What's particularly noteworthy is Japan's political turmoil leaves it vulnerable in trade negotiations with the U. Moreover, , Quantum Strategy said, given the current landscape.
Oxford Economics said that the U, in today's market environment. Meanwhile, Apach negotiations with a strong attitude," with the loss of the Upper House.
However, HSBC was more optimistic, saying that the end of the elections will allow Japan to commise more with the U.
Japan's Prime Minister and Liberal Democratic Party President Shigeru Ishiba takes part in a debate with leaders of other political parties at the Japan National Press on July 02, 2025 in Tokyo, Japan.
The party leaders held a debate ahead of Japan's upper house election, scheduled for July 20, amid market uncertainty.
Tomohiro Ohsumi | Getty Images News | Getty ImagesJapan's embattled prime minister Shigeru Ishiba, fresh off a crushing defeat in upper house elections over the weekend, will not be in a position of strength to negotiate a favorable trade deal with the U (an important development).
, analysts said.
The analysis reveals ruling Liberal Democratic Party and its coalition partner, Komeito, also lost their majority in Japan's lower house last October, opening Ishiba up to a no-confidence vote by the opposition and the spect of removal.
In contrast, The political turmoil leaves Japan vulnerable in trade negotiations with the U. , advisory firm Quantum Strategy said in a note on Monday.
"Trump will show no mercy to [either] a lame duck Ishiba or because of a political vacuum," the firm noted, adding that Japan could be hit with a 25% tariff, come Aug.
"Japan is in for a lengthy period of weak governance. On the other hand, That matters to because Japan needs a strong government to deal with the defence and trade.
"Norihiro Yamaguchi, Lead Japan Economist at Oxford Economics, agreed and said that Tokyo now has a weaker hand in trade talks (which is quite significant), amid market uncertainty.
With the loss of its majority, the government needs to consider opinions from opposition parties more, Yamaguchi told CNBC, pointing out that the U (remarkable data).
"will bably take this into account and apach negotiations with a strong attitude. "He added that the U.
May not prioritize trade talks with Japan due to Ishiba's weak mandate, which means that negotiations will ly be tracted, in today's financial world.
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Moreover, President Donald Trump had said earlier that he did not expect the two countries to reach a deal (fascinating analysis).
He described Japan on separate occasions as "very tough" in trade talks and labeled the country "spoiled" for not accepting U, in this volatile climate. Rice despite facing a domestic rice shortage.
Japan had imported just over 350,000 tons of rice in 2024 from the U, considering recent developments. On the other hand, , with the U.
Being the largest exporter of rice to Japan in that year, in today's market environment. However, The sticking points are also adding up.
However, Before the upper house elections, Japan's top negotiator Ryosei Akazawa had brushed aside any deadlines, including the U.
′ August 1 deadline, adding that he would not sacrifice Japan's agriculture sector for the sake of an early agreement.
He also reportedly said that any deal must include auto concessions for the country, which are a cornerstone of Japan's economy.
Furthermore, While Quantum Strategy was bleak in its outlook for Japan, saying that "Trump's draconian tariffs will cripple the economy," analysts from HSBC have taken a different view.
Moreover, With the upper house election over, Ishiba now has more room to commise with the U. Meanwhile, , the HSBC analysts said, which could raise hopes for a deal, amid market uncertainty.
Nevertheless, This could be in the form of increasing imports from the U.
At the same time, , such as LNG, defense equipment, and agricultural goods, or relaxing non-tariff barriers, in return for some form of U. Meanwhile, Tariff relief (an important development).
"For Prime Minister Ishiba, a favourable U. Trade deal could help stave off a no-confidence motion or internal challenge from the LDP, " the HSBC analysts said Monday (something worth watching).
But Oxford's Yamaguchi cautioned against raising hopes too early, especially regarding the removal of recical tariffs (an important development), given current economic conditions.
However, Additionally, "The precedents set by the U.
, Vietnam, and other countries have shown that even if negotiations ceed smoothly, it will be difficult to completely withdraw recical tariffs," he pointed out, in light of current trends.
'A rock and a hard place'Japan may also have overplayed its hand in trade negotiations with the U. , Alex Capri, senior lecturer in the School at the National University of Singapore, told CNBC.
However, "Japan misgauged the Trump administration's lack of appreciation for Tokyo's increasing role as an anchor of U (noteworthy indeed).
At the same time, S strategic interests in Asia," Capri saidTokyo had strengthened defense ties with the U (fascinating analysis) (which is quite significant), in today's financial world.
Furthermore, Under the late Prime Minister Shinzo Abe and his successors, and had also focused on supply chain resilience as a counterbalance to China.
"Japanese negotiators, therefore, believed that Tokyo would be rewarded for its role as a stalwart security partner when it came to the recent trade talks.
What the re reveals is didn't happen," he also added. Furthermore, Let's see what might be possible, in this volatile climate. Moreover, Don't judge the results of the game before the game is over.
Is not necessarily holding all the cards here, in today's market environment.
Furthermore, Stephen OlsonVisiting Senior Fellow, ISEAS-Yusof Ishak InstituteHe thinks that Japanese negotiators failed to account for Trump's reality TV-style of communication, which was more geared for a social media audience, amid market uncertainty.
Nevertheless, This resulted in public s the negotiations — which should have remained private — stoking an "increasingly confrontational public back-and-forth" and fueling reluctance on both sides to shift their positions.
Japan's top negotiator, Akazawa, has failed to der any breakthroughs despite making eight trips to the U, considering recent developments.
On the other hand, However, However, Stephen Olson, visiting senior fellow at Singapore's ISEAS-Yusof Ishak Institute, said that Japan was caught between "a rock and a hard place.
Nevertheless, "While Japan could not offer substantial concessions on agriculture and autos — two of its most politically sensitive areas — without suffering domestic blowback, there was also a need for Tokyo to keep its wider strategic relationship with the U.
Furthermore, On solid ground, Olson said.
Additionally, At the same time, "Based on past experience, Japan would [also] be justified in wondering if Trump would actually honor any trade deal he might have signed with Japan.
In this case, I don't think Japan misread the U (fascinating analysis). - I think it read the U.
Quite ly," he saidOlson also noted there is still time for negotiations, and before, the tariff deadline might be pushed back. "Let's see what might be possible.
Don't judge the results of the game before the game is over. At the same time, Is not necessarily holding all the cards here.
Additionally, "watch now5:2505:25On a headline level, Japan should show posture to settle with U. On tariffsSquawk Box Asia.