTRALIA’S APPROACH TO RESEARCH AND INNOVATION SECURITY: PROTECTING OPEN SCIENCE AND INTERNATIONAL COLLABORATION. 10/19, 2:00-3:00pm (EDT), VIRTUAL. Sponsor: Institute for Security & Development Policy. Speakers: Bart Hogeveen, Senior Fellow & Director Europe, Australian Strategic Policy Institute; Moderator: Melita Phachulia, Executive Assistant, Institute for Security & Development Policy.

PRESS CONFERENCE: HOW JAPAN CAN RESPOND TO A TAIWAN CRISIS. 10/20, 11:00am-Noon (JST), 10/19, 10:00-11:00pm (EDT), HYBRID. Sponsor: Professional Activities Committee, Foreign Correspondents' Club of Japan. Speaker: Katsuya Yamamoto, Director, Strategy and Deterrence Program and Senior Research Fellow, Sasakawa Peace Foundation.

If you would like to see the full week of Asia-relevant events and happenings, subscribe to the weekly Asia Policy Calendar. Only $100/year via this LINK.

Consumption Tax Cut is Back at the Forefront

The Extraordinary Session of the Diet Begins

By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
October 5, 2026

An extraordinary session of the Diet was convoked on October 5 with closure scheduled for December 12. The top priority for Prime Minister Sanae Takaichi and the ruling Liberal Democratic Party (LDP) is a consumption tax cut that would begin in April 2027. However, Takaichi faces the headwind of a scandal inside her administration and reservations about her diplomatic skills.
 
Ordinarily, such a Diet session in the fall is to discuss a supplemental budget for the Japanese economy or for dealing with an unexpected event such as a natural disaster. However, Takaichi has no plans so far to submit a supplemental budget bill. Indeed, she previously declared that she would not propose any supplemental budget and would integrate all the budget items into an annual budget that begins every April. Forgoing a supplemental budget should improve the efficiency of private business activities by improving the predictability of government spending.
 
Hence a consumption tax cut is the focus of this session. The Takaichi Cabinet made an official decision on the tax cut in mid-September: it will seek to reduce the consumption tax rate on food from eight percent to one percent for two years starting next April. The government will also establish a new system to subsidize job-hunting efforts by low-income families, instead of a refundable tax credit.
 
The leading coalition, the LDP and its partner, the Japan Innovation Party (JIP), does not have a majority to pass the bill in the Upper House, forcing the two parties to seek some help from opposition parties. LDP and JIP expect Komeito, which left the Centrist Reform Alliance (CRA) in September, to vote yes on the consumption tax cut bill.
 
However, the situation among the opposition parties is extremely complicated. The CRA lawmakers who had joined the party from the Constitutional Democratic Party of Japan (CDPJ) have since established a new party, the Democratic Reform Association (DRA). The DRA and Komeito then have organized a parliamentary group in the Lower House. Although the CDPJ and Komeito have not launched a similar project in the Upper House and continue to work separately there, it is up to Komeito whether to take a position closer to the CDPJ or to the LDP on the consumption tax cut proposal.
 
In addition to enacting the consumption tax cut, the LDP/JIP coalition hopes to reduce the number of Diet seats. The JIP has been calling on the LDP to implement their agreement made in October 2025 to reduce the number of seats in the Lower House by ten percent. The two parties failed to pass such a bill in either the extraordinary session of last fall or the special session earlier this year. Several members of the LDP are skeptical of JIP’s hard push for seat reduction.
 
The seat reduction proposal has led to an unusual unification of the opposition parties because all 45 seats to be eliminated are in proportional districts of the Lower House and thus work against small parties. If the LDP and JIP decide to ignore opposition complaints and take advantage of their super majority in the Lower House to pass the seat reduction, Komeito may oppose the consumption tax cut bill in retaliation. A multi-partisan group of lawmakers, including some from the LDP, submitted their opinion to the council for election reform, which argued that the 45-seat reduction would be baseless.
 
Controlling the procedure in the Diet will be crucial for Takaichi, who is reluctant to join the Diet’s discussion of the bills. The newly appointed Chairman of the LDP Council on Diet Affairs, Hideki Murai, supports Takaichi’s hesitancy and may negotiate to reduce her appearances before the Committee on Budget. But if Murai fails, the opposition parties will be further emboldened to oppose the leading coalition.
 
The Committee on the Budget has been a venue for discussing political scandals. Weekly magazines have reported that, before taking the position as Minister of Agriculture, Forestry and Fisheries, Kazuo Yana threatened some municipalities in his electoral district with cuts to their road construction budgets. The mayors of those cities supported another candidate in the last election in February. Yana’s possible involvement can be interpreted as blackmailing political opponents.
 
Yana is one of the lawmakers who received kickbacks from a former Abe faction in the LDP. His punishment was exclusion from a leadership position in the LDP for six months. Nevertheless, Takaichi allowed him to return to the leadership group by appointing him as minister in her cabinet reshuffle in September. She must have thought the kickback scandal was over. However, in an Asahi Shimbun poll, 68 percent considered it a problem that Takaichi had begun to appoint lawmakers embroiled in the funding scandal to ministerial positions. Mishandling of the Yana scandal may affect Takaichi’s approval rating.

Takaichi’s limited diplomatic skills have also raised concerns. A member of the U.S. Marine Corps in Okinawa was arrested by Japanese police on suspicion of a robbery from and the murder of a Japanese woman. The government of Japan has expressed its extreme regret to the U.S. However, Takaichi has not taken the matter up with U.S. President Donald Trump. Takaichi once said (in what she must now recognize as a grave mistake) that Trump was the only person who could bring peace and prosperity to the world. If she remains wedded to this view, she will show her irresolution about protecting Japanese citizens, and her public image will deteriorate.
 
Takaichi still has not improved bilateral relations with China that resulted from her careless speech on the Taiwan contingency in the Diet last November. Some lawmakers are trying to normalize Japan-China relations. This is not within Takaichi’s repertoire. Her missteps in diplomacy will give challengers a window to consolidate their opposition to her reelection as the LDP president in the fall of 2027.