Japan Prime Minister Ishiba Shigeru says he will step down after election setback

Japan’s Prime Minister Shigeru Ishiba announced Sunday he will step down as leader of the world’s fourth-largest economy amid growing political discord within his party.

“I made a difficult decision to step down,” Ishiba said during a press briefing, in comments translated by Japan’s public broadcaster NHK. He added that it is his “strong wish” for members of his Liberal Democratic Party (LDP) to overcome the “difficult divide” within the party.

Ishiba indicated that he had been thinking about his position as prime minister since last year’s election, but that it was a matter of finding the right timing.

Ishiba described the U.S. tariff measures as a “national crisis.” He added that he believes a “significant milestone” has been reached, after receiving a report from Japan’s tariff negotiator, Ryosei Akazawa, on Saturday.

“I have consistently stated that I do not intend to cling to this position, and that I would make a decision at the appropriate time after accomplishing what needed to be done…. Now that negotiations concerning U.S. tariff measures have reached a conclusion, I believe this is precisely the appropriate timing. I have therefore decided to step aside and make way for my successor,” he said in comments translated by NBC News.

The prime minister called for the LDP to hold an emergency leadership vote. Ishiba will continue his duties until a new successor has been found, he told reporters.

The world’s fourth-largest economy has been plagued with political uncertainty^[1] since the LDP lost its parliamentary majority in a snap election late last year. The election marked the first time since 2009 that the LDP has lost its majority. Pressure mounted when Japan’s ruling coalition lost control^[2] of the upper house in July.

Japan had struggled to reach a trade agreement with the U.S. and protect its massive auto sector from high duties. U.S. President Donald Trump^[3] signed an executive order^[4] on Thursday to implement a trade deal with Japan, imposing 15% baseline tariffs on most Japanese goods, including autos.

The deal was agreed to after months of negotiations, with Washington and Tokyo continuing to haggle over details for weeks before it was signed. On Sunday, negotiator Akazawa stated that the agreement was still “not settled” as the U.S. had yet to issue the expected presidential orders on duties for pharmaceuticals and semiconductors, Reuters reported.

Earlier this week, Japan’s ruling Liberal Democratic Party released a long-awaited report on why it lost seats in the upper house election in July.

The report ascribed the loss to the lack of appeal for the party’s measures aimed at taming inflation, previous political scandals and weak mobilization of young voters.

Local media reports suggested many key members of the LDP had signaled their intention to resign to the prime minister, while Ishiba had said that he intended to stay on amid calls within his party for choosing another leader.

— CNBC’s Anniek Bao contributed to this report.