As Tokyo resists trade concessions in rightward shift, Seoul has a chance to win tariff relief and enhance its position

Japan’s ruling Liberal Democratic Party (LDP) suffered its worst-ever defeat in an upper house election on Monday, weakening Prime Minister Shigeru Ishiba’s position and creating a structural divergence in the U.S.-ROK-Japan triangle that Seoul may now exploit.

While Japan’s domestic political challenges will complicate its ability to respond to U.S. tariff pressure by the Aug. 1 deadline, South Korea has quietly positioned itself as a more agile and stable negotiating partner for Washington.

With U.S.-Japan trade tensions simmering and Beijing recalibrating its posture, the balance within Northeast Asia could begin to shift.

JAPAN’S FURTHER SHIFT TO THE RIGHT

The LDP’s historic electoral loss confirmed that the party’s traditional support base has grown disillusioned under Ishiba’s leadership. Sanseito, a far-right nationalist party, captured at least 13 seats, up from just one and surpassing its initial target of six. The Democratic Party for the People also made gains, winning at least 16 seats, quadrupling its previous count.

These developments signal an erosion of voter trust in the LDP as well as Japan’s broader postwar political consensus.

While Ishiba remains prime minister, his party is now functionally a minority government and will face mounting internal pressure. Within the LDP, figures aiming to recapture the nationalist base will likely intensify calls to recalibrate Tokyo’s foreign and trade policy in a more overtly “Japan First” direction, undermining Ishiba’s internationalist posture.

Though no direct leadership challenge has emerged, the party is on unstable footing. If Ishiba’s rivals succeed in shifting the party further to the right, Japan’s capacity to manage bilateral trade talks with Washington may weaken further, particularly as domestic optics limit the types of concessions Tokyo can afford to make.

Japan’s chief tariff negotiator Ryosei Akazawa stated on Tuesday that Tokyo still aims to reach an agreement with the U.S. before the Aug. 1 tariff deadline. But given political constraints, any negotiation may be symbolic rather than substantive.

Even if Ishiba retains his office, the LDP’s broader posture will likely harden to reclaim conservative voters now defecting to Sanseito and other challengers. That shift will put Tokyo at odds with U.S. President Donald Trump’s “America First” approach, which does not align with Japan’s political climate or strategic trade interests.

ROK finance minister Koo Yun-cheol delivers remarks during a meeting at the government complex in Seoul, July 22, 2025 | Image: ROK Ministry of Economy and Finance

SEOUL GAINS FLEXIBILITY

While Tokyo faces internal fragmentation, Seoul has moved with quiet precision. South Korean trade and finance ministers, along with National Security Adviser Wi Sung-lac, are in Washington this week to hold high-level talks ahead of the same Aug. 1 deadline.

The visit, part of Seoul’s broader effort to preserve access to the U.S. market, highlights a contrast in posture. Whereas Japan is hamstrung by domestic political instability, South Korea has room to negotiate. This is a dramatic shift from just two months ago when Seoul was still dealing with the fallout of former President Yoon Suk-yeol’s Dec. 2024 martial law declaration and subsequent impeachment.

Meanwhile, ROK President Lee Jae-myung continues to pursue a pragmatic, national interest-first foreign policy, which provides Seoul with much needed flexibility. Lee continues to enjoy high approval ratings, and unlike Ishiba, he does not face a revolt from his party’s base.

As a result, Lee’s trade team can engage more substantively with their U.S. counterparts, even if the scope for avoiding tariffs remains limited.

The Trump administration, which views trade deficits as anathema to U.S. economic interests, is unlikely to exempt South Korea from tariffs. Earlier this month, Trump issued a letter to Seoul, imposing a blanket 25% tariff for ROK imports.

However, Washington may consider reducing Seoul’s tariff level slightly — perhaps to 19%, as it did with Indonesia’s initial 32% — if only to reward what it perceives as constructive engagement. From Washington’s perspective, doing so would also put pressure on Tokyo to offer further concessions or risk being singled out.

A two-tiered tariff regime for Seoul and Tokyo could carry significant consequences. For South Korean exporters, even a marginal reduction in U.S. tariffs would preserve partial market access and help maintain global investor confidence. More broadly, it would allow Seoul to cast itself as a rational and dependable partner in contrast to a Tokyo undergoing political turmoil.

Chinese foreign ministry spokesperson Guo Jiakun delivers remarks during a regular press conference, July 21, 2025 | Image: People’s Republic of China’s Ministry of Foreign Affairs

CHINA’S STRATEGIC RECALIBRATION

For years, Beijing has viewed Seoul as the weak link in the U.S.-ROK-Japan trilateral architecture. That perception has driven pressure campaigns, economic coercion and diplomatic isolation tactics targeting South Korea.

Although Washington likely continues to suspect that Lee Jae-myung is too accommodating toward China — evidenced by the White House’s initial response to Lee’s election referencing “Chinese interference and influence in democracies around the world” — Lee has subverted that narrative.

After taking office, Lee’s office ensured that his first call with a foreign leader was with Trump. His second was to Ishiba. Xi Jinping came third. This sequencing was deliberate and signaled continuity with Seoul’s longstanding alliance commitments. It also demonstrated Lee’s understanding that alignment with Washington and Tokyo remains the cornerstone of South Korean security and trade policy, regardless of partisan identity.

China, meanwhile, is recalculating its approach. With Washington and Tokyo facing heightened bilateral trade tensions and the LDP under pressure to adopt more nationalist policies, Beijing may see an opportunity to rebalance its regional engagement.

Chinese foreign ministry spokesperson Guo Jiakun declined to comment on the results of Japan’s election on Monday, describing it as a matter of Japan’s “internal affairs,” but said that Beijing is willing to work with Tokyo to “build a constructive and stable relationship that meets the requirements of the new era.”

Like South Korea, Japan remains deeply reliant on Chinese rare earth exports for its advanced manufacturing base, particularly in electronics and clean energy technology. In a scenario where trade talks with the U.S. stall or produce only modest outcomes, the LDP may consider stabilizing relations with China as a temporary buffer.

While such a move would not represent a major geopolitical realignment, it would mark a shift in how China perceives its points of leverage. If Japan — long seen as the staunchest U.S. ally in the region — must now temper its hawkish stance for economic survival, then the traditional trilateral structure weakens.

In this new environment, South Korea may no longer be Beijing’s primary pressure point. Tokyo’s vulnerability to supply chain disruptions, coupled with its post-election political fragility, may offer Beijing a more attractive wedge.

ROK President Lee Jae-myung, July 11, 2025 | Image: ROK Presidential Office

SEIZING A NARROW WINDOW

The coming days will determine whether Seoul can capitalize on the opportunity created by the LDP’s election loss. Should Japan fail to negotiate meaningfully, and should South Korea secure even minor concessions from Washington, global perceptions of Seoul would shift — from a junior partner in a U.S.-led alliance structure to a strategic actor capable of adapting to structural volatility.

For Washington, Tokyo’s decision to even temporarily hedge against it might undermine its long-term strategic planning in Northeast Asia. But in the short term, the Trump administration may use this moment to reshape trade relations on a bilateral basis, rewarding compliance and punishing obstruction.

For Beijing, the internal realignment in Tokyo is a signal to adjust its pressure tactics. If Japan’s political leaders become too inwardly focused to manage trilateral affairs, then China may step in to redefine the region’s economic balance, starting with supply chains and rare earth leverage.

For Seoul, the LDP’s electoral defeat is a regional inflection point that has offered it a rare window of opportunity for it to showcase that it is no longer the weak link and that it can navigate the region’s evolving dynamics.

South Korea’s ability to capitalize will depend on whether it can and will move quickly and decisively — first to secure tangible U.S. tariff concessions, and then to reposition itself as the region’s most reliable U.S. partner.

Edited by Bryan Betts