Sanae Takaichi Wants to Make Japan Great Again. It Won’t Be Easy.
She is the first woman to lead Japan after decades of rule by older men. She is keen to revise her country’s pacifist constitution and rebuild its military. She favors big government and public spending to spur growth. She is an unabashed conservative who prefers strict immigration controls.
[time-brightcove not-tgx=”true”]And now, after a record breaking election victory last week, she is stronger than ever, having called a snap election and led her party to winning 316 of the 465 seats in the lower house of Japan’s parliament—the largest seat total since the party’s inception in 1955.
Japan has been struggling with a pervasive sense of stagnation and disillusionment born of decades of deflation, wage stagnation, demographic decline and a creeping loss of confidence in the country’s place in the world.
Takaichi won by offering a message of hope and a vision for a brighter future. She rallied voters eager to believe that their hardworking leader could deliver on the promise of renewal. The landslide triumph gives Takaichi an overwhelming mandate and clears the way for her to enact a sweeping agenda of economic and security reforms that could transform Japan, the fourth largest economy in the world and the most important American ally in Asia.
It is morning again in Japan
Takaichi, a veteran conservative lawmaker, who was elected president of the Liberal Democratic Party (LDP) and prime minister in Oct. 2025, was riding high in the polls, with approval ratings hovering around 70%, when she announced a snap election in January. But after a mere three months in office, she had little in the way of a record to brag about.
What she did have was a carefully curated, dynamic image drawing on the media management skills of her mentor: Shinzo Abe, the influential Japanese leader, who was assassinated in 2022. Her first weeks in office were a flurry of activity: attending summits overseas, hosting President Donald Trump in Japan, making policy pronouncements and managing to pass a supplemental budget that had plenty of sweeteners for voters.
Surging prices for food and fuel over the previous year had battered Japanese households already pressed by stagnant wages and low pensions. She offered cash handouts to families, subsidies for household energy bills, and rice coupons. She slashed the gasoline tax and targeted inflation, the main concern of voters. Takaichi’s countermeasures brought timely relief and won over skeptics.
The snap election—a calculated wager to preempt economic headwinds and voter disenchantment—caught the opposition unprepared. The election was unmistakably a referendum on Takaichi’s qualities and decisiveness, posing the question to Japan’s voters: Whom do you trust? Takaichi or her hapless opponents?
It was not a very hard choice. The Centrist Reform Alliance, the main opposition party, formed in January after the merger of two older parties. It was led by Yoshiko Noda, a staid veteran politician, who briefly served as an undistinguished prime minister in 2012 and led his party to a crushing defeat at the hands of Shinzo Abe and the LDP. On his watch, relations with the United States nosedived, and his actions sparked tensions with Beijing over the disputed Senkaku Islands—frictions that have escalated ever since. The CRA suffered a humiliating defeat, as did other centrist and leftist parties.
Takaichi’s popularity with voters helped more than 90% of LDP candidates win their seats, including 41 out of 43 of her colleagues who overcame the stain of financial scandals to secure voter support. She outmaneuvered her opponents by appropriating their policies on immigration and cut taxes on food. Even with an immigrant population of a mere three percent, xenophobic sentiment has been growing in Japan.
Takaichi recognized that Japan, with its aging population, needs foreign workers, but that it needs to control the inflow. She unveiled new immigration controls, reassured voters about the situation, and ensured immigration did not dominate the campaign. It was also one of the shortest campaign periods ever, and despite winter the voter turnout at 56% was higher than in the 2024 election. This was unmistakably her victory.
The economic challenge
Takaichi began her first term in office by promoting a modified version of “Abenomics,” relying heavily on government spending financed by debt. Already Japan’s public debt had risen to roughly $9 trillion—240% of GDP or more than double the size of its economy. New borrowing funded 40% of the 2025 supplementary budget, pushing the national debt to a record high. Financial markets took fright: bond yields spiked and the yen slid. For ordinary Japanese, the consequences were tangible: higher mortgage rates and rising prices, as a weaker currency drove up the cost of imported food and fuel.
But the prime minister showed no sign of fiscal restraint. Her promise to cut taxes on food threatens to reduce government revenue further, worsening the deficit. She vows to abandon what she calls “excessive austerity” and channel strategic investments to 17 industries, promising to revive the economy and deliver a brighter future. Takaichi remains vague on how all this will be funded, though she has tried to reassure markets that she will pursue disciplined fiscal policies. Her wildly optimistic logic is that fiscal stimulus will spark growth, and that the private sector will raise long-stagnant wages, thereby increasing tax revenues.
The stock market has soared in anticipation of lavish public spending, but bond markets remain wary. Her plan for strategic investments is also raising questions about the likely effectiveness of such state intervention. And her rush to boost defense spending to meet White House targets is fueling concern that a numbers-driven process may prove counterproductive in terms of what Japan actually needs to enhance its military capacity.
As she juggles priorities in a rapidly aging society, the spotlight is on surging medical care and pension payments, which account for roughly one third of the budget. These costs are defrayed by the consumption tax—which Takaichi promises to slash on food—and by income taxes paid by a shrinking labor force. Other rapidly aging societies face a similar conundrum: require workers to pay higher taxes to maintain social security, or pare back benefits and make seniors pay more for medical treatment. The other option is to mortgage the future by borrowing, the politically easiest path, and one she seems to favor.
Out of China’s shadow
A great dream of Shinzo Abe was to convince the people of Japan to abandon unilateral pacifism and restore the country to a position of military strength. Takaichi, who is Abe’s most successful disciple, sees this as unfinished business. She plans major increases in defense spending and has promised to “work flat out” to build a military strong enough to deter Chinese threats to Japanese islands. She may be tempted to revise Article 9 of the Constitution, which bans maintaining a military and going to war. Despite her mandate, however, the bar for revision is exceptionally high, requiring two-thirds support in both chambers and a majority in a public referendum.
Takaichi’s hawkish approach to China has boosted her popularity. Last November, she spoke about a possible Japanese military response in support of Taiwan if China tried to alter the status quo by force. China denounced her and demanded a retraction. Takaichi was only guilty of making explicit what had been implicit. Although rhetorically Beijing overplayed its hand the economic sanctions imposed have been relatively modest.
Tokyo and Beijing will benefit from insulating their trade ties from their diplomatic tiffs. The challenge will be in creating an exit ramp for President Xi Jinping of China to shift course so that normal diplomatic exchanges and channels of communication can be revived. Beijing will need to rethink its diplomacy considering that Takaichi is a leader who is likely to run Japan for a while.
Takaichi, is due in Washington in March for an audience with Trump before his planned summit with Xi Jinping. Trump endorsed Takaichi and had a positive visit to Japan last fall. The reception should be cordial but Tokyo is anxious that Trump might cut a deal with Xi over its head and resurrect the specter of a “G-2” ( Group of 2) for Washington and Beijing to manage global affairs between themselves.
She is expected to emphasize that Japan remains America’s indispensable partner in Asia and point to Tokyo’s accelerating defense spending, which aims to hit the threshold of 2% of GDP and boost its military capacity. Even if she faces domestic resistance to higher taxes supporting increased defense expenditures, a more muscular Japan also strengthens Trump’s hand going into negotiations with Xi. Given Trump’s erratic and impulsive record, there is no certainty whether positioning Japan as the irreplaceable Asian ally will be enough to forestall a grand bargain between Washington and Beijing—one that could ignore Tokyo’s interests.
Apart from managing the relationship with Washington, Takaichi faces the need to strike a balance between regional sensitivities and domestic political gestures that fire up her conservative and nationalist base. Shortly after her victory, she signaled that she intends to visit the Yasukuni Shrine, a memorial for the war dead in Tokyo, where 14 Class A war criminals, convicted by the post war International Military Tribunal for the Far East, were secretly enshrined in 1978.
The shrine and an adjacent museum have long served as ground zero for an unrepentant view of Japan’s wartime conduct: downplaying or omitting Japanese wartime atrocities across Asia, from the forced mobilization of Korean laborers, the exploitation of so-called Korean comfort women, and the Nanjing massacre of 1937 in China.
A Yasukuni visit is red meat for Takaichi’s base, which has long championed an exonerating and valorizing stance on Japan’s wartime legacy. But such a visit would antagonize China and South Korea, where the shrine is viewed as a symbol of Japanese imperial aggression and historical denialism. It would also imperil the recent thaw in South Korean-Japan ties aimed at strengthening security and economic cooperation.
Her intention is a reminder that unresolved grievances over shared history along with overlapping territorial claims constitute the permafrost of regional relations.