(Corrects name to Takeshi, not Takashi, in paragraph 3 of January 7 story)
David Brunnstrom, Simon Lewis (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 out U.S. President Joe Biden’s decision to block Nippon Steel’s 14.9 billion dollars for US Steel “confusing.”
Biden’s move last Friday was a jolt to US efforts to strengthen ties just as a political crisis in neighboring South Korea potentially complicates deepening trilateral relations between Washington, Seoul and Tokyo formed to counter China’s growing military might.
On Monday, Japanese Prime Minister Shigeru Ishiba expressed confusion at Biden’s decision, but after a meeting in Tokyo on Tuesday, US Secretary of State Antony Blinken and Japanese Foreign Minister Takeshi Iwaya hailed bilateral ties as stronger than ever.
Blinken did not mention Nippon Steel in a no-questions-asked media address, but a statement from Japan’s foreign ministry said he and Iwaya “exchanged views on the economy, including the acquisition of United States Steel (NYSE:) Corporation by Nippon Steel Corporation.” “
It said they “reaffirmed the importance of Japan-US economic relations, including investment by Japanese companies in the US.”
Blinken said the two countries were “leading the way” in cooperation between like-minded countries, adding: “I have great confidence that it will continue for many, many years to come.”
After meeting with Ishiba at his residence, Blinken did not respond to reporters’ questions about the possible impact of Biden’s decision on bilateral relations.
Analysts say that while this could have a chilling effect on Japanese investment in the US, any damage to their wider relationship is likely to be limited given the two countries’ shared security concerns over 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 he still faced opposition from both Biden and President-elect Donald Trump, who takes office on Jan. 20 and has been courting him hard in Japan ahead of his re-election.
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 an arrest warrant for impeached President Yoon Suk Yeol.
Trump’s allies have also assured Seoul and Tokyo that they will support continued efforts to improve ties and advance military, economic and diplomatic cooperation to counter China and North Korea, Reuters reported ahead of the US 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 merger through what they called a bogus national security review. They called on the US federal court to overturn the decision.
A Japanese diplomat told Reuters that Biden’s move could chill foreign direct investment, but hoped that close US-Japan 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 on China.
Nicholas Szechenyi, a Japan expert at the Washington-based Center for Strategic and International Studies, said Japan will not allow the decision to poison US-Japan relations. “It is too important to Japan’s national security,” he said.
After winning the election, Trump reiterated that he was “totally against” the merger and promised to block it as president and to 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 wary of investing in or aligning with politically sensitive US supply chains,” he said. “China must be laughing at itself that it could never have hoped for a better outcome.”
