(Corrects name to Takeshi, not Takashi, in paragraph 3 of January 7 story)
By David Brunnstrom, Simon Louis (JO:), Trevor Hunnicutt and Tim Kelly
TOKYO/WASHINGTON (Reuters) – The foreign ministers of Japan and the United States said on Tuesday that ties between their countries were stronger than ever, even after Japan’s prime minister called U.S. President Joe Biden’s decision to block Nippon Steel’s $14.9 billion bid for US Steel as “embarrassing.”
Biden’s decision last Friday was a blow to U.S. efforts to strengthen ties, just as neighboring South Korea’s political crisis potentially complicates deepening trilateral relations between Washington, Seoul and Tokyo, formed to counter China’s growing military power.
Japanese Prime Minister Shigeru Ishiba on Monday expressed confusion over Biden’s decision, but after meeting Tuesday in Tokyo, U.S. Secretary of State Antony Blinken and Japanese Foreign Minister Takeshi Iwaya praised relations bilateral relations as being stronger than ever.
In remarks to the media, during which no questions were answered, Blinken did not mention Nippon Steel, but a Japanese Foreign Ministry statement said he and Iwaya “exchanged views on the “economics, including on the acquisition of United States Steel (NYSE:) Corporation by Nippon Steel Corporation.”
He said they “reaffirmed the importance of economic relations between Japan and the United States, including investments by Japanese companies in the United States.”
Blinken said the two countries are “leading the way” in cooperation between like-minded countries and added: “I am confident that this will continue for many years to come.”
After meeting with Ishiba at his residence, Blinken did not respond to reporters’ questions about the potential impact of Biden’s decision on bilateral relations.
Analysts say that while this could have a deterrent effect on Japanese investment in the United States, any damage to their broader relationship will likely be limited given the two countries’ shared security concerns over the China.
Business lobbies in Japan and the United States pushed hard for the merger, backing their arguments with warnings about the consequences for vital U.S.-Japan relations.
But he still faces opposition from Biden and President-elect Donald Trump, who takes office on Jan. 20 and has been assiduously courted by Japan in the run-up to his re-election.
Before his trip, the State Department said Blinken wanted to build on the momentum of trilateral cooperation between the United States, Japan and South Korea.
In Seoul on Monday, Blinken reaffirmed his confidence in South Korea’s handling of its political unrest as investigators sought to extend an arrest warrant for deposed President Yoon Suk Yeol.
Trump’s allies also assured Seoul and Tokyo that they would support continued efforts to improve relations and advance military, economic and diplomatic cooperation to counter China and North Korea, Reuters reported before the American elections.
TENSION, LIMITED DAMAGES FROM NIPPON STEEL’S DECISION
Nippon Steel and US Steel filed a lawsuit Monday, accusing Biden of violating the US Constitution by blocking their merger through what they called a sham national security review. They asked the US federal court to overturn the decision.
A Japanese diplomat told Reuters that Biden’s decision could dampen foreign direct investment, but he hoped the close U.S.-Japan relationship would continue, with a strong emphasis on restoring strong ties with Trump observed under his previous administration and took advantage of the increasingly hawkish mood. in Washington on China.
Nicholas Szechenyi, a Japan expert at the Center for Strategic and International Studies in Washington, said Japan would not let the move poison U.S.-Japan relations. “It’s too important for Japan’s national security,” he said.
Trump reiterated after his election victory that he was “totally against” the merger and pledged to block it as president and support US Steel with tax breaks and tariffs.
A former senior official in the first Trump administration told Reuters he believed Trump would have taken the same approach as Biden.
Marc Busch, a researcher at Georgetown University’s McDonough School of Business, predicts “significant payoffs” for U.S. efforts to work with allies to create resilient supply chains in the face of domination or Chinese competition in key areas.
“Japan and other allies will have doubts about investing in or aligning with politically sensitive U.S. supply chains,” he said. “China must be laughing internally to know that it could never have hoped for a better outcome.”
