Becoming president of Japan’s Liberal Democratic Party (LDP) and soon the country’s first female prime minister is the easy part. Sanae Takaichi can rely on a fractured opposition to win a majority of votes in the legislature to become the next prime minister. In a speech following her election as party president, she promised she would give up work-life balance and “work, work, work” to revive Japan, a comment that earned chuckles from her colleagues. [time-brightcove not-tgx=”true”]Although pitching herself as Japan’s Margaret Thatcher, she does not favor Thatcher’s fiscal discipline. Like Thatcher, she is not a healer, and she does not have an encouraging track record on empowering women. She must heal the internal party rift, boost public support, tackle urgent economic issues, and manage the menace of President Donald Trump’s strongarming barrage of demands and threats. The problems she inherits appear intractable, raising concerns about a revolving door at the top reminiscent of the 2006-2012 era, when “one and done” prime ministers ruled.Read more: What Japan’s First Female Prime Minister Could Mean for the Country’s Gender PoliticsFollowing losses in two straight national elections, the LDP did some soul-searching about what went wrong. The party is divided over Abe Shinzo’s legacy and how to convince the public that it hears their frustration about the slush fund scandals that afflicted his rightwing faction most. Abe loyalists like Takaichi have blocked significant campaign finance reform and accountability initiatives. This “keep calm and carry on”, business-as-usual approach soured the public on the LDP. Over the decades of LDP dominance of Japanese politics since it was established in 1955, voters tolerated endemic corruption because the LDP delivered economic growth. With the economy in the doldrums, the public is less forbearing.While trying to bridge internal party rifts, Takaichi will need to build a majority coalition and convince voters that changing leaders really matters. Stanching the hemorrhage of voter support requires some bold moves and tangible achievements. The new premier, a veteran lawmaker seen as Abe’s protégé, is well positioned to regain the support of rightwing voters who feel the LDP had become too moderate, especially on immigration. Until the 2025 Upper House election, immigration was never politicized in election campaigns, but that changed as the upstart Sanseito won 15 seats on the back of its anti-globalization, anti-immigration stance. Now that the genie is out of the bottle, politicians across the spectrum have scrambled to clarify their position on immigration, including all five candidates running in the LDP presidential race. Yet, nobody in a position of power thinks that restricting the inflow of foreign workers is a viable option because they play a crucial and growing role in the economy.So, what to do about the toxic legacies of Abenomics engulfing Japan? While campaigning, Takaichi declared “Japan is Back”, echoing her mentor’s rallying slogan. She favors reviving a set of policies that are largely discredited. As former prime minister Kishida noted, Abenomics did not provide the basis for sustainable growth, accentuated income inequalities, and did not attend to the needs of the marginalized, his polite way of voicing a common perception that it amounted to welfare for the wealthy. Abe also added significantly to Japan’s massive debt burden, which stood at an astounding 260% ratio of public debt to GDP when he stepped down in 2020. The Bank of Japan has commenced with tapering, incrementally selling off its huge investments in ETFs that primed the stock market under Abe, and is signaling incremental interest rate increases. The inflation hammering households is primarily due to the weak yen that the Abe government orchestrated with negative interest rates and massive monetary easing, causing a surge in energy and food prices that pinches voters’ wallets.Takaichi assumes this burden and must contend with a socio-economic malaise gripping Japan that owes much to the surge in poorly paid non-regular employment on Abe’s watch, now 40% of all workers, and cheap yen inflation. There are no easy fixes, so figuring out how to cushion the harsh impact will be the basis of negotiations with other parties in the Japanese legislature, the Diet.The LDP-led coalition is a minority in both houses of the Diet and thus bringing another party into the coalition is an urgent priority. The Osaka-based Nippon Ishin is the most likely candidate as its policies broadly align with those of the LDP. Takaichi has promised to be a resolute leader, but will need to learn the art of compromise while juggling priorities and trade-offs on domestic policies.Looming over the welter of domestic problems is typhoon Trump. The Japanese government negotiated a reduction in auto tariffs in exchange for a massive commitment of $550 billion in investments in the U.S., but has learned the hard way that there is no done deal with Trump. The White House explained as an oversight its failure to cut newly imposed auto tariffs with an executive order as agreed. Once that was issued, the terms of the investment deal were “clarified”, one-sided in favor of the U.S. in terms of profit sharing and granting the White House control over how much, where and when the investments must be made. If Trump is dissatisfied with the Japanese response, he has reserved the right to reimpose higher tariffs on autos. What could go wrong?Considering Trump’s tendency to move the goal posts, the Japanese government and business community can be forgiven for feeling like they are being shaken down. But Trump has Japan over a barrel; the auto sector employs 5.5 million workers, accounting for 10% of jobs in industry, and earns around $40 billion from car exports to the U.S., its largest overseas market. The ripple effect across the economy, ranging from steel and glass to paint and widget firms, is enormous, and all those workers are consumers. It is estimated that Trump’s 25% tariffs imposed from April until August (on top of existing 2.5% tariffs) blew a Yen 2.6 trillion hole in the profits of the top six carmakers. As it sinks in that higher tariffs are the new normal, pressure is increasing for consolidation, mergers and relocating production facilities to the U.S.Figuring out how to manage Japan’s threatening ally is an urgent priority. Abe Shinzo was known as the Trump whisperer, his closest friend on the international stage, but that didn’t stop heavy tariffs on aluminum and steel products. Flattering, placating, and kowtowing only seem to spark escalating demands while defiance risks retaliation. The U.S. will also be asking for a sharp increase in the amount of money Tokyo pays Washington for hosting 54,000 U.S. troops on bases in Japan. Currently, Japan has agreed to spend $8.6 billion between 2022-2027, but the U.S. will certainly ask for a significant increase. Given the riskier threat environment in East Asia due to China’s regional hegemonic ambitions and North Korea’s nuclear saber-rattling, Tokyo has little negotiating leverage. Takaichi’s support for a whitewashed version of Japan’s shared history with Asia and regular visits to the controversial Yasukuni Shrine will roil relations with China and South Korea and sap momentum from the recent thaw in ties with Seoul.Although Tokyo will probably meet its 2022 pledge to double defense spending to 2% of GDP by 2027, the Trump administration is lobbying for a 3.5% target, a big ask in a nation awash in debt and prospects for escalating social welfare outlays for a rapidly aging population. Currently, about 30% of the population is 65 years or older and social welfare spending accounts for 33.2% of the national budget. Takaichi will have to walk that tightrope of competing priorities, knowing she is ruling on borrowed time and must face voters by October 2028.