Japan’s ruling coalition, led by Prime Minister Shigeru Ishiba’s Liberal Democratic Party (LDP) and its partner Komeito, suffered a stunning defeat in Sunday’s upper house election, losing its majority in the 248-seat chamber.

The coalition secured only 47 of the 125 seats contested, falling short of the 50 needed to maintain control, according to NHK. This blow, following the LDP’s worst performance in 15 years in October’s lower house election, has left Ishiba’s minority government teetering on the edge of political instability as a critical August 1 deadline looms for trade negotiations with the United States.

Despite the “harsh result,” Ishiba, 68, vowed to remain as prime minister and LDP leader, emphasizing the urgency of ongoing tariff talks with the U.S., Japan’s largest export market. “We are engaged in extremely critical tariff negotiations with the United States... we must never ruin these negotiations,” he told TV Tokyo, underscoring his commitment to Japan’s national interests.

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Facing a 25% tariff threat from U.S. President Donald Trump if no deal is reached, Japan’s auto industry—accounting for 8% of jobs—and overall economy risk a potential recession, with weak export data already raising alarms.

The main opposition, the Constitutional Democratic Party (CDP), capitalized on voter frustration, securing 22 seats. Rising consumer prices, particularly for rice, dubbed “The raging rice riots of Reiwa,” and lingering resentment over LDP funding scandals fueled public discontent.

The far-right Sanseito party, riding a wave of anti-immigration sentiment with its “Japanese First” campaign, emerged as a surprise contender, projected to win 10-15 seats, up from just one previously.

While the upper house loss doesn’t directly topple Ishiba’s government, it heightens vulnerability to no-confidence motions and internal LDP calls for leadership change, with figures like Sanae Takaichi and Shinjiro Koizumi waiting in the wings.

As Japan navigates economic headwinds and a jittery bond market wary of the world’s largest debt pile, Ishiba’s ability to unify his party and negotiate with opposition groups will be critical to averting legislative gridlock and securing a trade deal.

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