David Brunnstrom, Simon Lewis (JO:), Trevor Hunnicutt and Tim Kelly
WASHINGTON/TOKYO (Reuters) – U.S. President Joe Biden’s decision to block Nippon Steel’s $14.9 billion bid for US Steel cast a shadow over Secretary of State Antony Blinken’s visit to Japan on Tuesday for farewell meetings with Washington’s most important ally in Asia.
The rejection, announced on Friday, shook US efforts to strengthen ties with Asian allies just as the political crisis in South Korea potentially complicates a revived relationship between Washington, Seoul and Tokyo. The trilateral alliance is a key point in the countries’ efforts to counter China’s military buildup.
Investment in the U.S. could also be reduced, but analysts say any damage to the broader U.S.-Japan relationship is likely to be limited given shared security concerns over China.
On Monday, Japanese Prime Minister Shigeru Ishiba described Biden’s decision to block the sale of US Steel to Nippon Steel as “puzzling.”
Accompanied by White House National Security Adviser Jake Sullivan, Blinken met with Japanese Foreign Minister Takeshi Iwaya in Tokyo and will hold talks with Ishiba and other senior Japanese officials later in the day.
The numerous trips to Japan over the past four years “are evidence not only of the importance, but also of the centrality that the United States places on our partnership. President Biden asked me to come on this latest trip to emphasize that,” Blinken Iwayi said.
“We have, between our two countries, a partnership that started with a focus on bilateral issues, worked on regional issues and is now truly global,” he added.
Ahead of his trip, the State Department said Blinken wanted to build on the momentum of US-Japan-South Korea trilateral cooperation.
In Seoul on Monday, Blinken reaffirmed confidence in South Korea’s handling of the political turmoil as investigators there sought to extend the arrest warrant for impeached President Yoon Suk Yeol.
US President-elect Donald Trump’s allies have also assured Seoul and Tokyo that they will support continuing to improve ties and enhance military, economic and diplomatic cooperation to counter China and North Korea, Reuters reported ahead of Trump’s Nov. 5 re-election.
TENSION, LIMITED DAMAGES FROM NIPPON STEEL DECISION
Nippon Steel and US Steel filed a lawsuit on Monday accusing Biden of violating the US Constitution by blocking their $14.9 billion merger through what they called a bogus national security review. They called on the US federal court to overturn the decision.
Nicholas Szechenyi, a Japan expert at Washington’s Center for Strategic and International Studies, said Biden’s decision would make Blinken’s visit to Tokyo “awkward.”
However, “Japan will not allow Nippon Steel’s decision to poison US-Japan relations; it is too important to Japan’s national security,” he said.
A Japanese diplomat told Reuters that Biden’s decision could chill foreign direct investment, but hoped that close US-Japanese relations would continue, with a strong focus on re-establishing the strong ties with Trump seen during his previous administration, and capitalizing on an increasingly hawkish mood. in Washington about China.
Business lobbies in both Japan and the US have pushed hard for the merger, backing their arguments with warnings about the effect on vital US-Japan relations.
But the merger has faced opposition from both Biden and Trump, who takes office on Jan. 20 and has been courted diligently by Japan ahead of his re-election.
After his re-election, Trump reiterated that he was “totally against” the merger and vowed to block it as president and support US Steel with tax breaks and tariffs.
A former senior official in Trump’s first administration told Reuters he believed Trump would take the same approach as Biden.
Marc Busch, a fellow at Georgetown University’s McDonough School of Business, predicted “significant consequences” for US efforts to work with allies to create resilient supply chains in the face of Chinese dominance or competition in key areas.
“Japan and other allies will be leery of investing in or aligning with politically sensitive US supply chains. China must be laughing at itself that it could never have hoped for a better outcome.”
