Japan’s Prime Minister Shigeru Ishiba has announced that he will resign following growing calls from within his party to take responsibility for a historic defeat in July’s parliamentary election.

Ishiba, who took office in October, said he was stepping down as prime minister and as the head of his conservative Liberal Democratic Party.

Ishiba, a 68-year-old moderate centrist, had resisted demands from opponents further to the right within his own party to resign. He argued that he wanted to avoid a political vacuum at a time when Japan faces key domestic and international challenges, including US tariffs, rising prices and growing tensions in the Asia-Pacific.

Ishiba explained at a news conference Sunday night as he announced his resignation plans that he had intended for some time to take responsibility for his party's summer election loss, but was first determined to make progress in tariff negotiations with the United States. He described it as matter of the national interest.

“Who would seriously negotiate with a government whose leader says he is stepping down?" Ishiba said.

He said the moment had arrived with an order by US President Donald Trump on Friday to lower tariffs on Japanese cars and other products to 15 per cent from a previously imposed 25 per cent rate.

“Having reached a milestone in the US tariff negotiations, I decided now is the time to make way for a successor," Ishiba said.

Pressure from the party

The resignation came one day before his party was to decide whether to hold an early leadership election, which would have amounted to a virtual no-confidence motion against him if approved.

He said he made the “painful decision to resign” to avert that step because “it would cause a critical division within the party, and that is absolutely not my intention.”

Ishiba said he would instead start a process to hold a party leadership vote to choose his replacement, which is expected to be held in October. He is to remain as prime minister until a new party leader is elected and endorsed by the parliament.

He said he is not going to run, even though he regrets leaving behind unfinished business, such as measures for salary increases, agricultural reforms and further strengthening Japan's security.

Loss after loss

In July, Ishiba’s ruling coalition failed to secure a majority in the 248-seat upper house in a crucial parliamentary election, weakening the stability of his government. The loss followed a defeat in the more powerful lower house, where the party-led coalition lost its majority in October, only two weeks after Ishiba took over.

Party lawmakers who support the prime minister said those who lost seats were largely ultra-conservatives who were linked to corruption scandals before Ishiba took office. Public polling showed that pressure on Ishiba to resign caused his support to grow.

Calls for Ishiba to step down grew after the Liberal Democratic Party last week called for a “complete overhaul” of the party following its losses.

A conservative heavyweight Taro Aso, known for his anti-Ishiba stance, and a minister and several deputy ministers in the Ishiba Cabinet requested an early vote, prompting others to follow suit.

Former Health Minister Norihisa Tamura said on a talk show of the public broadcaster NHK earlier Sunday that the best way to heal party divisions and move forward is for Ishiba “to settle” the dispute before Monday’s vote. The party has already been distracted from necessary work on economic measures and on figuring out ways to gain opposition support in the next parliamentary session, Tamura said.

Possible candidates to replace Ishiba include Agriculture Minister Shinjiro Koizumi, as well as ultra-conservative former Economic Security Minister Sanae Takaichi, Chief Cabinet Secretary Yoshimasa Hayashi, a moderate and the protege of former Prime Minister Fumio Kishida.

Lacking a majority in both houses, the next party leader will have to work with the main opposition parties to get bills passed, experts say, or else face constant risks of no-confidence motions.

The opposition parties, however, are too splintered to form a big coalition to topple the government.

Who could replace Ishiba? 

Ishiba's resignation will trigger a leadership race in his Liberal Democratic Party, with the winner facing a parliament vote to become prime minister.

Since the ruling coalition has lost its majorities in both chambers of parliament, the LDP president is no longer guaranteed to become premier. There is a slim possibility an opposition party leader takes the helm of the world's fourth-largest economy.

Here is a list of lawmakers who might throw their hats in the ring:

Ruling - Liberal Democratic Party (LDP)

Sanae Takaichi, 64

If chosen, Takaichi would be Japan's first female prime minister.

A party veteran who has held a variety of roles, including economic security and internal affairs minister, she lost to Ishiba in the LDP leadership race in a run-off vote last year.

Known for conservative positions such as revising the pacifist postwar constitution, Takaichi is a regular visitor to the Yasukuni shrine to honour Japan's war dead, viewed by some Asian neighbours as a symbol of past militarism.

Takaichi stands out for her vocal opposition to the Bank of Japan's interest rate hikes and her calls to ramp up spending to boost the fragile economy.

Shinjiro Koizumi, 44

Heir to a political dynasty with a hand in governing Japan for more than a century, Koizumi would become its youngest prime minister in the modern era.

Koizumi ran in the last year's party leadership race, presenting himself as a reformer able to restore public trust in a scandal-hit party.

Unlike Takaichi, who left government after her defeat in that contest, the Columbia University-educated Koizumi stayed close to Ishiba as his agriculture minister, overseeing a widely publicised attempt to curb soaring rice prices.

In his only other cabinet post, as environment minister, Koizumi called for Japan to get rid of nuclear reactors in 2019. He faced ridicule that year for remarks that climate policy needed to be "cool" and "sexy". Little is known about his views on economic policy, including on the BOJ.

Yoshimasa Hayashi, 64

Hayashi has been Japan's chief cabinet secretary, a pivotal job that includes being top government spokesperson, since December 2023 under then-premier Fumio Kishida and Ishiba.

He has held a variety of portfolios, including defence, foreign and agriculture minister, often being tapped as a pinch-hitter following an incumbent's resignation.

A fluent English speaker, Hayashi worked for trading house Mitsui & Co., studied at the Harvard Kennedy School and was a staffer for US Representative Stephen Neal and Senator William Roth Jr.

Hayashi ran for the LDP leadership race in 2012 and 2024. He has repeatedly called for respecting the BOJ's independence on monetary policy.

Opposition - Constitutional Democratic Party of Japan

Yoshihiko Noda, 68

Former Prime Minister Noda is the leader of the biggest opposition group, the centre-left Constitutional Democrats.

As premier from 2011 to 2012, he worked with the LDP to push through legislation to double Japan's consumption tax to 10 per cent to help curb bulging public debt - earning a reputation as a fiscal hawk. The consumption tax was raised to 10 per cent in 2019 for most items.

In the upper house election in July, Noda reversed course and called for a temporary cut to the consumption tax for food items. He has repeatedly called for phasing out the BOJ's massive stimulus.

Opposition - Democratic Party for the People

Yuichiro Tamaki, 56

Tamaki's centre-right party is one of the fastest-growing in recent elections.

A former finance ministry bureaucrat, Tamaki co-founded the Democratic Party for the People in 2018 and advocates increasing people's take-home pay by expanding tax exemptions and slashing the consumption tax.

He supports boosting defence capabilities, stricter regulations for foreigners' land acquisition and constructing more nuclear power plants.

Tamaki has called on the BOJ to be cautious about phasing out stimulus, saying it should wait until real wages turn positive and help underpin consumption.