Business Impacts of Japan’s New PM Sanae Takaichi

Tomoko Hosaka Mullaney
Executive Director, U.S.-Japan Business Council

Published

October 22, 2025

The election of Sanae Takaichi as Japan’s first female prime minister is more than symbolic: it marks a shift in Japan’s political and economic trajectory. Known for her conservative ideology, assertive national security stance, and deep interest in strategic industries, Takaichi brings a distinctly interventionist and security-focused approach to governance. Her coalition with the Japan Innovation Party (Ishin) enables bold moves in defense, energy, and industrial policy—but it also introduces new political complexities.

As we will discuss on the October 23 episode of The Call, the U.S. Chamber’s weekly show focused on geopolitical analysis, Takaichi governs without a parliamentary majority. The LDP–Ishin coalition falls just short of control in both chambers of the Diet, and Ishin has opted not to take ministerial posts, offering support “outside the Cabinet.” This arrangement gives Ishin flexibility to walk away if its priorities are not met, leaving Takaichi vulnerable to legislative gridlock and internal dissent. For U.S. companies, this means policy volatility may be a real risk.

Takaichi has tapped highly experienced policymakers for her Cabinet including Foreign Minister Toshimitsu Motegi, Minister of Economy, Trade, and Industry Ryosei Akazawa, Defense Minister Shinjiro Koizumi, and Minister of Internal Affairs and Communications Yoshimasa Hayashi.

For U.S. companies operating in or with Japan, it will be important to stay agile, informed, and engaged, and to leverage strategic openings while preparing for policy shifts, regulatory changes, and geopolitical uncertainties.

Here are five areas to watch in the months ahead:

1. U.S.-Japan Relations and Strategic Alignment

Takaichi’s premiership carries significant implications for the U.S.-Japan relationship. She has pledged to “elevate Japan-U.S. relations to even greater heights” and uphold a recent trade and investment agreement with the U.S., which includes Japan’s commitment to invest $550 billion in American strategic sectors. Her ideological alignment with President Donald Trump—who is scheduled to visit Japan on October 27—could foster personal rapport and policy continuity.

Opportunities for U.S. firms in sectors prioritized by both governments, including semiconductors, energy, and defense.
Risks of a more transactional relationship, especially if bilateral negotiations become politicized.

Watch for: Outcomes from the Trump-Takaichi meeting and follow-up on the $550 billion Japan-U.S. investment agreement.

2. A More Assertive Security and Defense Posture

Takaichi’s coalition with Ishin enables the ruling bloc to push forward on defense spending hikes, loosen arms export rules, and advance constitutional reform. This shift could open new avenues for:

U.S.-Japan defense co-production and technology sharing.
Expanded procurement opportunities in aerospace, cybersecurity, and dual-use technologies.

Watch for: Legislative moves on arms exports and constitutional amendments, which could reshape Japan’s defense industry and its partnerships with U.S. firms.

3. Economic Security and Supply Chain Realignment

As a former Minister of Economic Security, Takaichi is expected to prioritize strategic autonomy in critical sectors. Her administration will likely focus on:

Strengthening domestic production of semiconductors, pharmaceuticals, and rare earths.
Tightening foreign investment screening in sensitive industries.
Reducing reliance on Chinese supply chains.

Watch for: New compliance regimes and bilateral initiatives aimed at securing supply chains—especially in tech, life sciences, and advanced manufacturing.

4. Energy Policy: Nuclear Revival and Domestic Innovation

Takaichi supports restarting nuclear reactors and investing in next-generation technologies like fusion and perovskite solar cells. Her goal of “100% energy self-sufficiency” reflects a broader push for energy resilience.

Opportunities for U.S. firms in nuclear engineering, grid modernization, and renewable tech.
Risks tied to public sentiment and potential import restrictions on foreign-made solar components.

Watch for: Infrastructure investment plans and regulatory shifts in energy tech and renewables.

5. Industrial Strategy and Strategic Investment

Takaichi’s broader economic vision centers on revitalizing Japan’s industrial base through targeted investment, public-private partnerships, and strategic sector prioritization. Her administration is likely to focus on:

Semiconductors, defense tech, and biotech as engines of growth.
Regional revitalization through infrastructure and innovation zones.
Public-private investment platforms to attract foreign capital and scale domestic innovation.

Watch for: New industrial policy frameworks and investment incentives that align with U.S. strategic sectors—especially in advanced manufacturing, life sciences, and energy.