A gamble by Japanese Prime Minister Sanae Takaichi to hold a snap election soon after taking power has paid off handsomely, handing her Liberal Democratic Party (LDP) a historic landslide that effectively gives her a free hand in opposing China, assuaging U.S. President Donald Trump, and providing handouts to voters hit by rising inflation.

The election also provides a new lease on life for the long-ruling LDP, which appeared in serious trouble after disastrous results in the October 2024 election, when the party, along with its coalition partner, lost its majority in the House of Representatives, the more powerful, lower house of Japan’s parliament. With the rise of new more telegenic parties with a right-wing bent, there was talk that the reign of the LDP, which has ruled the country for all but six of the last 70 years, might finally be over.

A gamble by Japanese Prime Minister Sanae Takaichi to hold a snap election soon after taking power has paid off handsomely, handing her Liberal Democratic Party (LDP) a historic landslide that effectively gives her a free hand in opposing China, assuaging U.S. President Donald Trump, and providing handouts to voters hit by rising inflation.

The election also provides a new lease on life for the long-ruling LDP, which appeared in serious trouble after disastrous results in the October 2024 election, when the party, along with its coalition partner, lost its majority in the House of Representatives, the more powerful, lower house of Japan’s parliament. With the rise of new more telegenic parties with a right-wing bent, there was talk that the reign of the LDP, which has ruled the country for all but six of the last 70 years, might finally be over.

But, as with the U.S. Republican Party, the new LDP is in effect a party of one, at least for now. Heading into Sunday’s election, Takaichi was boasting approval ratings of 57-68 percent, compared with just 30 percent for the party overall.

Her popularity propelled the LDP to 316 of 465 seats in the House of Representatives. Most importantly, it gives the party a two-thirds supermajority for the first time in post-World War II history. This lopsided result means it can override vetoes by the upper house. Japan’s House of Councillors has its own election schedule and is still controlled by the opposition and therefore could have been a brake on Takaichi.

The LDP has traditionally been run on a system of collective leadership, with senior party figures and factions jostling for power while presenting a unified face in public. This result gives Takaichi a rare chance to turn things into a one-woman show. But her leadership isn’t certain. Questions remain over whether Takaichi’s burst of popularity will endure and how the financial markets will react to plans for greater spending that puts more pressure on Japan’s finances.

The results also showed that young people in Japan are growing more restive amid economic and political uncertainty, embracing the populist, far-right takes of new parties that look for easy scapegoats. Among the villains are foreigners, even though they represent just 3 percent of the population and are seen by employers as an increasingly important component of the economy as Japan continues its long demographic decline. To help drive home the point, social media posts highlight badly behaved foreign tourists, especially those from China, ignoring the frequent, rather unsightly behavior of drunken Japanese salarymen.

As part of her bid to draw back this voting bloc to the LDP, Takaichi has embraced a “Japan first” approach. When running to become head of the party, and therefore prime minister, last fall, she expressed outrage over what she said were incidents of foreigners kicking the tame deer that roam around Japan’s Nara Park. It was not clear if the incident actually happened—or what the behavior of a few foreign tourists has to do with a rational immigration policy.

Takaichi has also brought the ire of Beijing with her statements in parliament on the threat posed of any Chinese action against Taiwan and how that might allow the Japan Self-Defense Forces to intervene in any such conflict. While the comments reflected those of previous leaders including Shinzo Abe and Taro Aso, the formal setting of parliament was apparently too much for China. It also provided Beijing with the chance to test the waters of how far Japan would be willing to go in the face of its economic interests. China is Japan’s largest export market and potentially even more important in the face of numerous trade threats by Trump.

Her brash behavior has proved to be part of the charm, however, especially for usually apathetic younger voters who have long been a political black hole. This was a crucial factor in Sunday’s election, with polls just before the vote putting Takaichi’s support level at nearly 90 percent among the 18-29 age group, especially among younger women.

She has played up her anti-establishment demeanor, showing up at the prime minister’s official residence for the first time in a sweatsuit, engaging in a K-pop drum duet with Korean President Lee Jae-myung, and winning an endorsement from Trump. She duly thanked the U.S. president for his support, conveniently omitting the fact that this was the same man who boasted last year of extorting $550 billion from Japan in the form of mandatory U.S. investments in exchange for not torpedoing imports by Japanese automakers.

All this bravado played out well on social media and was in sharp contrast to the main opposition group, a hastily formed coalition that ran under the uninspiring name of the Centrist Reform Alliance (CRA) with an equally uninspiring agenda that promised more of the same—exactly what people did not want.

The CRA failed to benefit from the participation of Komeito, which had been allied with the LDP for 26 years before finding it could not do business with Takaichi and pulled out of the coalition. Representing more than 8 million members of the Soka Gakkai religious group, the party had been Japan’s most reliable get-out-the-vote organization. But in the face of Takaichi, Komeito and the Constitutional Democratic Party of Japan, the CRA’s other member, found themselves looking like yesterday’s answers. The two parties lost more than two-thirds of their seats, ending up with 49 in all.

Demographics clearly played a key role. According to exit polling by the Asahi newspaper, the coalition took less than 10 percent of the vote among those 40 and under.

But support for Takaichi was broader as well, with the LDP winning in all age groups and among those who don’t just follow social media. “We have had 30 years of no change and no progress. Takaichi looks like she is willing to try new things. If they don’t work, we can try other things. But we must try something new,” one senior executive at a leading Japanese multinational said.

The main risk ahead for the prime minister is in her economic program. Her promises of a multitude of wonderful outcomes has brought unflattering comparisons to former British Prime Minister Liz Truss, whose downfall after just 45 days in office represents one of the fastest market rubouts in history.

The issue is how to deal with rising prices that are outpacing growth in wages. Her solution is to suspend the 8 percent consumption tax on food and groceries for a two-year period, thereby helping to alleviate some of the side effects of inflation, rather than the more painful traditional measures to cool inflationary pressures.

This flies in the face of conventional economics since fiscal stimulus typically serves to heat up an economy and feeds into a spiral of price rises, and many economists have reacted accordingly.

“The downsides of consumption tax cuts as an anti-inflation measure are numerous: They offer limited effectiveness; worsen fiscal health, potentially fueling yen depreciation and rising long-term interest rates; and undermine confidence in social security systems funded by the tax, thereby increasing long-term insecurity,” said Takahide Kiuchi, an economist at the Nomura Research Institute and a former board member at the Bank of Japan.

The other immediate problem, Kiuchi and other economists point out, is that increasing Japan’s already gargantuan debt of around 240 percent of annual GDP will further scare the bond market and weaken the yen, which will in turn push up inflation. If the central bank then raises interest rates to defend the yen and cool rising prices, the government would be faced with potentially catastrophic increases in its own borrowing costs. A market sell-off would have implications far beyond Japan.

Seeing these constraints, Takaichi has more recently downplayed the scale of her plans, saying that fiscal soundness remains a concern and claiming that she can cover lost revenue of around $32 billion from a reduced sales tax without issuing additional bonds. The “how” in this is not completely clear and will take some persuasion to convince the markets.

“Crucially, investors should focus less on the immediate election results and more on the political maneuvering that will follow. It is these subsequent developments that will determine the final direction of Japan’s fiscal and monetary policy,” Kentaro Koyama, Deutsche Bank’s chief economist for Japan, said in a note to clients.

The other major area of uncertainty is how durable Takaichi’s support base will be. “The main driver of this outcome appears to be strong support among young voters. Their support seems to have been mobilized more by media- and social media-driven impressions than by substantive policy analysis,” said Masahiro Mogaki, a political affairs specialist at the Keio Economic Observatory in Tokyo.

For the moment, however, Takaichi is clearly running the show—and enjoying it.