Ishiba’s tariff fumble and Japan’s political malaise

Shigeru Ishiba’s premiership began like a late-night market rally — driven more by sentiment than substance. His sudden rise amid Japan’s political churn was as unexpected as a gamma squeeze on a sleepy Friday afternoon. But now, heading into a make-or-break upper house election, the trade deal that might have redeemed him looks like vaporware — and his political long position is rapidly going underwater.

Where Shinzo Abe once played the role of Trump whisperer with finesse — all nine holes of diplomacy and a perfectly tailored smile — Ishiba has misread the room like a trader leaning long into a hawkish Fed surprise. His decision to exile Taro Aso, arguably the one LDP figure fluent in the language of both English and ego, was the political equivalent of dumping your one decent hedge the night before CPI.

Instead of smoothing the yield curve in US-Japan relations, Ishiba’s envoy, Ryosei Akazawa, brought little global experience to the table — more local prefecture than global macro. And while Ishiba's base applauds his refusal to bow to Trump’s every tweet, the unwillingness to give even an inch on low-hanging fruit like a partial tariff rollback or mild defense spending boost suggests a man more committed to defiance than diplomacy.

It’s tempting to say the trade friction was out of Ishiba’s control — that even Abe would’ve struggled with this iteration of Trump. But markets, like politics, don’t reward stubborn idealism. They reward adaptability. And on that score, Ishiba has failed to hedge his leadership risks.

Polling suggests the LDP is on the cusp of an electoral drawdown. Ishiba’s approval rating is sub-21% — deep into bear market territory. And even if he tries to hold on by citing “ongoing tariff talks” as cover, that’s akin to a CEO clinging to their job citing a pending strategic review after a catastrophic earnings miss.

His allies hoped for an Abe 2.0 — instead, they got a half-hearted reboot without the conviction or the charisma. “Enjoyable Japan” as a slogan? That’s not policy — that’s a karaoke track. And like a poorly hedged currency bet, it didn’t last the week.

Even Ishiba’s ideological instincts — a tilt toward a more autonomous Japan, warmer overtures to Beijing — have been poorly sold and inconsistently executed. His stance has left China hawks on edge, while failing to convince the average voter he’s delivering anything tangible at home. Inflation is the pain point, but Ishiba’s answer is just another round of cash handouts, with all the lasting impact of a yen intervention in a dollar bull trend.

He once campaigned for progressive reform — on same-sex marriage, on civil liberties — but has since soft-pedaled those positions, flip-flopping like a central bank that can’t decide if it's data-dependent or politically pressured.

If the LDP gets steamrolled on Sunday, Ishiba’s grip on power may not survive the week. But even if he exits stage left, Japan’s political theater won’t be settling down anytime soon. With the looming specter of Trump tariffs and a leadership vacuum few want to fill, the script still reads like a bad dream.