The CSPC Dispatch - July 25th, 2025

This will be our last issue before the CSPC newsletter takes a well-deserved summer break in August. We will be back with more analysis and commentary in September. 

Click on the image to explore our recently launched Democracy Innovation Timeline!

This week, we launched a new interactive resource as part of our Quarter Millennial Project: the Democracy Innovation Timeline. This tool features over 50 entries highlighting how reform and renewal have shaped American democracy, from the first primary election to the Reconstruction Amendments and the Presidential Election Day Act of 1845. The timeline demonstrates that democratic innovation is not just possible, it’s an American tradition. We invite you to explore the resource and welcome your feedback on what we intend to be a living project that grows over time.

In today’s issue, CSPC Senior Fellow Robert Gerber explores the prospects of an EU–US trade deal, Senior Fellow Hidetoshi Azuma examines the implications of Japan’s recent upper house elections, and Sitara Gupta analyzes India’s singular approach to geopolitics and how the country is adapting to a changing global order.

As always, we hope you find the Dispatch informative and welcome your feedback on how we can continue to improve. 


Deal or No Deal

By Robert W. Gerber

 

Container ship in Port Koper, Slovenia. (CC BY-SA 4.0)

 

The Financial Times reported July 23 that the United States and the European Union would soon announce a new trade accord that would set a 15% tariff on EU exports to the United States in exchange for expanded market access for certain U.S. goods exported to the EU market. This arrangement could include lowering EU tariffs on American-built cars, according to a Washington-based trade lawyer who was involved in previous transatlantic negotiations. EU goods exports to the United States face a potential tariff hike to 30% beginning August 1, which is the extended deadline the White House set for countries “to remedy non-reciprocal trade arrangements and align sufficiently with the United States on economic and national security matters.” Earlier this year President Trump declared that goods trade deficits constituted an “unusual and extraordinary threat to the national security and economy of the United States” and levied “reciprocal” tariffs of 11%-49% on dozens of countries with whom the United States runs a trade deficit. A baseline 10% tariff applies to all imports.

The EU is the top U.S. trading partner and EU-based companies make up the largest source of foreign investment in the United States (Japanese companies are second). The United States had a goods trade deficit of $236 billion in 2024 (alongside a surplus in services trade). Nevertheless, trade negotiations with Europe have been notoriously difficult, thwarted by behind-the-border issues like product testing, standards, and differences over agriculture. White House advisor Peter Navarro told Bloomberg TV July 23 that EU automobile tariffs, barriers to U.S. agriculture exports, digital services taxes, and the Value Added Tax (VAT) are top White House concerns. U.S. Secretary of Commerce Howard Lutnick expressed optimism about reaching a deal with the EU and said that ongoing negotiations could continue after August 1 (with reciprocal 30% tariffs in effect).

The EU has never been shy to retaliate against unilateral measures it deems illegal under World Trade Organization rules, as it did in 2018 in response to U.S. steel and aluminum tariff measures. The European Commission already pre-approved a retaliatory measure if it can use if reciprocal tariffs kick in. The EU could also consider applying its Anti-Coercion legislation, which was developed to respond to unilateral actions by other countries (like China) that affect EU interests.

What do recent White House trade deals tell us about what a U.S.-EU deal might look like? The “U.S.-UK Economic Prosperity Deal” announced May 8 affirmed a 10% baseline tariff on U.S. imports from the UK and a tariff reduction from 25% to 10% on up to 100,000 UK-made vehicles. The deal also opens the door for elimination of Section 232 duties on aluminum and steel imports contingent on secure supply chains. The UK offered market openings on some U.S. beef and ethanol exports. Other behind-the-border regulatory harmonizations will be implemented over time. The UK government confirmed these provisions, which were later reinforced by a White House executive order.

Implications of the U.S.-Japan deal are harder to figure out. The White House issued a fact sheet July 23 that announced a 15% reciprocal tariff on Japanese goods including on autos (down from 25%) and that Japan would accept U.S.-spec vehicles. The fact sheet also states that Japan will invest $550 billion “to rebuild and expand core American industries” and that the United States would retain 90% of the profits from this investment. To date, the Japanese government has not issued a statement confirming these details.

President Trump announced an agreement with the Philippines that guaranteed tariff free access for U.S. goods and a 19% U.S. tariff on imports from the Philippines. Like Japan, the government of the Philippines has not confirmed details of the agreement – which may include a defense component. The announcement drew criticism for its “one sidedness” in the Manila Times. The United States and Indonesia issued a joint statement on their “Framework for Reciprocal Trade” that set the U.S. tariff rate on Indonesian exports at 19% and committed Indonesia to work toward removing tariff barriers including (potentially) accepting U.S. product standards and testing requirements including for automobiles. The agreement may allow lower U.S. tariffs on Indonesian critical minerals. The deal also takes note of pre-ordained purchases of U.S. aircraft and agricultural commodities.

The EU, South Korea, Canada, and other trading partners seeking relief from reciprocal tariffs could infer from these recent deals that a 10% or 15% baseline tariff is the floor, and that a commitment to negotiate regulatory harmonization at a future date is a potential way forward. They also may see flexibility on U.S. Section 232 steel and aluminum tariffs if like the UK they put in place measures to secure supply chains. They would be smart to propose collaboration on critical minerals supply chains or other ways to bolster U.S. national security. However, President Trump’s demands for purchase or investment commitments would be a challenge for a bloc like the EU, which represents 27 sovereign countries wherein companies make their own investment decisions.

The Trump Administration faces its own set of challenges even as it declares wins in the trade arena. The tactical choice to use unilateral tariff threats to procure foreign government concessions incurs a cost in the form of less support for bilateral cooperation among foreign audiences. The Administration’s stated objective of boosting American manufacturing may be at odds with the President’s other goal of maintaining high tariffs because more than half of U.S. imports are manufacturing inputs. The announcement of deals with the UK, Japan, and Indonesia calmed markets for a day but do not mitigate long-term uncertainty in global markets. If the results of these trade agreements remain unsettled, organizations are likely to delay significant investments and purchasing decisions. The Administration's use of the International Emergency Economic Powers Act for tariffs is legally contested and may be overturned. When the Biden administration negotiated several executive trade "frameworks," members of Congressional trade committees argued that trading partners would be more likely to make significant commitments if trade agreements were formalized into law. This argument applies today as well.

Robert W. Gerber is a Senior Fellow at CSPC.


Shigeru Ishiba’s War on Japan’s 1955 System

By Hidetoshi Azuma

 

Launching convention of the Liberal Democratic Party of Japan in 1955.

 

In the sweltering heat of a Japanese summer, Prime Minister Shigeru Ishiba’s premiership abruptly descended into chaos earlier this week. Less than a year into his tenure, which began in October 2024, the Liberal Democratic Party (LDP) under his leadership suffered a devastating blow in the July 20, 2025, upper house election, where the ruling coalition lost its majority in the House of Councillors. This defeat marks the latest in a series of electoral setbacks—often dubbed the “triple election loss”—including the LDP’s failure to secure an outright majority in the lower house in October 2024 and subsequent by-election humiliations that have eroded the party’s grip on power. For a party that has dominated Japanese politics for nearly seven decades, these losses signal not just a crisis of leadership but a fundamental rupture in the political order. Ishiba, long an LDP insider with outsider credentials, now finds himself at war with the very system that propelled him to the top—a conflict that may finally bury the last remnants of the so-called 1955 System.

The 1955 System, named for the year the LDP was founded through a merger of conservative factions with covert U.S. support, refers to the era of uninterrupted LDP dominance that lasted until 1993, with only brief interruptions thereafter. It was characterized by factional horse-trading, pork-barrel politics, and a cozy alliance between big business, bureaucrats, and politicians that ensured stability at the cost of genuine reform. Even after its perceived “end” in the early 1990s amid corruption scandals, the LDP’s resilience allowed it to reclaim and maintain power, often through coalitions and backroom deals, leading the old Cold War-era political system to unceremoniously survive well into the 21st century. Yet, Ishiba’s rocky premiership has exposed the system’s fragility in a modern Japan grappling with economic stagnation, demographic decline, and geopolitical pressures.

The immediate trigger for the crisis was the upper house vote, where the LDP and its junior partner Komeito secured only around 41 of the 125 contested seats, falling short of the 50 needed for a majority. This result left the LDP without control of either parliamentary chamber for the first time since 1955, a historic nadir that has emboldened opposition parties like the Constitutional Democratic Party (CDP) to consider no-confidence motions. Voters, frustrated by rising rice prices, inflation, and perceived mishandling of U.S. trade negotiations under President Trump’s tariff threats, punished the LDP. The surge of populist parties, such as the far-right Sanseito with its “Japan First” anti-immigration rhetoric, which gained 14 seats, further fragmented the political landscape. Ishiba, who campaigned on promises of rural revitalization and defense reforms, failed to connect with an electorate weary of the LDP’s scandals and inertia.

Yet the real drama unfolds within the LDP itself, where internal tensions have boiled over into open rebellion. Ishiba, a maverick known for his criticisms of past leaders and advocacy for dissolving the party’s powerful factions, has alienated key figures. Chief among them is former Prime Minister Taro Aso, the octogenarian leader of a major LDP faction and a pillar of the old guard. Aso, who reportedly declared he “couldn’t accept” Ishiba remaining in office, has led the

charge against the prime minister, viewing him as a disruptor who lacks the factional loyalty that defined the 1955 System. Aso’s faction, once a kingmaker, resents Ishiba’s rise, which came amid the dissolution of LDP factions in 2024 following slush-fund scandals that toppled his predecessor, Fumio Kishida. Ishiba’s anti-faction stance, while popular with the public, has fractured the party’s internal cohesion, turning what was once a disciplined machine into a cauldron of discontent. Mid-level lawmakers, facing electoral wipeouts, now openly question Ishiba’s viability, with some calling for his resignation to avert further damage.

Amid this infighting, Ishiba’s survival strategy hinges on pragmatism and selective alliances with former rivals. He has vowed to stay on, emphasizing the need to implement a newly negotiated U.S.-Japan trade deal to shield the economy from tariffs—a pivotal issue that could define his legacy. Crucially, Ishiba is leaning on relationships with two former prime ministers who represent a bridge between the old system and potential reform: Fumio Kishida and Yoshihide Suga. Kishida, Ishiba’s immediate predecessor, threw his support behind Ishiba during the 2024 LDP presidential election, helping him edge out competitors in a field weakened by scandals. Their alliance stems from shared views on fiscal responsibility and security policy, with Kishida’s endorsement providing Ishiba a veneer of continuity. Similarly, Suga, who served as chief cabinet secretary under Shinzo Abe before his brief 2020-2021 premiership, offers practical counsel. Known for his administrative prowess and reformist bent—such as pushing digitalization—Suga has advised Ishiba on navigating bureaucratic hurdles.

In a telling move, Ishiba met with Aso, Kishida, and Suga on July 23, 2025, to discuss the “sense of crisis” post-election. While Aso remained critical, the gathering with Kishida and Suga suggests Ishiba is courting their backing to form ad hoc coalitions or poach support from smaller parties, such as the Democratic Party for the People (NDPP). This approach—bypassing traditional factional blocs in favor of policy-driven partnerships—marks a departure from the 1955 System’s rigid hierarchies. Ishiba denies discussing resignation in these talks, instead framing his persistence as essential for stability amid U.S. trade volatility. His game plan: Weather the storm by delivering on economic promises, such as tariff relief, while quietly building a reformist bloc within the LDP that prioritizes national interests over personal loyalties.

But herein lies the ultimate irony: Ishiba’s very efforts to survive could put the final nail in the coffin of the 1955 System. By challenging factionalism and embracing outsider politics, he has unwittingly—or perhaps deliberately—dismantled the mechanisms that sustained LDP hegemony for more than half a century. The loss of both parliamentary majorities echoes the 1993 collapse, when corruption led to the LDP’s first ouster. Today, with populists rising and voters demanding accountability, the party can no longer rely on its postwar playbook. Ishiba’s premiership, born from the ashes of scandals under Abe, Suga, and Kishida, has exposed the LDP’s vulnerabilities: An aging leadership, out-of-touch policies, and a failure to adapt to a multipolar world increasingly driven by U.S. President Donald Trump’s America First policy. If he clings to power, it could splinter the party further, inviting opposition coalitions or even a snap election. If he falls, his successor might revert to old ways, but the irreparable damage is done—the system’s coffin is nailed shut.

Japan stands at a crossroads. Ishiba’s war on the 1955 System, whether intentional or accidental, offers a chance for renewal: A more pluralistic democracy, responsive to global

challenges like China’s rise and climate change. Yet it also risks instability in a nation that prizes consensus. As Ishiba battles on, one thing is clear: The LDP’s era of unchallenged rule is finally over, increasingly plunging Tokyo into a Hobbesian power struggle of all against all. Next month looks to be another watershed one determining Japan’s future.

Hidetoshi Azuma is a Senior Fellow at CSPC.


Walking the Line: India’s Global Balancing Act in a Divided World 

By Sitara Gupta

 

President Donald J. Trump hosts Indian Prime Minister Narendra Modi at the White House in February 2025. (Photo Credits: The White House)

 

When Russian armed forces massed on Ukrainian borders in February 2022, many Western observers assumed India would join in global condemnation of Russia’s full-scale invasion. Instead, India resisted taking sides and increased efforts to gain cheaper Russian oil imports while maintaining a continuous dialogue with Moscow. In the years since, India also signed multiple agreements with the United States, strengthened the Quadrilateral Security Dialogue (QUAD) with the United States, Japan, and Australia, and received a warm reception in Washington during Indian Prime Minister Narendra Modi’s visit in February 2025. For expert observers, India’s two-track foreign policy has been both strategically compelling and at times frustrating—a case study in contemporary non-alignment. 

India’s singular approach to geopolitics is anything but novel. As a leader of the Non-Aligned Movement (NAM) during the Cold War, India abstained from declaring allegiances amid major power rivalries. Today, this philosophical commitment to independence has evolved into what New Delhi terms strategic autonomy—a dedication to independent and interest-driven decision-making, multi-alignment, and pragmatic engagement within a new global order. 

In response to the Ukraine crisis, the West has escalated economic pressures on Russia for more than three years. As recently as July 16, 2025, the North Atlantic Treaty Organisation (NATO) Secretary General Mark Rutte warned of secondary sanctions on countries purchasing Russian exports. Yet India’s ties with Russia are long-standing and enduring, and Moscow remains a key supplier of energy and defense systems. At the All India Petroleum Dealers Association (AIPDA) Conclave on July 17, 2025, for instance, Indian Minister of Petroleum and Natural Gas Hardeep Singh Puri confirmed that Russia contributes to about 35% of India’s total oil imports. Decades of cooperation between the two nations has also resulted in India procuring around $13 billion in military equipment over the past five years, accounting for approximately 20% of Russia’s total arms exports.

India has made its independent stance clear: it will consistently prioritise national interests and pragmatism over external pressures to take sides in geopolitical rivalries. Should complications with Russia arise, however, India has shown a willingness to adapt through diversification. At the same conclave earlier this month Minister Puri added, “India has diversified the sources of supply…from about 27 countries that we used to buy from to about 40 countries now.” New Delhi’s dependence on Moscow is clearly not ideological, but rather a determination driven by an obligation to protect the interests of its 1.4 billion people.  

At the same time, India has an increasingly close relationship with the United States. Washington and New Delhi have signed a number of defence agreements, including the U.S.-India Catalyzing Opportunities for Military Partnership, Accelerated Commerce & Technology (COMPACT); Communications Compatibility and Security Agreement (COMCASA); Basic Exchange and Cooperation Agreement (BECA); and Initiative on Critical and Emerging Technology (iCET). India has also purchased about $24 billion in U.S. military hardware since 2008, and U.S. aerospace equipment is now being manufactured in India. Soft power engagements between the two countries have also increased, and the Indian diaspora’s success in American universities and industries have led most Indians to hold a broadly favorable view of the United States. Notably, the closeness of this value-based relationship has grown despite changes in political parties and leadership on both sides.

India’s inclusion in the QUAD, alongside the U.S., Japan, and Australia, illustrates a shift towards more economic and technological interdependence, specifically in the Indo-Pacific arena. After the 10th QUAD Foreign Ministers’ Meeting held in Washington on July 1, 2025, there has been a deeper sense of collaboration on maritime security, with the formation of the first-ever Quad-at-Sea Ship Observer Mission. The recently launched Quad Critical Minerals Initiative also indicates a shared commitment to fortifying economic and energy security between the four countries. As India prepares to host the next QUAD meeting later this year, outcomes will be closely followed that may alter the future of the Indo-Pacific. 

While India’s participation in the QUAD diplomatic partnership reinforces the U.S. view of New Delhi as a natural ally and regional counterbalance to China, however, expectations should be in check. If a conflict between China and Taiwan were to erupt, for instance, India is unlikely to provide anything beyond verbal support for the American position. It is important to remember that India’s position is shaped by its complex geography: it not only shares a historically contested border with China but, as two ancient civilizations, both countries have deep historical ties across Asia. Full alignment with any bloc could heighten tensions between the two neighbours. For India, being non-aligned is thus a pragmatic necessity that creates freedom to maneuver, especially as China tightens its “No Limits” partnership with Russia.

At the 2025 Aspen Security Forum that concluded on July 18, 2025, India’s instincts for non-alignment in the economic sphere were also visible when the question of a U.S.-India trade deal was discussed. Shaurya Doval, founder of the India Foundation and member of ruling Bharatiya Janata Party (BJP), noted that U.S. pressure for greater agricultural market access conflicts with India’s domestic reality, where more than 60% of the population banks on farming. Even the potential expansion of H-1B Specialty Occupation Visas in exchange for Indian trade concessions was considered a nonstarter if it compromised India’s core interests. As Doval noted, “While a deal with the U.S. is desirable, it is not the end if it doesn’t happen.” The United States, he implied, must see India solely as a democratic partner, not a dependent one. 

While India’s path will sometimes necessarily differ from the United States, it is increasingly viewed as one of the most important voices of the Global South. New Delhi’s deeper engagement with BRICS countries, in addition to Brazil, Russia, China, and South Africa, indicates a pragmatic drive towards greater relevance in an increasingly multipolar world. Although the West may view the rise of the BRICS with discomfort given the change in global power dynamics they represent, India’s efforts to facilitate smoother exchanges between Global South nations and other geopolitical blocs should be seen as a recognition of changing geopolitical realities, and not as a challenge to the United States. 

Sitara Gupta is a CSPC intern and recent graduate of the University of California, Berkeley.


CSPC IN THE NEWS

If You Can Keep It: The United States at 250

Originally published on NPR WAMU 1A on July 14th, 2025:

President & CEO Glenn Nye was featured on NPR’s 1A segment, “If You Can Keep It: The United States at 250.” In the conversation, Glenn reflects on the role of innovation in sustaining a healthy democracy and emphasizes that reflection must be paired with action to carry forward our legacy of reform.

Listen to the full segment here.

Post success at The Hague summit, the real NATO work remains

Originally published in Breaking Defense on July 14th 2025:

The NATO Summit in The Hague delivered a major milestone — a 5% GDP defense spending pledge — but as CSPC’s Joshua Huminski writes in his latest op-ed for Breaking Defense, the real work starts now.

Read the full piece here.

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The CSPC Dispatch — July 11, 2025