TOKYO. Japan’s ruling coalition has lost control of the upper house in Sunday’s election, according to public broadcaster NHK, delivering another blow to Prime Minister Shigeru Ishiba as he faces mounting domestic unrest and a looming trade deadline with the United States.

While the upper house election does not directly determine the fate of Ishiba’s administration, the result adds to the political pressure already bearing down on the prime minister, who lost control of the more powerful lower house in October.

NHK reported early Monday that Ishiba’s Liberal Democratic Party (LDP) and its coalition partner Komeito are expected to fall short of the 50-seat threshold required to control the 248-seat upper chamber, with only six races left to be decided. Half the chamber’s seats were contested in the election.

This latest electoral setback follows the coalition’s worst performance in 15 years during the October lower house vote. That result left Ishiba’s government exposed to no-confidence motions and internal party calls for leadership change.

Speaking to NHK after the release of exit polls, Ishiba said he “solemnly” accepted the “harsh result.” In a separate interview with TV Tokyo, he emphasized the need to stay focused on critical trade talks with the United States, saying, “We are engaged in extremely critical tariff negotiations… we must never ruin these negotiations. It is only natural to devote our complete dedication and energy to realizing our national interests.”

When asked if he planned to remain as prime minister and LDP leader, Ishiba responded, “That’s right.”

Japan, the world’s fourth-largest economy, faces an August 1 deadline to reach a trade agreement with the U.S., or risk facing punitive tariffs in its largest export market.

The opposition Constitutional Democratic Party is set to finish second, vote tallies show. Meanwhile, the far-right Sanseito party, which first gained traction through YouTube and social media during the COVID-19 pandemic, is poised to make significant gains. Riding on its “Japanese First” campaign and anti-immigration rhetoric, the party is expected to win at least 13 new seats, in addition to one it already held.

Opposition parties calling for tax cuts and increased welfare spending resonated with voters amid rising living costs, particularly the soaring price of rice. Analysts say the LDP’s opposition to reducing the consumption tax placed it at odds with the electorate.

“The LDP was largely playing defence in this election, being on the wrong side of a key voter issue,” said David Boling, a director at consulting firm Eurasia Group. “Polls show that most households want a cut to the consumption tax to address inflation, something that the LDP opposes. Opposition parties seized on it and hammered that message home.”

The LDP has promoted fiscal restraint to avoid spooking Japan’s government bond market, already wary due to the country’s massive national debt. Analysts warn that any concessions the ruling party makes to win opposition support may lead to increased government spending and financial market instability.

“The ruling party will have to compromise in order to gain the cooperation of the opposition, and the budget will continue to expand,” said Yu Uchiyama, a politics professor at the University of Tokyo. “Overseas investors’ evaluation of the Japan economy will also be quite harsh.”

Sanseito, which gained notoriety for spreading conspiracy theories and anti-vaccine rhetoric during the pandemic, has increasingly brought its anti-immigration stance into the political mainstream. The party’s surge has drawn comparisons to far-right groups like Germany’s AfD and the UK’s Reform Party.

“I am attending graduate school but there are no Japanese around me. All of them are foreigners,” said 25-year-old Yu Nagai, who voted for Sanseito in Tokyo’s Shinjuku ward. “When I look at the way compensation and money are spent on foreigners, I think that Japanese people are a bit disrespected.”

Despite a record 3.8 million foreign-born residents in Japan last year, they still comprise just 3% of the population, a far smaller proportion than in Western countries. However, the rise in visible foreign presence, driven in part by tourism, is reshaping Japan’s political conversation.