LinkedIn | Edelman

With feverish speculation about the imminent calling of a General Election – perhaps as early as 6pm this evening – the Edelman Public Affairs team assesses the likely outcomes ahead and their impact on businesses.

While just three ultimate end states remain the same - no deal, deal, no Brexit – the former is becoming increasingly likely, and the routes to achieve them are also crystallising.

This week will see rebel Conservatives join forces with other parties to seek to extend the Brexit deadline, while Team Johnson has vowed to eject and deselect any Tory MPs seeking to undermine his no deal position.

It is hard to see any outcome being reached without an election being called to give the Prime Minister the majority he craves. The question is whether Labour would vote in favour of an election (which could fall in November), having spent the last three years calling for one, or whether they follow Tony Blair’s advice not to “fall into the trap” of enabling an accidental no deal.

Buckle in for the biggest week in politics since the last. But this time we may well see the real splitting of the Conservative Party and without doubt a test of nerve on all sides.

Click here to read the full analysis.

Latin America Electoral Report: June 2026

Electoral dynamics continue to reshape Latin America’s political landscape. In Colombia, the presidential race heads to a closely contested runoff between Abelardo De La Espriella and Iván Cepeda after a first round marked by historic turnout and growing polarization. In Peru, the runoff campaign is unfolding amid electoral disputes and a fragmented Congress, while in Bolivia, territorial fragmentation and social unrest are testing President Rodrigo Paz’s governability following the end of the MAS era. Meanwhile, in Brazil, early signs suggest that the 2026 presidential election is consolidating into a highly competitive contest between President Lula and Senator Flávio Bolsonaro.

This monthly report by Edelman compiles key developments, insights, and updates on the region’s main electoral processes, featuring analysis developed by our Public & Government Affairs Thought Leadership team in Latin America. Its goal is to provide a concise, strategic overview of the political dynamics shaping the region’s future.

Download here

Japan’s economic security policy is moving beyond supply chain support and into a more operational phase of institutional implementation. The shift now brings together Foreign Exchange and Foreign Trade Act (FEFTA)-based inbound investment screening, prevention of technology and information leakage, protection of critical infrastructure, support for strategic overseas projects, and stronger intelligence coordination at the center of government. Ongoing Diet deliberations point in the same direction.

The 2026 bill to amend the Economic Security Promotion Act is expected to expand Japan’s economic security framework to include services essential to critical goods, healthcare-related infrastructure, overseas strategic projects and stronger policy-analysis functions. This does not mean that Japan is closing its market. Rather, Japan is moving toward “selective openness”: continuing to welcome investment and business expansion while applying closer scrutiny to technologies, data, ownership structures, governance rights, and supply-chain risks that may affect national-security interests.

For companies and investors, regulatory compliance alone will no longer be sufficient. Businesses will need to explain not only whether a filing is required, but also how their technologies, capital structure, data, customer relationships, procurement networks, and post-transaction governance may be viewed by authorities and partners from a national security perspective. Economic security is therefore becoming a management-level issue that should be considered early in:

Investment planning and M&A strategy
Supply-chain design and data governance
Cross-border partnerships

Companies that can identify security-related risks early, design credible mitigation measures, and communicate their approach clearly will be better positioned to navigate Japan’s evolving policy environment and build long-term trust with regulators, business partners, investors, and customers.

Structural Shift: The Economic Security Promotion Act and Response to Economic Coercion

Japan’s economic security policy is moving beyond its initial focus on critical goods and supply-chain resilience. It is entering a more integrated phase of institutional implementation that includes inbound investment screening, prevention of technology leakage, protection of critical infrastructure, and the strengthening of intelligence capabilities. In 2021, the Kishida administration convened the Economic Security Promotion Council, followed by the enactment of the Economic Security Promotion Act in 2022. The Act established the foundation of Japan’s economic security policy through four pillars:

securing stable supplies of critical goods
ensuring the stable provision of critical infrastructure services
supporting the development of advanced critical technologies
introducing a non-disclosure system for sensitive patent applications.

Building on this foundation, Japan is now adding more effective mechanisms for risk management. The 2026 bill to amend FEFTA positions the promotion of inbound direct investment as an important policy priority, while also emphasizing the need to address investments that could harm national security, as security concerns increasingly extend into the economic domain. This indicates that Japan is not moving toward a closed approach to foreign investment. Rather, it is seeking to continue accepting investment while more precisely assessing substantive control structures, access to technologies and information, and potential impacts on supply chains.

Alongside these developments, Japan is also moving to strengthen its national intelligence capabilities as a foundation for more effective institutional implementation. The bill to establish the National Intelligence Council would create a body within the Cabinet to deliberate on important matters related to information collection and analysis activities that support key national policy decisions. The government also plans to establish the National Intelligence Bureau as the secretariat of the Council, to strengthen the collection, analysis, and overall coordination of information that is currently dispersed across ministries and agencies.

At the same time, the scope of economic security is expanding beyond domestic regulation and defense-related industries to include overseas business, international transport networks, critical infrastructure including healthcare, and policy-analysis functions. The 2026 bill to amend the Economic Security Promotion Act, which passed the House of Representatives on May 19, 2026 and was sent to the House of Councillors, includes support for overseas projects that contribute to the resilience of international transport networks, new provisions related to services essential to the supply of designated critical goods, the addition of healthcare to the critical infrastructure framework, and the strengthening of research and analysis on economic measures related to national security. As a result, economic security is expanding from a policy focused mainly on protection to one that also supports Japanese companies’ overseas expansion and the development of resilient supply chains.

This shift means that Japan’s economic security policy is no longer only a matter of domestic institutional design. It has become a theme that directly affects the decision-making of global companies and investors. In future inbound investment and M&A transactions in Japan, price and growth potential will not be the only factors that matter. Technologies, data, supply chains, and post-acquisition control structures will increasingly influence whether a transaction is considered viable from a national security perspective. For companies, regulatory compliance alone will not be sufficient. They will need to be able to explain their risk mitigation approach to technologies, capital structure, data, and business relationship that may be viewed as security-related risks by authorities and partners.

Investment Screening Reform: Amendments to FEFTA and Japan-style CFIUS

FEFTA remains the legal foundation of Japan’s foreign-investment review system. Unlike the Committee on Foreign Investment in the United States, or CFIUS model, which is built around a smaller number of deeper case reviews, Japan’s system already operates as a broad front-end screening regime. In fiscal year 2024, the Ministry of Finance (MOF) recorded 2,903 prior notifications for inward direct investment and related transactions. Around 79% of those filings were screened within 14 calendar days, and the average review period was 8.2 business days. At the same time, the system is not merely procedural: withdrawals, non-notified cases, administrative dialogue, and refiling are already important parts of how the regime works in practice.

The 2026 FEFTA amendment bill would make that regime more explicitly national-security-oriented. The MOF’s Japanese bill summary frames the reform around two objectives: continuing to promote sound inward direct investment while responding to the rapid expansion of security concerns into the economic domain. The bill would bring into scope certain indirect acquisitions, where a foreign investor acquires 50% or more of the voting rights in a foreign entity that itself holds covered shares in a Japanese company. It would also require investors to notify proposed risk-mitigation measures relating to national security, and to notify changes to those measures. In addition, the bill would deem certain nominee or contractual arrangements to be transactions by foreign investors, strengthen reporting and possible disposal-related measures for high-risk non-notified transactions, and require the Minister of Finance and the competent business minister to seek opinions from the heads of relevant administrative organs where necessary during screening.

This is the most concrete basis for the growing “Japan-style CFIUS” discussion. The phrase is useful shorthand, but it should not be read to mean that Japan is copying the United States wholesale. The official bill materials do not create a new statutory CFIUS-equivalent committee. Instead, Japan appears to be moving toward a more CFIUS-like operating model within FEFTA framework: more attention to control and beneficial ownership, more focus on mitigation, more interagency consultation, and greater sensitivity to indirect acquisition structures. This direction is also consistent with recent changes that expanded FEFTA core sectors and tightened the exemption framework for certain investors, reflecting greater concern over supply chain protection, technology leakage, military diversion risk and investor attributes.

The practical effect is that FEFTA review is becoming less of a box-checking exercise and more of a national security assessment. The government’s published screening factors already show that authorities consider whether an investment could affect production or technology bases relevant to national security; whether technologies or sensitive information could be leaked or misused; whether supply conditions, stability or quality could be affected; and whether the investor’s capital structure, beneficial ownership, business relationships, foreign-government influence, or compliance history create risk. They also look at the specific rights the investor may exercise after closing, including board or auditor appointments, access to non-public technical or systems information, participation in management committees, and proposals that impose deadlines or pressure on management.

For companies and investors, this means the key question is no longer only whether a filing is technically required. It is whether the transaction can be explained credibly from a national security perspective. Low-risk filings may continue to move quickly, as the fiscal year 2024 timing data suggest, but transactions involving control, dual-use technology, sensitive data, critical supply chains, defense-linked customers, or opaque ownership structures are likely to face a more searching review. The parties should therefore prepare a security narrative early: who ultimately owns and controls the investor; whether any foreign-government influence exists; what information and technology the investor will access; how data and sensitive know-how will be ring-fenced; how supply continuity will be protected; and what governance rights the investor actually needs. In this sense, “Japan-style CFIUS” is best understood not as a new institution, but as a gradual hardening and sophistication of Japan’s existing FEFTA system.

Case Study: Implications of the Makino Milling Machine Case

The Makino Milling Machine case shows what Japan’s more security-conscious investment screening environment can look like in practice. On April 23, 2026, the Finance Minister confirmed that the government had issued a recommendation to discontinue MBK Partners’ planned acquisition of Makino under FEFTA. MBK Partners is a South Korea-based private equity firm founded by Korean-born American investor Michael B. Kim, with a dedicated focus on investments in North Asia.

The government’s concern was not simply foreign ownership in the abstract. It focused on Makino’s position in Japan’s defense-relevant manufacturing ecosystem, including:

its role as a world-class machine-tool manufacturer
the use of its products by Japanese defense-equipment manufacturers
the risk of technology or information leakage affecting production bases relevant to national security

The recommendation followed review by the MOF and the Ministry of Economy, Trade and Industry (METI) through the relevant FEFTA process.

Company-side disclosures indicate that mitigation was proposed but did not resolve the authorities’ concerns. MM Holdings, the MBK Partners-related tender offeror, stated that it had spent approximately ten months engaging with Japanese authorities and had proposed risk-mitigation measures while referring to recent CFIUS practice in the United States. Nevertheless, on April 30, 2026, MM Holdings accepted the recommendation, terminated the tender offer agreement with Makino, and decided not to commence the tender offer. The disclosure also referred to information that may not be sensitive on its own but could become sensitive from a national security perspective when combined with other information. This “mosaic” logic suggests that Japanese authorities may focus not only on obvious defense secrets, but also on industrial, technical, procurement, and customer-related information that becomes strategically meaningful when aggregated.

The case is important because mitigation did not save the deal. It shows that Japan’s review is not limited to identifying whether a transaction falls into a sensitive sector. The state may also assess whether proposed mitigation is operationally credible, whether it is compatible with the investor’s intended post-acquisition role, and whether the investor can realistically pursue its value-creation plan without accessing the very information the government wants to protect. Makino also demonstrates that Japan’s historical preference for quiet risk management has limits: where the target is embedded in defense-relevant production, advanced manufacturing or sensitive technology ecosystems, and information access concerns cannot be resolved, the government is prepared to use formal discontinuance powers.

At the same time, Makino should not be over-read as a sign of broad investment closure. It should be read alongside MBK’s reported acquisition of Altemira Holdings, an aluminum business group, which appears to have received FEFTA clearance. Press reports indicate that Altemira also had an economic-security nexus because it handles certain lithium-ion battery-related materials, but the transaction was reportedly cleared through Japan’s prior screening process. The contrast suggests that the issue is not simply whether a company falls within a core sector. Rather, the key factors appear to include the sensitivity of the target’s technologies, its relationship to defense production, the information-access risk created by full ownership, and the credibility of mitigation.

For businesses, the combined lesson from Makino and Altemira is not that foreign capital is unwelcome. Japan still appears to be pursuing “selective openness" rather than blanket restriction. Transactions involving defense-adjacent manufacturing, dual-use technologies, sensitive data, critical infrastructure or hard-to-ring-fence information access may face intense scrutiny, while transactions with a core-sector connection but lower leakage or defense-production risk may still be cleared. For multinational investors, the strategic question is therefore not only “Is this a core sector?” but “How will the Japanese state understand this target’s technologies, data, customers, supply-chain role and post-acquisition governance from a national security perspective?”

Global Benchmark: Comparison with US CFIUS

The United States remains the most relevant benchmark for understanding where Japan’s regime may be heading, even though the two systems are structurally different. US CFIUS is a Treasury-chaired interagency committee that reviews certain foreign-investment and real-estate transactions for national security risk.

The US process is deeper and more discretionary than Japan’s broad prior-notification model. CFIUS filings are generally voluntary, although certain transactions are subject to mandatory filing requirements. Parties may submit a shorter declaration or a full notice, with higher-risk cases potentially moving into investigation, mitigation, or presidential review. If CFIUS clears a transaction, the parties ordinarily receive “safe harbor,” meaning CFIUS will not later reopen the transaction unless certain limited conditions apply, such as false or misleading information.

The 2024 CFIUS data illustrate this narrower-but-deeper model. CFIUS assessed 116 declarations and reviewed 209 notices, moving more than half of the notices into investigation and adopting mitigation measures or conditions in relation to 25 notices. It also monitored 242 mitigation agreements and conditions and conducted 79 site visits, showing the importance of post-clearance monitoring and enforcement.

Japan’s FEFTA system, by contrast, still screens much more widely at the front end. Japan recorded 2,903 prior notifications in fiscal year 2024, compared with CFIUS’s 325 total declarations and notices in calendar year 2024. Most Japanese filings cleared quickly, while the US system devoted more resources to investigations, mitigation monitoring, site visits and enforcement. The difference is therefore not simply that one system is “stricter” and the other is “lighter.” The US model is narrower but deeper; Japan’s model is broader and more administrative.

The 2026 FEFTA amendment bill would narrow that gap, but it would not erase the basic difference. Japan would still not have a US-style CFIUS committee. However, the bill would move Japan closer to a risk-weighted, mitigation-conscious and interagency model by requiring notification of national-security mitigation measures, covering certain indirect acquisition structures, and requiring consultation with heads of relevant administrative organs where necessary. In practical terms, Japan may remain fast for routine filings but become more demanding for transactions involving control, sensitive technologies, defense-linked production, critical infrastructure, strategic supply chains, or foreign-government influence.

For companies, the comparison with CFIUS is useful because it shows the likely direction of travel. Investment screening should not be treated as a narrow legal filing exercise. Investors should prepare evidence on ultimate ownership, beneficial control, foreign-government exposure, governance rights, information access, technology controls, data ring-fencing, supply continuity and compliance monitoring. The key implication is that Japan may increasingly expect mitigation thinking to be built into transaction design from the outset.

Differences at a Glance

Beyond CFIUS: Amendments to the Economic Security Promotion Act and Expansion of Policy Scope

Alongside FEFTA reform, Japan is also pursuing broader measures to strengthen economic security. The Diet is currently deliberating a bill to amend the Economic Security Promotion Act, the country’s core economic security legislation enacted in 2022. The amendment bill should be understood as a significant expansion of the scope and tools of Japan’s economic security policy, covering critical goods, critical infrastructure, critical technologies, overseas business activities, and policy-analysis capabilities. In other words, Japan’s economic security policy is evolving from supply-chain protection toward a more integrated approach that combines investment screening, technology-leakage prevention, infrastructure protection, overseas strategic finance, and policy intelligence.

The original Economic Security Promotion Act created four main pillars: securing the stable supply of designated critical goods, including semiconductors, batteries, critical minerals, machine tools, industrial robots and cloud programs; protecting critical infrastructure services; supporting the development of critical technologies; and establishing a system to keep certain sensitive patent applications undisclosed. The amendment bill would expand this framework in three main ways. First, it would allow the government to support services that are indispensable to the supply of designated critical goods, reflecting a broader understanding of supply-chain resilience that includes logistics, production, maintenance, and other enabling functions. Second, it would add the medical sector, including certain hospitals and medical digital transformation-related functions, to the critical infrastructure framework. Third, it would broaden the range of public research funds that can be used to support designated critical technologies.

One of the most notable features of the bill is the creation of a new framework for “designated overseas projects” that are important to Japan’s economic security. These projects are defined broadly to include overseas facilities and operations that strengthen international transport networks, support the provision of important services, or enable the overseas deployment of important technologies. Private companies would be able to submit plans for such projects, obtain ministerial certification, and receive support from the government and the Japan Bank for International Cooperation (JBIC). The amendment would also enable JBIC to take on greater risk for certified economic security projects, with the aim of mobilizing private capital.

This is a significant shift, although the bill itself does not list specific industries, related government strategy discussions point to areas such as semiconductors, drones and other unmanned systems, shipbuilding, critical minerals and materials, and port and logistics infrastructure. The policy logic is that Japan wants to help its companies build supply chains and strategic business footholds in countries that are less vulnerable to economic coercion or geopolitical disruption. Japanese companies’ overseas expansion is therefore being reframed not only as commercial activity, but also as part of national resilience and security policy.

The bill also seeks to strengthen Japan’s ability to analyze and anticipate economic security risks during peacetime. It would create a comprehensive economic security think tank function through the Research Institute of Economy, Trade and Industry (RIETI), a policy research institute associated with METI. The aim is to build stronger capabilities for research, analysis, and policy recommendations across diplomacy, intelligence, defense, economics, and technology. In parallel, the bill would establish a statutory public-private council to promote structured information sharing and consultation between government and industry, with confidentiality obligations designed to enable more substantive exchanges on sensitive risks.

For global businesses, the key implication is that Japan’s economic security policy is becoming more integrated and more proactive. The amendment bill points to a model in which the state not only reviews or restricts risky transactions, but also supports critical industries, protects essential infrastructure, finances strategic overseas projects, and builds permanent analytical capacity. Japan’s economic security agenda is therefore shifting from defensive screening toward a more comprehensive system for shaping markets, supply chains, and corporate behavior in line with national security priorities.

Implications for Business

As economic security becomes a more central factor in Japan’s policy environment, Japanese companies, foreign companies, and investors will all need to incorporate national security considerations into transaction planning and business strategy. Sensitive technologies, critical supply chains, data protection, dual-use risks, and foreign-ownership structures can no longer be treated simply as legal or compliance matters to be reviewed at the final stage of a transaction. They are becoming board- and management-level issues that should be considered early in strategic decision-making.

For Japanese companies, building internal structures to manage economic security risks will become increasingly important. Economic security cuts across corporate governance, investment review, research and development (R&D) strategy, procurement, supply chain management, and crisis preparedness. For example, Mitsubishi Electric has established an Economic Security Management Office and developed a group-wide framework to coordinate economic security functions across business units and domestic and overseas affiliates. This kind of approach shows that economic security is becoming a cross-functional management issue involving legal, public affairs, technology, procurement, business development, and senior management teams.

Foreign companies and investors will also need to adjust their approach to Japan-related investments and partnerships. Where a target business involves sensitive sectors or critical technologies, they should identify economic security issues at an early stage, consider prior consultation with relevant authorities where appropriate, and prepare risk mitigation measures. These may include restrictions on access to sensitive information, governance safeguards, commitments on domestic supply, cybersecurity measures, and contractual arrangements to protect critical technologies and data. In this environment, formal compliance with filing requirements may not be sufficient to address broader economic security concerns.

The implications are particularly important in three areas:

Defense and Technology

Defense and technology risks are no longer limited to traditional defense equipment. They also include dual-use technologies such as semiconductors, AI, quantum, space, cybersecurity, robotics, drones, and advanced materials. Companies need to assess whether their technologies could have security-related applications, and whether foreign investment, partnerships, or data-sharing arrangements could create risks of technology leakage or access to sensitive information.

Healthcare

Healthcare is becoming part of the economic security agenda because medical resilience is now treated as national resilience. Relevant areas include pharmaceuticals, vaccines, medical devices, diagnostics, biotechnology, digital health, and medical data. The pandemic demonstrated that medical supply chains, domestic production capacity, infectious disease preparedness, patient data protection, and the cybersecurity of healthcare systems are directly linked to national resilience.

Critical Minerals

Critical minerals are a strategic vulnerability for Japan because of its dependence on imported resources. Relevant areas include rare earths, battery materials, semiconductor-related materials, and minerals used in renewable energy technologies. Given Japan’s dependence on imported resources, companies need to assess not only price and availability, but also supply concentration, country risk, export controls, sanctions exposure, transport routes, and alternative sources of supply.

Overall, economic security is moving from the margins of legal and regulatory compliance to the core of corporate strategy. Companies will need to treat economic security not as a one-off regulatory hurdle, but as an ongoing management capability that shapes:

Investment decisions
Partnership structures
Supply chain design
Data governance
Stakeholder engagement

Those that identify risks early, develop credible mitigation measures, and communicate their approach clearly will be better positioned to complete transactions smoothly, maintain trust, and demonstrate long-term reliability and resilience in Japan.

This document was developed as deep insight on strengthening Japan's intelligence and economic security. For additional information, reach out to Yuichi.Kori@edelman.com

Colombia will head to a runoff election on June 21, 2026. Abelardo De La Espriella (43.74%) and Iván Cepeda Castro (40.90%) will compete for the Presidency of the Republic in a race decided by a margin of 2.84 percentage points. Election day, the most closely monitored in the country's recent history, proceeded without major incidents and was described by international observers as transparent and orderly.

Electoral Integrity

The first round of voting on May 31 was conducted under normal conditions, with an unprecedented institutional deployment in the country’s electoral history.

More than 1,300 international observers from 22 countries and 26 organizations were present throughout the national territory, nearly three times the number that participated in the 2022 runoff election. The European Union Election Observation Mission (EU EOM), led by Esteban González Pons, Vice President of the European Parliament, stated that the election day was conducted in an “orderly, transparent, and incident free” manner at the polling stations observed across the country.

US Republican Senator Bernie Moreno, who attended as an international observer, was unequivocal in his assessment: “Democracy won today.” National Registrar Hernán Penagos thanked poll workers and oversight bodies for their efforts and affirmed that the vote consolidation process continued normally.

Less than two hours after polls closed, the National Registry’s preliminary count showed a clear and irreversible trend. This level of speed in reporting results reaffirmed the technical and institutional strength of Colombia’s electoral system and significantly reduced the scope for questioning the legitimacy of the process.

Today, Colombia demonstrated that its democracy is resilient. The institutional capacity to conduct an election of this scale with transparency, efficiency, and under extensive international scrutiny is a reputational asset that the country should proactively leverage with investors, trading partners, and global audiences.

Vote Distribution

Together, the two runoff candidates captured 84.64% of all valid votes, marking the highest level of two candidate vote concentration recorded in a Colombian first round election in decades. A total of 23,978,053 voters participated out of an eligible electorate of 41,421,973 citizens (57.88%), the highest turnout in the history of the country’s presidential elections. Valid votes accounted for 98.77% of all ballots cast, including 406,968 blank votes, representing 1.71% of the total.

Who’s Who? Profiles of the Runoff Candidates

Abelardo De La Espriella

Defensores de la Patria | Right Wing | Vice President: José Manuel Restrepo

Her position could be more pragmatic than Fajardo’s. If she sees room to influence the next government’s agenda, particularly on anti-corruption measures, public security, and social protection, she could be open to negotiation. Her urban, centrist voter base is likely to become one of the main constituencies contested by the two finalists.

Iván Cepeda Castro

Pacto Histórico | Left Wing | Vice President: Aida Quilcué

Senator, 63 years old. A philosopher and human rights activist, he is the son of Manuel Cepeda Vargas, a Patriotic Union senator who was assassinated in 1994. He has spent more than three decades working in Congress and participating in peacebuilding efforts. He won the Pacto Histórico primary with 65% of the vote and is widely seen as representing the ideological continuity of the Petro administration. His running mate is Aída Quilcué, an Indigenous leader and prominent advocate for ethnic and Indigenous rights.

Political Context and Analysis

Colombia moved toward the extremes: “plebiscite” on Gustavo Petro’s administration than a traditional presidential contest.

The most revealing fact of this first round is not who won, but how Colombians voted: 84.64% of valid votes were concentrated in the two candidates representing opposite ends of the political spectrum. The independent center (Fajardo) and the center right (Valencia) together captured only 11.18% of the electorate, with Fajardo accounting for just 4.26% on his own. This level of concentration has a name: structural polarization. The result confirms a trend increasingly visible across Latin America, where voters are moving away from moderate alternatives and gravitating toward candidates who promise political rupture, whether from the left or the right.

More than a traditional presidential election, this first round functioned as a plebiscite on the government of Gustavo Petro. Support for De La Espriella was, to a large extent, a vote against the administration’s reforms, governing style, economic management, and ideological agenda. Support for Cepeda, by contrast, largely reflected a desire for continuity and the defense of the progressive project launched in 2022. The candidates’ individual platforms mattered less than the position each occupied in relation to the outgoing government. This pattern is not unusual in the region. Over the past year, several left-leaning governments in Latin America have faced a pendulum effect as voters reassess unmet expectations for change.

De La Espriella consolidated a right-wing candidacy with a style, rhetoric, and profile distinct from Colombia’s traditional political establishment. A legal outsider with no prior elected office, he built his public profile through high profile litigation and media exposure. His rise is consistent with the fragmentation of right-wing leadership in the post Uribe era. Following the first-round results, former President Álvaro Uribe openly endorsed his candidacy, while Cambio Radical formally joined his coalition, suggesting a pragmatic consolidation of the right around his campaign ahead of the June 21 runoff.

Cepeda, meanwhile, enters the second round without the momentum that once made him the frontrunner in opinion polls. His principal challenge will be to expand his support among moderate voters who, in the first round, either backed centrist alternatives or chose not to participate.

Looking Ahead to the Runoff Election

The Battleground Vote: 11.18% Could Decide the Presidency.

The behavior of voters whose preferred candidates did not advance to the runoff will be decisive. Paloma Valencia (1,639,668 votes, 6.92%) and Sergio Fajardo (1,009,045 votes, 4.26%) together represent 11.18% of valid votes, a potentially pivotal bloc given the current margin of just 2.84 percentage points between the two finalists.

Valencia has already announced her personal endorsement of De La Espriella. However, none of the prominent figures who appeared alongside her on stage, including Aníbal Gaviria, Enrique Peñalosa, and Mauricio Cárdenas, have publicly announced whom they will support in the runoff. Fajardo, meanwhile, stated that his political sector will play an important role in the coming weeks but stopped short of endorsing either candidate. The transfer of support from these constituencies will not be automatic and will depend on ideological affinities, political negotiations, and voter perceptions of the risks associated with each option.

Abstention will also be a key variable. With turnout reaching 57.88%, a significant share of eligible voters did not participate in the first round. If mobilized ahead of June 21, this segment could materially alter the electoral balance and prove decisive in determining Colombia’s next president.

Statements from the Presidential Candidates

Abelardo De La Espriella

Presidential Candidate | Defensores de la patria

The candidate responded to statements made by Gustavo Petro and Iván Cepeda questioning the legitimacy of the election, asserting that he would not allow “the will of the people to be stolen.” In his remarks, he argued that Colombia is facing a humanitarian and security crisis, criticized the outcomes of the “Total Peace” policy in light of rising attacks and killings, and claimed that the governing coalition may seek constitutional changes to remain in power. He also called on the international community, particularly the United States, to monitor and accompany the runoff election process. De La Espriella thanked the more than 10 million voters who supported his candidacy and said he is prepared for the decisive contest on June 21. He also recognized the contributions of his running mate, José Manuel Restrepo, and his campaign team, highlighting that his movement was able to consolidate without the backing of traditional political structures. The candidate expressed gratitude for Paloma Valencia’s endorsement and called on Colombians to remain united and prayerful ahead of the runoff, reiterating his commitment to advancing the country’s development.

Iván Cepeda Castro

Presidential Candidate | Pacto Histórico

He stopped short of fully recognizing the preliminary results and called for verification of what he described as a “discrepancy,” referring to 886,000 individuals or voter identification records, as well as an unspecified number of polling stations with “atypical voting patterns” allegedly detected by his campaign’s electoral monitoring software. He cited the President of the Republic in support of the need for such a review and stated that he would refrain from making a definitive assessment until the official vote counting commissions advance their work. He also claimed that his campaign had received “10 million miscounted votes” and declared himself the leader of the country’s largest political force. During his remarks, he criticized his opponent, Abelardo de la Espriella, describing him as a lawyer for drug traffickers and fraudsters, and argued that a De la Espriella presidency would dismantle the progressive achievements of recent years. He also questioned the financing of the first-round frontrunner’s campaign and called for a detailed audit of its funding sources and expenditures.

Paloma Valencia

Candidate | Centro Democrático

She stated that she remains committed to serving Colombia and congratulated Abelardo De La Espriella on what she described as an “extraordinary victory.” Valencia argued that the election result reflects the rejection by a significant portion of Colombians of the Petro administration and announced her personal endorsement of De La Espriella for the runoff election. She was joined on stage by Aníbal Gaviria, Enrique Peñalosa, Juan Daniel Oviedo, and Mauricio Cárdenas, none of whom publicly announced their support for either candidate following the first round.

Sergio Fajardo

Candidate | Centro Independiente

He thanked his campaign team and the more than one million voters who supported his candidacy. Fajardo stated that those votes will play an important role in shaping Colombia’s future and emphasized that the voice of his movement will be heard during the next stage of the electoral process. However, he did not announce support for either of the two runoff candidates.

Juan Daniel Oviedo

Vice Presidential Candidate of Paloma Valencia

He distanced himself from Paloma Valencia’s decision to endorse De La Espriella, positioning himself within the more moderate wing of the political center. He stated that he would take several days to evaluate the outcome and would announce his position by June 3. His eventual decision is expected to be one of the key indicators of how centrist voters may align ahead of the runoff election.

What's Next

Runoff Election, June 21: A Highly Competitive Race in a Divided Country

The runoff election is shaping up to be one of the closest contests in Colombia’s recent history. The 2.84 percentage point margin separating the two finalists leaves little room for assumptions and virtually guarantees a competitive race through election day.

The first indication of what lies ahead came from the candidates’ own election night speeches. Neither candidate made an effort to move toward the political center. De La Espriella called on voters to “defeat tyranny and absolutism,” while Cepeda challenged the preliminary results, referred to “10 million miscounted votes,” and described his opponent as a lawyer for drug traffickers. Rather than signaling national reconciliation, both speeches suggested a further escalation of political polarization. The runoff is therefore likely to intensify, rather than moderate, the political debate.

The 11.18% of votes represented by Paloma Valencia and Sergio Fajardo remains mathematically decisive, but the redistribution of those votes is far from guaranteed. Valencia announced her personal endorsement of De La Espriella, while Juan Daniel Oviedo publicly distanced himself from that decision and said he would wait until June 3 before announcing his position. Fajardo also declined to endorse either finalist. Meanwhile, Aníbal Gaviria, Enrique Peñalosa, and Mauricio Cárdenas have remained silent. As a result, the moderate center and center right electorate remains fragmented between ideological preferences and concerns about political polarization, making voter behavior difficult to predict.

Governability Risk: The Real Challenge Begins on July 20

Whoever wins on June 21 will face a structural challenge that extends well beyond the campaign: governing a deeply divided country with a fragmented Congress and no preexisting majority coalition.

If De La Espriella wins, he will need to build legislative support largely from scratch. His movement lacks a consolidated congressional bloc, and its path to power depends heavily on endorsements from parties and political actors that supported other candidates during the first round. The result could be a government with a strong electoral mandate but limited legislative capacity during its opening months.
If Cepeda prevails, he will inherit the political wear and tear of the Petro administration, confront the reality that a majority of voters supported alternatives to the Pacto Histórico in the first round, and face heightened scrutiny from business and institutional stakeholders regarding economic and security policy. His immediate challenge would be to build confidence among sectors that did not support his candidacy.

In either scenario, the first 100 days of the next administration will provide the clearest measure of governability. A country in which 84.64% of voters rallied behind candidates at opposite ends of the political spectrum leaves little room for gradual transitions. Regardless of who wins, the next government will take office with strong electoral legitimacy but also with significant political friction from day one.

Materials presented by Edelman’s Public & Government Affairs experts. For additional information, reach out to Valentina.Dangond@Edelman.com

Colombia will hold the first round of its presidential elections on May 31. The country operates under a presidential system in which any candidate who fails to secure more than 50% of the vote advances to a runoff election, scheduled for June 21. Voting is not mandatory. Turnout this Sunday is expected to range between 22 and 24 million voters, representing less than 60% of the electoral roll.

The election takes place at a particularly complex moment. Outgoing President Gustavo Petro’s administration (the first left-wing government in the country’s history) is ending amid fiscal constraints, mounting pressure on the healthcare system, deteriorating public security conditions, and a cautious investment environment.

The campaign quickly evolved into a confrontation between the left and the right, leaving the political center with little visibility. The most likely outcome is that Colombia will not elect a new president on May 31 but rather determine which two candidates will compete for the presidency in the June 21 runoff.

The Three Candidates with Real Chances

Iván Cepeda • Pacto Histórico

A left-wing senator with a long track record on human rights and peace issues, he is running as the continuity candidate for the Petro administration. Every major poll places him as the leading candidate heading into Sunday’s vote, with support ranging from 33% to 44% depending on the polling firm, making his advancement to the runoff all but certain. The challenge he is likely to face in June is not consolidating his own base but overcoming high rejection rates: 42.9% of Colombians say they would never vote for him, the highest unfavorable rating among the three leading candidates.

Paloma Valencia • Centro Democrático

A center-right senator historically associated with former President Álvaro Uribe, she entered the race as the most voted candidate in the March 8 primary coalition elections, which drew nearly 6 million voters nationwide. She also has the backing of several parties with representation in Congress. However, recent polling shows her losing momentum, with support ranging from 12.6% to 21.7% depending on the polling firm. The key question is whether her party machinery and the electoral base demonstrated in the primaries will translate on election day into stronger results than current polls suggest.

Abelardo De La Espriella • Defensores de la Patria

A trial lawyer with no previous electoral career, he has emerged as the surprise phenomenon of the final stretch of the campaign. He positioned himself as a right-wing voice distinct from the traditional parties: more confrontational, more emotional, and with a strong presence on social media. Throughout May, his support rose between 10 and 15 points depending on the poll, reaching a statistical tie with Cepeda in two of the four major surveys. The central question is whether this surge reflects a genuine expansion of voter support or an electorate that polling firms are struggling to measure accurately.

The center: Sergio Fajardo and Claudia López

Two centrist candidates complete the relevant electoral landscape: Sergio Fajardo, former mayor of Medellín and former governor of Antioquia, known for transforming the city through social urbanism and education policies; and Claudia López, former mayor of Bogotá with a strong anti-corruption profile. Neither is expected to reach the runoff since polls place them between 1% and 4%, but their urban and independent voter base could prove decisive in determining the outcome in June.

Sergio Fajardo

He has been explicit: he will not support any runoff candidate unconditionally. Any political negotiation would have to involve concrete commitments on defending democracy, fighting corruption, and rejecting polarization. He is unlikely to enter the conversation as a political ally, but rather as someone setting the terms for his endorsement.

Claudia López

The Polls: What They Show and What They Omit

In 2025, Colombia passed a law that tightened the technical requirements for polling, including larger sample sizes, mandatory regional representation, and greater state oversight. Paradoxically, the result has not been greater convergence among pollsters, but more visible differences between them. Two of the four surveys published before the blackout period show Cepeda and Abelardo in a statistical tie, while the other two give Cepeda a clear lead. The explanation is not necessarily that one of them is wrong, but that each methodology captures a different electorate. Atlas Intel, for example, relies on geolocated digital recruitment, reaching the kind of voter who is active online. The other firms conduct in-person household interviews, a method that can sometimes limit how openly respondents express their preferences.

Three factors that do not fully appear in the polls:

The primary election baseline: Paloma Valencia heads into Sunday with the backing of nearly 6 million votes obtained in the March 8 primary coalition election. That electoral base is not fully reflected in current voting intention polls.
Abelardo’s electorate: His supporters are part of a new right-wing movement that is highly active on social media but has not yet been tested in previous electoral cycles.
Party machinery: The parties supporting Valencia have real grassroots structures and mobilization capacity on election day that conventional opinion polls do not always capture accurately.

Frontrunners' Proposals

Insights

Cepeda is heading to the runoff. What Sunday’s vote will determine is who will face him in June, and that question has two possible answers each with very different implications for the country and for those operating in it.

If Abelardo De La Espriella advances, Colombia would face its most polarized runoff election in years. He is a candidate with no previous electoral track record, but he would enter the second round backed by a new and highly energized electorate, competing against the candidate representing continuity with the outgoing government and a strong party structure. Runoff scenarios from Atlas Intel and Centro Nacional de Consultoría show Abelardo De La Espriella defeating Cepeda. Polls also suggest that, in this scenario, blank voting would increase in the second round.
If Paloma Valencia advances, Iván Cepeda would face a candidate with established party machinery and a detailed government platform that could help consolidate centrist voters around a programmatic agenda. Guarumo polling shows her defeating Cepeda by a wider margin than De La Espriella. But before thinking about the runoff, her immediate challenge is qualifying for it.
The centrist vote, particularly supporters of Sergio Fajardo and Claudia López, will be decisive. Neither Fajardo nor López is expected to offer support unconditionally. The coming weeks are likely to involve political negotiations as significant as the campaign itself.

For the business sector, the two most likely runoff scenarios present substantial differences in regulatory policy, openness to investment, relations with key partners (the United States, the European Union, and the region), and institutional stability. The outcome on May 31 will define the new political landscape. Edelman will publish an updated analysis with the election results that same evening.

Colombia heads to the polls on May 31. Make your vote count too. Every vote matters. Democracy does not sustain itself; it is sustained by citizens who choose to participate.

¹Verified sources: Invamer for Caracol/BLU (May 22); Guarumo-EcoAnalítica for El Tiempo (May 21); Atlas Intel for Semana (May 15 and 22); CNC for Cambio (May 24). Invamer excludes undecided voters and only measures respondents with a defined voting intention, which explains its higher figures. The weighted average adjusts for recency and methodological consistency.

Materials presented by Edelman’s Public & Government Affairs experts. For additional information, reach out to Valentina.Dangond@Edelman.com

Key Takeaways

The Xi–Trump summit stabilized but did not fundamentally reset China–US relations.
Both sides signaled a preference for managed strategic competition with clearer guardrails and sustained leader-level engagement.
Taiwan was Beijing’s principal strategic red line and the most significant long-term risk factor in the relationship; however, the US placed greater emphasis on economic reciprocity, supply chain security, and commercial deliverables.
Economic outcomes were incremental rather than transformational, focused on predictability, institutional dialogue, and selective commercial cooperation.
For business, the summit improves short-term stability but reinforces the need for scenario-based geopolitical risk planning.

Executive Summary

The Xi–Trump Summit in May 2026 marked a pivotal moment in China–US relations, as both nations sought to redefine their bilateral engagement. The summit's significance was underscored by its focus on managed stabilization rather than sweeping structural changes.

President Xi articulated a new framework for the relationship—a “constructive China–US relationship of strategic stability”—emphasizing cooperation and collaboration, even amid ongoing competition and differences. The US adopted similar language but placed a clear emphasis on “fairness and reciprocity,” underscoring that Washington views stability as useful only if it yields concrete, balanced outcomes. Commitments made during the summit were viewed as essential, but it was clear that execution and follow-through would ultimately define bilateral trust and future progress. Reciprocal head-of-state visits are planned for the coming months—including President Xi to the US in September and President Trump back to China in November—signaling ongoing diplomatic engagement and observation windows.

The summit represents a transition from confrontation to controlled competition, with short-term stabilization achieved but no fundamental long-term reset of the relationship. Taiwan emerged as a central, non-negotiable red line for China, with stability in the overall relationship contingent upon proper handling of the issue. While the US official readout downplayed Taiwan, focusing instead on trade and energy, implicit understandings were reached, and ongoing communication between leaders and military officials was deemed critical to avoid misjudgment.

The summit delivered incremental, sector-specific, and procedural progress on economic and trade outcomes. The possible extension of the tariff truce, China’s expanded purchases of US goods, and the establishment of new institutional mechanisms demonstrated a shared priority to contain tensions, stabilize confidence, and create space for further negotiations. Beijing is likely to evaluate future engagement based on compliance and follow-through, while Washington will evaluate implementation through a more transactional lens: whether China follows through in ways that benefit US workers, farmers, ranchers, manufacturers, and supply chain resilience. Looking ahead, the true test lies in the consistency between commitments and the concrete actions required to execute them, and in both sides' ability to maintain stability amid evolving political and economic landscapes.

For businesses, the summit signals pragmatic stability under managed competition rather than a broad thaw. Agriculture, energy, aviation, and selected industrial sectors may see immediate benefits, particularly where commercial outcomes align with US jobs and export priorities. Technology, AI, semiconductors, telecommunications, data, critical minerals processing, and dual-use sectors will remain constrained by national security concerns.

Multinational firms operating in China must navigate increasingly complex regulatory systems, while US firms should assume that Washington will continue to distinguish between permissible commercial engagement and strategic-sector exposure. Chinese companies in the United States will continue to face investment screening, export controls, and sector-specific restrictions, prompting a shift from broad expansion to selective, compliance-driven growth.

Trump’s China Visit: A Critical Step in Bilateral Relations

After the global election cycle in 2025, 2026 became a critical juncture for redefining both bilateral and multilateral relationships, with China hosting several head-of-state visits in the first four months of the year. The most important was the Xi–Trump summit held May 13–15—President Trump’s first state visit to China in his second term and the first from a sitting US president in nearly nine years.

Six months after the Busan meeting, this summit demonstrated greater political sophistication, serving as both a benchmark for assessing the implementation of prior commitments and a platform for setting new expectations. Against the backdrop of a mutual desire to establish a stable foundation, President Xi introduced a recalibrated framework described as a “constructive China–US relationship of strategic stability.” The US accepted the utility of a more stable framework, but its official framing added an important condition: stability must rest on fairness and reciprocity. This concept reframes stability in positive terms—recognizing ongoing competition and differences, yet prioritizing cooperation and collaboration over confrontation or escalation.

The summit’s most important outcome was the establishment of stronger guardrails for bilateral engagement that extend beyond short-term economic and electoral pressures. For China, the value of commitments lies in their execution—only with follow-through can genuine bilateral trust be established. Illustrating this pragmatic approach, President Xi accepted President Trump’s invitation for a state visit to the United States in September, while

President Trump indicated he would make a return visit to China in November, likely coinciding with APEC. For the United States, the value lies in whether those commitments deliver reciprocal benefits and strengthen US leverage in areas such as market access, supply chain security, and commercial opportunity. These reciprocal engagements signal sustained high-level diplomacy, but they should be understood as structured checkpoints rather than evidence of a durable reset.

The expectation for 2026 is a more predictable relationship, but one that is still defined by competition and periodic volatility. This period is expected to set the tone for the remaining three years of President Trump’s term. While three years may seem brief in the context of long-term political shifts, China views this period as a pivotal political milestone and remains focused on the broader, ongoing “political marathon.”

What Did the Summit Achieve?

Tactical Success: A “Win-Win” for Managed Competition

The summit’s most consequential achievement lies in its demonstration of mutual strategic restraint, with both sides recognizing that the costs of unchecked confrontation far outweigh the benefits. This awareness has propelled Beijing and Washington to adopt a pragmatic, interest-based approach to manage persistent differences and identify actionable areas for cooperation. The summit’s agenda reflected China’s unwavering focus on the “three Ts”—Trade, Technology, and Taiwan—and the United States’ prioritization of its “five Bs”—Beans, Beef, Boeing, Board of Trade, and Board of Investment.

Both nations signaled a commitment to de-escalate tensions and foster a degree of predictability in the bilateral relationship. The summit set the stage for regular dialogue, gradual adjustment, and addressing bigger issues over time, especially in sensitive areas like technology and national security. This evolving framework not only manages immediate risks but also lays the groundwork for addressing deeper structural imbalances over time.

Taiwan: Central to Establishing Strategic Guardrails

Taiwan emerged as a pivotal, non-negotiable issue at the summit, underscoring its role as both a litmus test and a potential flashpoint in China–US relations. China articulated its position with unequivocal resolve: the broader stability of bilateral ties is fundamentally contingent upon the careful and consistent management of the Taiwan question. For Beijing, Taiwan functions as the ultimate “safety valve”—a critical threshold that, if crossed, could precipitate direct confrontation. From Washington’s perspective, however, the summit did not appear to produce, or publicly signal, a change in US policy. The US priority remains preserving deterrence, maintaining peace and stability across the Taiwan Strait, sustaining alliance confidence, and avoiding miscalculation. The continuation of head-of-state and military-to-military dialogues is not merely symbolic—it is essential for building mutual trust, reinforcing crisis management mechanisms, and minimizing the risk of miscalculation or unintended escalation.

Economic and Trade: No Grand Deal, But a Strategic Letter of Intent

The summit’s most concrete progress emerged in the economic and trade domain, where both sides agreed to extend and fine-tune the existing tariff truce, complemented by a handful of targeted commercial deals. These steps are less about resolving longstanding structural imbalances and more about sustaining a climate of predictability and preventing further escalation. In contrast to the Busan meeting, neither Washington nor Beijing sought to showcase a sweeping “grand deal.” This summit produced a “Letter of Intent” aimed at reinforcing the institutional architecture for ongoing engagement. This shift signals a new era where substantive negotiations are increasingly delegated to institutional channels.

China signaled openness to expanding its imports of US goods, particularly in agriculture and energy—targeting about $17 billion annually in US agricultural products through 2028, in addition to the soybean purchase plan made in 2025, while also reopening its meat market by renewing and expanding beef facility approvals, resuming poultry imports from eligible states, and indicating a potential initial Boeing aircraft order of up to 200 planes, with scope for further expansion.
Market access was a central topic, with both sides discussing ways to enhance bilateral investment and operations. In the agriculture sector, the US will actively address China's long-standing export concerns regarding dairy and aquatic products, medium bonsai, and the certification of Shandong Province as an avian influenza-free zone. The talks yielded no immediate breakthroughs on regulatory easing, underscoring the incremental and cautious nature of progress.
Technology and critical materials advances remain tightly circumscribed by national security concerns. Both sides also broached the topic of reciprocal restraint on rare earths and other critical minerals, reflecting a mutual recognition of supply chain vulnerabilities and interdependence.
The proposed “Board of Trade” and “Board of Investment” mechanisms suggest an effort to formalize engagement on tariffs, export controls, trade flows, and investment issues. Rather than representing a wholesale shift toward rules-based economic governance, the bodies appear more likely to institutionalize a Trump-style managed-trade approach: structured, transactional, and focused on negotiated outcomes in non-sensitive sectors. Their practical significance will depend less on the creation of the boards themselves than on whether the administration uses them consistently to manage disputes, clarify market access expectations, and produce durable commitments.

Connectivity and Practical Cooperation: The Underrated Engine of Diplomatic Soft Power

Both Washington and Beijing placed a premium on tangible, swiftly achievable outcomes to rebuild foundational understanding, engagement, and—importantly—trust. Business leaders played a pivotal role: their ongoing business-to-business interactions, grounded in routine visits to China, have been instrumental in maintaining a baseline of cooperation despite rising political tensions.

This summit also marked a significant expansion in the involvement of diplomats and media figures. The inclusion of US Secretary of State Marco Rubio, despite his history as a sharp critic of Beijing, signaled a calculated willingness by Beijing to demonstrate sincerity and openness in its diplomatic posture. Similarly, a group of international media representatives, including Fox News anchor Bret Baier, brought a fresh lens to the proceedings. Beijing also appeared interested in shaping broader US public perceptions through expanded media engagement. The strategic use of connectivity and practical cooperation is a tool for shaping public opinion and advancing bilateral interests.

Geopolitical Coordination: Selective Convergence Within Enduring Rivalry

At the Xi–Trump summit, both sides candidly discussed key global challenges. While both powers recognize the necessity of dialogue on shared global risks, neither is prepared to cede ground or dilute their core strategic prerogatives. Discussions encompassed regional flashpoints such as stability in the Middle East—with particular attention to energy security and the imperative of keeping the Strait of Hormuz open—as well as the ongoing conflict in Ukraine and other geopolitical tensions.

US official statements underscored a focused interest in Iran and coordination on energy security, signaling a pragmatic cooperation where American strategic interests are directly at stake. Chinese official readouts remained deliberately broad, emphasizing general principles and refraining from issue-specific commitments. This divergence in messaging reveals a pattern of a willingness to align tactically on mutual concerns, but ongoing division on strategic priorities persists. The summit demonstrated selective cooperation on global risks, with both powers maintaining their core strategic positions in a climate of ongoing competition.

What's Next?

The trajectory of US–China relations is best understood as a phase of pragmatic short-term stabilization, while deep-seated structural competition persists and volatility remains a medium- and long-term risk. The embrace of a “constructive relationship of strategic stability” introduces a new guardrail principle, providing a fresh framework for engagement. However, it does not fundamentally alter the underlying dynamic: rivalry remains the dominant theme.

For China, the immediate priority is the effective implementation of summit commitments. The current stabilization window is a tactical move designed to foster predictability and create space for recalibrating domestic economic and social policy. Yet, a central uncertainty remains: whether these outcomes translate into actionable arrangements. Beijing’s decision not to issue a formal communique underscores a cautious approach; future engagement will be measured less by summit declarations and more by US policy follow-through and the alignment between rhetoric and enforcement.
For the United States, stabilization is tactical rather than transformational. Washington continues to view long-term strategic competition with China as a defining feature of the international system, particularly in technology, national security, industrial policy, critical minerals, supply chain resilience, and regional security. The Administration’s broader trade agenda reinforces this view: US policy is focused on expanding domestic production, strengthening national security sectors, reducing import dependencies, and pursuing reciprocity in trade relationships.

Key Forward-Looking Watchpoints: External Spillovers

The durability of the current stabilization in China–US relations will be tested not only within the bilateral channel, but also through its far-reaching impact across the global geopolitical order. China’s strategic posture, while fundamentally consistent, is now articulated with greater clarity and intent. The elevation of “strategic stability” as the guiding framework underscores both countries’ preference for managed competition with clearly defined guardrails—calibrated engagement designed to prevent escalation while preserving core interests—a pragmatic coexistence. For the United States, the challenge is to stabilize the relationship with China without unsettling allies or weakening deterrence. For example, President Trump’s phone call to Prime Minister Takaichi on his way back to the US reflects Washington’s efforts to reassure and recalibrate the US–Japan alliance, while President Putin’s upcoming visit to Beijing from May 19–20 will be closely watched for signals of alignment or divergence in the China–Russia axis. The interplay between bilateral management and external spillovers will thus remain a defining feature of the emerging strategic landscape.

What Does It Mean for Business?

From a business standpoint, the visit signals a calculated phase of short-term stability anchored within the framework of managed competition. At the macro level, the summit offers a measure of predictability, but it does not restore economic interdependence as an uncomplicated pillar of the relationship. The critical question is not whether cooperation exists, but where it is politically permissible, commercially useful, durable, and enforceable. Sectoral impacts will be differentiated: agriculture, energy, aviation, logistics, and selected industrial sectors may benefit from state-supported demand and transactional momentum, while high-technology sectors, including semiconductors, AI infrastructure, telecommunications, data, rare earths and critical minerals processing, and dual-use technologies, will remain subject to incremental and highly conditional relief.

The risk environment is being redefined rather than reduced. The paradigm is shifting away from acute volatility toward a regime of managed, persistent uncertainty. Although policy frameworks are becoming more institutionalized, they remain largely non-binding, and execution risks continue to loom. Moving forward, the most salient risks will revolve around policy consistency and potential geopolitical flashpoints—requiring companies to transition from reactive risk management to proactive, scenario-based strategic planning.

For multinational corporations operating in China, the evolving complexity of overlapping regulatory regimes is driving a strategic realignment toward diversification, segmentation, and the systematic integration of geopolitical risk into investment, trade, and operational decision-making. For US firms specifically, while no dramatic policy reversal is anticipated, the absence of immediate deterioration supports a baseline of stability and predictability. As implementation of bilateral consensus unfolds, American companies may anticipate improved policy clarity and continued market access, with targeted commercial outcomes sustained by active business engagement and ongoing investment—collectively reinforcing China’s role as a key market and supply chain nexus. Maintaining a sophisticated and nuanced understanding of the global political climate—and cultivating robust government relationships with Chinese authorities at all levels—remains essential for protecting and expanding the political capital necessary to maintain a license to operate and license to grow.

For Chinese companies operating or willing to invest in the US, the environment remains structurally constrained. Despite periodic diplomatic engagement, core regulatory barriers, including CFIUS reviews, export controls, sanctions risk, procurement restrictions, data security concerns, and sector-specific limitations, will remain enduring obstacles. Chinese firms are therefore likely to recalibrate from broad-based expansion toward selective, compliance-driven growth, emphasizing non-sensitive sectors, supply chain integration, local partnerships, and transparency. The summit may improve diplomatic atmospherics, but it will not materially reduce US scrutiny of Chinese investment in sectors connected to technology, data, infrastructure, critical minerals, energy, telecommunications, or national security.

Materials presented by Edelman’s public & government affairs experts. For additional information, reach out to Cynthia.Xing@Edelman.com or Matt.Streit@Edelman.com

Latin America Electoral Report: April 2026

Elections continue to reshape Latin Americaʼs political landscape, with recent results and upcoming contests redefining the regionʼs balance of power. Chile has inaugurated José Antonio Kast, consolidating a broader rightward shift, while Costa Rica elected Laura Fernández, signaling continuity with strategic adjustments. In Bolivia, the end of the MAS era has triggered a phase of political reconfiguration, now being tested through subnational elections. At the same time, Colombia has renewed its Congress amid high fragmentation and is advancing toward a highly competitive presidential race, and Peru is heading into deeply fragmented 2026 elections marked by institutional transformation. Brazil, meanwhile, is entering an increasingly polarized electoral cycle ahead of its 2026 vote.

This monthly report by Edelman compiles key developments, insights, and updates on the regionʼs main electoral processes, featuring analysis developed by our Public & Government Affairs Thought Leadership team in Latin America. Its goal is to provide a concise, strategic overview of the political dynamics shaping the region’s future.

Download here

The March 19 summit between Prime Minister Takaichi and President Trump served as a critical stress test for the Japan-US Alliance, recalibrating the partnership amid escalating US-Iran tensions. While the crisis threatened to overshadow the bilateral agenda, the meeting still produced substantive economic and strategic deliverables for both countries. Japan successfully preserved alliance cohesion while staying within domestic legal and political constraints related to actively entering the Iran war. The US highlighted Japan’s large-scale investment commitments and positioned it as a model ally in reinforcing burden-sharing.

The investment framework presented at the summit points to expanding US-bound investment, particularly in energy infrastructure supporting AI-driven demand, as well as in critical minerals, semiconductors, and advanced technologies, reflecting both longstanding priorities—such as the need for closer Japan-US coordination on economic security—and the recent increase in energy security risks around the Strait of Hormuz. It also reflects closer policy alignment across these sectors, pointing to a more government-driven business environment.

Companies aligned with government-led initiatives are likely to benefit, while others may face rising adjustment pressures. Overall, the agreement indicates substantial shifts in investment flows and the competitive landscape over a longer-term horizon.

A Stress Test for the Japan–US Alliance

The Japan-US summit between Prime Minister Takaichi and President Trump took place against the backdrop of escalating US-Iran conflict, which quickly overtook the originally planned agenda of alliance coordination and economic cooperation. The US entered the talks seeking greater allied support, particularly for securing the Strait of Hormuz, while Japan approached the summit aiming to reaffirm the alliance but avoid direct military commitments, reflecting constitutional constraints and domestic caution. As a result, the summit functioned less as a routine bilateral meeting and more as a stress test of alliance expectations under crisis conditions, highlighting growing US pressure for burden-sharing and Japan’s continued preference for limited, non-combat engagement.

Despite these tensions, both sides framed the outcome as positive, though for different reasons. In Japan, the summit was seen as successful in maintaining legal consistency while avoiding additional US pressure for direct operational support, particularly regarding potential Self-Defense Forces deployment. Prime Minister Takaichi’s emphasis on cooperation “within the bounds of domestic law” helped avert confrontation and secure a degree of US understanding. Public support was also strong: a Yomiuri Shimbun poll showed 69% approval of the summit, with over 80% supporting the government’s response to the Iran situation. In the US, the outcome was assessed mainly in economic terms, with the White House highlighting Japan’s large-scale investment commitments, especially energy projects linked to job creation in key states. President Trump also portrayed Japan as a “model ally” compared to NATO members, using the outcome to reinforce pressure on other allies to increase contributions.

Key Issues

Iran War and Energy Security

US Expectations: Iran Response and Alliance Burden-Sharing

Iran and energy security emerged as central issues, with the US pressing Japan to take on a more active role in the crisis response. Washington sought support for securing the Strait of Hormuz—critical to global energy flows and Japan’s oil imports—including potential maritime, logistical, or other non-combat contributions. More broadly, the US framed the situation as a test of alliance credibility, signaling expectations for more tangible burden-sharing beyond political backing. While no concrete commitments were secured, the US position underscored a preference for visible, operational contributions aligned with its regional strategy.

Japan Position

Japan maintained a cautious and ambiguous stance, avoiding any commitment to direct military involvement while emphasizing diplomacy, energy security, and alliance coordination. Tokyo reiterated its opposition to Iran’s nuclear development but stopped short of endorsing US military actions or agreeing to operational support. This reflects constitutional constraints, particularly Article 9—which renounces war as a sovereign right and limits Japan’s use of force overseas—as well as Japan’s traditionally pragmatic and generally friendly relations with Iran, shaped in part by long-standing energy ties, and domestic sensitivity toward participation in US-led conflicts.

Ahead of the summit, Diet discussions highlighted these constraints. Prime Minister Takaichi faced questioning from both ruling and opposition lawmakers over how far Japan should support US actions. In this context, she stated that Japan has “no plans at this point” to deploy Self-Defense Forces to the Strait of Hormuz and emphasized that any response would remain within constitutional limits, while stressing the need for “frank discussions” with the US. Within the LDP, senior figures expressed caution, coalition partners remained hesitant, and opposition parties raised concerns over constitutional risks and limited national interest, advocating diplomatic de-escalation.

Strategic Outlook: Energy Vulnerability and Policy Constraints

Japan is likely to maintain a cautious and incremental approach, continuing to avoid direct military engagement while keeping its options open within existing legal boundaries. Energy security remains central to this calculus. Japan imports roughly 90% of its crude oil from the Middle East, with most of it transiting the Strait of Hormuz, making the waterway a critical chokepoint for its economy. While Japan maintains strategic petroleum reserves and has previously coordinated stockpile releases during supply disruptions, prolonged instability in the Strait would have significant economic implications, increasing pressure on Tokyo to consider how it can contribute to maintaining maritime stability. However, any shift toward a more active role would likely remain limited and contingent on domestic political consensus and legal constraints.

Economic and Industrial Policy (Japanese Investments to the US)

Large-Scale Japanese Investment Commitments

Against the backdrop of limited alignment on security issues—particularly Japan’s reluctance to engage directly in the Iran crisis—economic cooperation emerged as the primary area of tangible progress. Japan’s commitments therefore function not only as economic initiatives, but also as a means of reinforcing the alliance under constrained security conditions.

Japan pledged more than USD 70 billion in US investments, focused on energy infrastructure, including small modular nuclear reactors (SMRs) and natural gas power projects. These form part of a broader USD 550 billion bilateral framework agreed between the two countries. Beyond expanding energy capacity, the projects are intended to support rising electricity demand from data centers and AI, while strengthening long-term technological competitiveness.

Energy and Industrial Strategy Alignment

Beyond their scale, the investments also reflect closer alignment in US and Japanese energy and industrial policy. Nuclear and gas infrastructure are positioned as central to economic security amid global energy uncertainty and growing industrial demand. Cooperation on critical minerals and supply chains further highlights shared priorities around resilience and reduced external dependence. Together, these efforts point to a more integrated “geo-economic” framework, where economic policy increasingly supports strategic objectives.

Trade Frictions and Strategic Bargaining

Tokyo’s investment strategy is closely tied to trade tensions with the United States, where tariff pressure has been used to encourage inward investment. For Japan, these commitments serve to stabilize the bilateral relationship while signaling alliance support in lieu of direct military contributions. For the US, this dynamic reinforces a broader approach of using trade leverage to secure allied investment, supporting domestic industry while advancing strategic objectives without direct fiscal outlays.

In the context of the Iran crisis, economic cooperation effectively functions as a politically viable alternative to security burden-sharing. Overall, Japan’s approach reflects a pragmatic use of economic statecraft to reinforce the alliance while compensating for constraints in its security posture.

US–China Relations

Indo-Pacific Security and Strategic Focus

While not the immediate focus of the summit, China remained a central strategic reference point shaping US-Japan coordination across both security and economic domains. Both sides reaffirmed their commitment to a “free and open Indo-Pacific,” with the alliance continuing to underpin deterrence and regional stability. For Japan, this is particularly critical in the context of growing military pressure in East Asia, including around Taiwan and the East China Sea.

At the same time, the escalation in the Middle East has heightened concerns in Tokyo about a potential diversion of US strategic attention away from the Indo-Pacific. Japanese policymakers remain sensitive to any shift that could weaken deterrence dynamics, creating an underlying tension as US expectations for support in the Middle East compete with Japan’s core security priorities.

Policy Implications for Businesses

The Japan-US summit highlights closer policy alignment across energy, supply chains, and advanced technologies, pointing to a more government-driven business environment. Investment in power infrastructure tied to AI-driven data center demand is expected to create opportunities across energy and digital sectors, while cooperation on critical minerals underscores both new business potential and a shift toward more policy-managed supply chains. Strengthened collaboration in AI and semiconductors is also likely to support cross-border expansion for Japanese firms. Although market reactions have been muted amid geopolitical tensions, the agreement signals meaningful medium- to long-term shifts in investment and competitive dynamics.

Market Reaction

While the weekend Japan–US summit was broadly perceived as reassuring for markets, its impact proved limited when trading resumed in Tokyo on Monday, March 23. The primary driver was the rapid pricing-in of prolonged Middle East tensions, following President Trump’s demand to reopen the Strait of Hormuz and Iran’s hardline response. The Nikkei 225 fell by JPY 1,857 to JPY 51,515, briefly dipping below its year-to-date low during intraday trading, with declines observed across nearly all sectors. Market participants increasingly view geopolitical risk as outweighing policy-related developments in driving near-term market dynamics.

Sector-Specific Impact

Energy

The agreement outlines concrete power infrastructure projects, including small modular reactors (SMRs) in Tennessee and Alabama and natural gas-fired power plants in Pennsylvania and Texas. These initiatives are driven by rapidly growing electricity demand from data centers—fueled in part by the expansion of generative AI—as well as rising electricity prices, underscoring the need to expand power generation capacity and further strengthening the link between energy and digital infrastructure. For Japanese companies, this is expected to expand participation in US energy projects. At the same time, SMRs remain at an early stage of commercialization, with uncertainties surrounding cost competitiveness and scalability. In addition, supply constraints for key equipment such as turbines, as well as concerns over the profitability of large-scale investments, have been highlighted as potential risks.

Critical Minerals and Supply Chains

An action plan covering 13 projects—including rare earth recycling and deep-sea resource development—was announced to strengthen Japan–US cooperation in securing stable supplies of critical minerals. The fact that many of the outcome documents focused on critical minerals underscores that this area has emerged as a central pillar of bilateral cooperation. This reflects a shared strategic objective to reduce reliance on China, given that both countries remain heavily dependent on Chinese supply. In parallel, discussions on mechanisms such as a price floor are aimed at weakening China’s price-setting influence and fostering the development of a “new market” for non-China-sourced minerals. While this creates new opportunities for resource-related companies, it also highlights the need to reassess procurement strategies in response to increasing policy involvement in supply chains.

AI and Semiconductors

The agreement highlights enhanced cooperation in AI, quantum technologies, and high-performance computing (HPC), alongside infrastructure investment supporting data center expansion. The key implication lies in the increasing integration of industrial policy and technology development, rather than standalone sectoral growth. Growth in data center demand—closely tied to power infrastructure development—is likely to create policy-driven opportunities across cloud, AI platforms, and semiconductor-related sectors. In addition, preferential visa treatment for investments involving technology transfer and workforce development is expected to facilitate Japanese companies’ expansion into the US market. At the same time, increased government involvement may shape market access, talent mobility, and technology transfer conditions, requiring firms to navigate a more policy-constrained innovation environment.

Materials presented by Edelman’s public & government affairs experts. For additional information, reach out to Yuichi.Kori@edelman.com.

Latin America Electoral Report: February 2026

Latin America is entering a defining electoral cycle. Recent developments across the region underscore the pace of change: Argentina has renewed part of its Congress, Bolivia is navigating a new phase following the end of the MAS era, Chile has elected José Antonio Kast as president, and Costa Rica has ushered in a new administration. At the same time, Brazil, Peru, and Colombia are moving toward pivotal 2026 elections, with fragmented political landscapes and shifting coalitions adding uncertainty to the outlook.

Edelman’s February 2026 Latin America Electoral Report provides a concise, strategic overview of these processes. Developed by our Public & Government Affairs teams across the region, this report compiles key updates and political analysis to help organizations anticipate risk, identify engagement opportunities, and navigate a rapidly evolving political environment across Latin America.

Download here

Japan’s February 8 Lower House election delivered a historic victory for Prime Minister Sanae Takaichi and the ruling Liberal Democratic Party (LDP). The LDP secured 316 out of 465 seats, achieving a two-thirds supermajority for the first time in postwar Japan. The outcome substantially expands the LDP’s political bandwidth, strengthening its ability to advance legislation even in the face of Upper House resistance. The election also exposed the limited electoral appeal of the newly formed Centrist Reform Alliance (CRA), reinforcing the broader fragmentation and weakness of Japan’s centrist opposition.

LDP’s strengthened mandate comes amid a complex geopolitical environment. Closer leader-level alignment with the United States creates momentum for cooperation in areas including economic security, while Japan continues to navigate a firm yet pragmatic approach toward China.

For businesses, the return of political stability and clearer policy direction provides a more predictable operating environment. Companies may wish to reassess medium- to long-term strategies in light of government priorities—including the “17 strategic sectors”—and consider selective engagement in areas such as AI, semiconductors, healthcare, defense, and energy security, where policy attention and public support are likely to remain sustained.

Election Results

A Snap Election Delivering a Landslide Mandate and Political Realignment

Japan’s February 8 Lower House election marked a sharp political reset. What began as a snap election aimed at stabilizing governance instead produced a historic landslide win for Prime Minister Takaichi and the ruling Liberal Democratic Party (LDP), marking a potential end to political instability that followed successive election setbacks in 2024 and 2025 and delivering unprecedented control of the Diet’s lower chamber.

The election followed major political realignment, including the collapse of the long-standing LDP–Komeito coalition and the formation of a cooperation framework with the Japan Innovation Party (Ishin). These developments, outlined in our earlier thought leadership Birth of the Takaichi Administration, set the stage for a high-stakes test of voter confidence.

Japan’s Lower House consists of 465 seats: 289 elected from single-member districts and 176 from proportional representation. Voters cast two ballots—one for a candidate and one for a party—under a parallel system that does not correct for disproportionality.

The results were decisive. The LDP secured 316 seats, the largest share held by any party in postwar Japan and the first time a single party exceeded a two-thirds majority. Coalition partner Ishin won 36 seats, bringing the ruling bloc’s total to 352 seats and firmly consolidating legislative power. On the opposition side, despite the newly formed Centrist Reform Alliance (CRA)’s appeal to centrist base, it failed to gain traction with voters, winning only 49 seats—down from 167 before the election—with just 20.7% of its 236 candidates elected, underscoring persistent leadership and credibility challenges across the opposition.

What Does It Mean?

The LDP’s landslide victory was widely anticipated, driven in large part by the strong popularity of Japan’s first female prime minister. Entering the campaign with high approval ratings, Prime Minister Takaichi leveraged her visibility and assertive leadership style to attract support across demographic groups, including younger voters, while advancing a more conservative agenda on security, foreign resident policy, and governance. The snap election proved a tactical success, translating personal approval and opposition fragmentation into overwhelming legislative gains, including a two-thirds majority in the Lower House, while exposing the limited appeal of newly consolidated opposition forces such as the Centrist Reform Alliance (CRA).

Expanded Political Bandwidth for the Ruling Liberal Democratic Party (LDP)

Japan’s National Diet consists of two chambers: the House of Representatives (lower house) and the House of Councillors (upper house). While members of the lower house serve shorter terms, the lower house holds greater legislative authority. In particular, it can override the upper house in key legislative circumstances if it commands sufficient support.

Under Japan’s constitutional framework, legislation rejected by the upper house may still be enacted if it is repassed by the lower house with a two-thirds majority. Although the ruling LDP–Ishin bloc remains a minority in the upper house, its post-election control of 316 of 465 seats in the lower house secures that threshold, significantly strengthening the government’s ability to advance legislation and policy priorities.

Severe Setback for the Newly Formed Centrist Reform Alliance (CRA)

In response to Prime Minister Takaichi’s plan to call a snap election, Constitutional Democratic Party (CDP) and Komeito merged under the banner of the Centrist Reform Alliance (CRA) “to broaden the centrist base and prevent it from leaning further to the right.”

However, the alliance suffered a significant setback, losing more than 100 seats compared with its pre-election strength, leading to the resignation of the co-leaders. Key factors behind the alliance’s underperformance include the failure to bridge policy differences—particularly on foreign and security policy—as well as persistent voter skepticism that the merger was driven primarily by electoral expediency. Furthermore, within CRA, as electoral strategies favored ex-Komeito candidates, the former CDP bloc became the clear underperformer, with its Diet representation collapsing by approximately 85%.

Geopolitical Risk Environment Shaping Japan’s Business Outlook

United States

President Donald Trump’s visit to Japan last October featured carefully staged optics that evoked the Abe–Trump era, underscoring the emergence of strong personal chemistry between President Trump and Prime Minister Takaichi. This alignment was reinforced in the run-up to the election, when President Trump expressed his “Complete and Total Endorsement” of the Takaichi administration.

This election outcome has provided Prime Minister Takaichi with a strengthened political mandate, expanding her diplomatic bandwidth to pursue a leader-led approach to Japan–US relations. This trajectory is expected to elevate the role of summit diplomacy, with her planned visit to Washington DC in March emerging as the next key milestone in bilateral cooperation. The prime minister is signaling an interest in encouraging US participation in rare earth mining projects around Minamitorishima Island, Japan’s easternmost territory in the Pacific with significant rare earth potential.

China

During the election campaign, Prime Minister Takaichi’s firm stance toward China—amid heightened Chinese pressure on Japan following Diet remarks related to Taiwan—appears to have resonated with domestic voters. China’s foreign ministry has reiterated that China’s policy toward Japan remains consistent, unaffected by the outcome of any single election, while also calling for Japan to withdraw its statements about Taiwan. The prevailing sentiment among China’s business community and academic experts is caution with a guarded outlook on China-Japan relations. While Chinese pushback is expected to persist in the near term, the Japanese government has signaled its intention to pursue a dual-track approach, combining enhanced defense capabilities and closer coordination with like-minded partners with continued efforts to engage China through sustained dialogue.

At the same time, reports that President Trump may visit China the first week of April point to a degree of Washington’s engagement with Beijing. While Japan and the United States share broad concerns over China, their approaches are not fully aligned, highlighting the need for Japan to pursue a pragmatic path toward stabilizing relations with China. Whether the post-election mandate enables such an approach will be closely watched.

Policy Implications for Businesses

As cooperation with the United States in the area of economic security becomes increasingly important, tensions in Japan’s relationship with China—particularly risks related to supply chain fragmentation—are expected to persist, heightening the urgency of establishing domestic sourcing and production frameworks for strategic materials. Against this backdrop of elevated geopolitical risk, the Takaichi administration has positioned the “17 strategic sectors,” including semiconductors, AI, and cybersecurity, as top policy priorities. With the ruling bloc securing a decisive and stable supermajority in the Lower House, these policy initiatives are now widely expected to be advanced with greater momentum.

Market Reaction

Equity and Bond Markets

Against the backdrop of the ruling bloc’s landslide victory and expectations for political stability, the Tokyo stock market surged on the day following the election, with the Nikkei 225 briefly reaching the 57,000 level for the first time during intraday trading. In contrast to the sharp rally in equities, movements in the bond market remained relatively limited.

Foreign Exchange Markets

Prior to the election, market participants largely anticipated that a victory by the Liberal Democratic Party—campaigning on a platform of “responsible proactive fiscal policy”—would lead to further yen depreciation. However, in the foreign exchange market on the day after the election, the yen strengthened in certain phases. Market observers point to the view that Prime Minister Takaichi largely refrained from emphasizing consumption tax cuts during the campaign, leading to a broader perception that opposition-backed proposals for immediate consumption tax reductions were unlikely to be implemented in the near term—an assessment that appears to have contributed to yen strength.

Sector-Specific Impact

Investment momentum is expected to accelerate in growth sectors designated as part of the “17 strategic sectors,” particularly in areas such as healthcare, AI, semiconductors, and defense. Reflecting these expectations, stocks related to defense as well as AI and semiconductor industries rose in the equity market on the day following the election.

The Takaichi administration’s 17 strategic priority areas for investment:

AI and Semiconductors
Shipbuilding
Quantum Technologies
Synthetic Biology and Biotechnology
Aerospace
Digital and Cybersecurity
Content Industries
Food Tech
Resources, Energy Security, and Green Transformation (GX)
Disaster Prevention and National Resilience
Drug Discovery and Advanced Medical Care
Fusion Energy (Nuclear Fusion)
Advanced Materials (Critical Minerals and Components/Materials)
Port and Logistics Infrastructure
Defense Industry
Information and Communications Technology (ICT)
Ocean Industries / Maritime Sectors

Healthcare

Strengthen Drug Discovery Capabilities: Against the backdrop of intensifying geopolitical risks, including US–China tensions, the government has signaled its intention to strengthen research and development of domestically produced vaccines and therapeutics in order to ensure a stable domestic supply of pharmaceuticals.
Promote Digital Transformation (DX) in Regional Healthcare Infrastructure: In response to population aging and depopulation in regional areas, the administration is expected to advance digital transformation in healthcare, including the use of AI for medical imaging and diagnostic support.
Revise Medical and Long-Term Care Reimbursement: To improve the financial sustainability of hospitals and long-term care facilities and support wage increases for healthcare workers, the government has implemented increases in both medical service fees and long-term care reimbursement rates, underscoring a policy direction toward expanded spending in the social security sector.

Action Recommendations: Businesses should develop medium- to long-term strategies aligned with policy priorities, as drug discovery and healthcare DX are positioned as national strategic areas. By engaging in public–private partnerships and pilot programs, companies can capture growth opportunities in domestic pharmaceuticals and digital health, while closely monitoring changes in reimbursement and regulatory frameworks. At the same time, proactive dialogue with policymakers on AI adoption, data governance, and ethical considerations will be essential for effective risk management.

AI and Semiconductors

Promote AI Deployment and Cross-Sectoral Utilization: The Takaichi administration has articulated a policy stance that positions AI as a foundational technology for enhancing industrial competitiveness and improving administrative efficiency. In addition to promoting the deployment of AI across a wide range of sectors, the government aims to create an enabling environment for private-sector-led AI adoption through investments in human capital development and the establishment of appropriate regulatory and governance frameworks.
Strengthen Domestic Supply Chains for Semiconductors and Rare Earths: Recognizing that advanced semiconductors and rare earths are indispensable to the further development of AI, the Takaichi administration has identified the expansion of domestic production capacity and the diversification of procurement sources as key priorities. These efforts are to be supported through enhanced R&D assistance, workforce development, and infrastructure investment.
Accelerate Data Center Development and Power Infrastructure Expansion: As the widespread adoption of generative AI is expected to drive sharp increases in data processing demand and electricity consumption, the government has signaled its intention to strengthen AI infrastructure by accelerating the development of domestic data centers. At the same time, it aims to secure a stable and cost-efficient power supply through the expanded use of renewable energy and next-generation power sources.

Action Recommendations: Companies in the AI and semiconductor sectors should treat expanded AI deployment and supply chain resilience as policy-driven growth opportunities and reassess investment and business strategies accordingly. Participation in government-backed initiatives—such as domestic semiconductor production, rare earth sourcing, and data center development—can support long-term competitiveness. Continued engagement with policymakers on power supply, talent development, and data governance will also be critical.

Defense

Following its victory in the Lower House election, the Takaichi administration can be seen as having secured public backing to accelerate progress toward achieving defense spending equivalent to 2.0% of GDP, ahead of schedule (with defense-related expenditures projected at approximately 1.8% of GDP in FY2025).

Invest in Dual-Use Technologies: Prime Minister Takaichi has consistently emphasized the pursuit of economic growth through investment in dual-use technologies with both civilian and military applications. Japanese public and private sector actors have already begun promoting such dual-use products to markets including Northern Europe and Germany, where defense awareness has heightened in response to the conflict in Ukraine
Expand Defense Equipment Transfers: The Takaichi administration has taken a proactive stance toward the effective liberalization of defense equipment exports to allied and like-minded countries. The ruling bloc’s electoral victory is therefore viewed as a tailwind for Japan’s defense industry. Historically focused on domestic demand—primarily procurement by the Ministry of Defense—the industry is now seeing growing expectations for the expansion of overseas markets.

Action Recommendations: Defense-related companies should view rising defense spending and the expansion of equipment transfers as medium- to long-term opportunities, while reassessing strategies beyond domestic demand to include allied and like-minded markets. Strengthening public–private collaboration through investment in dual-use technologies, alongside careful management of export controls and international norms, will be essential.

Materials presented by Edelman’s public & government affairs experts. For additional information, reach out to Yuichi.Kori@edelman.com.

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