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SEOUL, South Korea — Japan is getting its samurai on — riding into battle against both the outgoing and incoming U.S. presidents.
The usually reticent ally is making it clear that it will not go quietly in its fight to overturn President Biden’s decision to block Nippon Steel’s $14.1 billion takeover bid of U.S. Steel, with Prime Minister Shigeru Ishiba warning this week that the rejection could have real consequences for the bilateral relationship, where annual two-way trade topped $300 billion in recent years.
Particularly rankling is the fact that Mr. Biden cited “national security concerns” in denying the Japanese company’s offer.
“It is unfortunately true that there are concerns being raised within Japan’s industrial world over future Japan-U.S. investment,” Mr. Ishiba told reporters Monday in his first press conference of the new year. “It’s something we have to take seriously.”
“I will strongly urge the U.S. government to respond toward dispelling [the concerns],” he added. “It is out of the question if we don’t get proper explanation on why there are concerns on national security.”
Eiji Hashimoto, the chairman and CEO of Nippon Steel, seconded those concerns in a press conference in Tokyo Tuesday, the day after his company, in a joint action with U.S. Steel, filed a lawsuit seeking to nullify Mr. Biden’s veto in two U.S. courts. Mr. Biden had been under strong political pressure from Democratic-leaning labor unions to nullify the sale of the iconic but troubled American steelmaker to a foreign rival.
Speaking to reporters, Mr. Hashimoto accused Mr. Biden of acting against the law in the final days of his presidency to stymie a deal that has been in the works since December 2023, overriding the findings of his own government to do so.
“A review of the deal by the Committee on Foreign Investment in the United States was not properly conducted due to President Biden’s illegal intervention,” Mr. Hashimoto said. “We can never accept this.”
Mr. Hashimoto added that the lawsuit, which aims to annul Mr. Biden’s ruling, will prove that the decision was not made on national security grounds, as claimed. That rationale is widely dismissed in Tokyo, a key U.S. ally in the region and host to more than 60,000 American troops at dozens of bases and other facilities across Japan.
The decision was also harshly criticized in parts of the Japanese press.
“When is an ally not a partner? Apparently when a Japanese company seeks to purchase an iconic U.S. corporation,” The Japan Times said in an editorial this week, calling Mr. Biden’s move a “troubling snub” of an ally. “Trust has been greatly damaged and it is unclear what will be required to undo the harm.”
The furor coincided with Secretary of State Antony Blinken’s valedictory visit to Tokyo on Tuesday. The secretary of state met with Mr. Ishiba and Foreign Secretary Iwaya Takeshi. The State Department’s readouts of the meetings did not address the deal and referred only obliquely to the importance of the bilateral economic relationship.
Big investors
Japan is the largest single foreign investor in the U.S., and the U.S. is the largest single investor in Japan.
Mr. Ishiba said the U.S. must “be able to explain clearly why there is a national security concern” with Japanese investment in a U.S. company. “We will strongly call on the U.S. government to take steps to dispel these concerns,” he said.
The Nippon Steel-U.S. Steel lawsuit accuses Mr. Biden of bowing to the United Steelworkers union, a key supporter of the Democratic Party, even though many rank-and-file members and a substantial majority of U.S. Steel employees reportedly favor the deal.
That lawsuit has been filed in the D.C. Circuit Court of Appeals. A separate lawsuit was filed in the U.S. District Court for the Western District of Pennsylvania against U.S. steelmaker Cleveland-Cliffs Inc., which sought to acquire U.S. Steel at a lower price than Nippon offered.
The lawsuit claims Cleveland-Cliffs, together with the steelworkers union, has undertaken “a coordinated series of anti-competitive and racketeering activities illegally designed to prevent any party other than Cliffs from acquiring U.S. Steel as part of an illegal campaign to monopolize critical domestic steel markets.”
President-elect Donald Trump offers no relief for Japanese business executives and political leaders. He said he would have blocked the merger and vows to impose new tariffs protecting U.S. Steel from foreign rivals.
“Why would they want to sell U.S. Steel now when tariffs will make it a much more profitable and valuable company?” Mr. Trump wrote in a post on his social media site Truth Social. “Wouldn’t it be nice to have U.S. Steel, once the greatest company in the world, lead the charge toward greatness again?”
That suggests Mr. Hashimoto faces massive odds in persuading a U.S. court to reverse Mr. Biden’s decision. Still, he put on a brave face.
“There is a chance we can still win,” he said. “We will never give up on growing our U.S. operations.”
On a website it created to promote the acquisition, Nippon Steel wrote, “Nippon Steel and U.S. Steel remain confident that the transaction is the best path forward to secure the future of U.S. Steel — and we will vigorously defend our rights to achieve this objective.”
Some Tokyo-based analysts warn that Nippon Steel would face a long-term expansion roadblock if it cannot acquire U.S. Steel.
Others say Nippon’s shares have not taken a serious dive because of the deal’s massive price and the long-standing political hurdles.
The Japanese have some U.S. allies, and U.S. Steel executives say they will fight to save the deal. They argue that it will bring necessary investments and technological improvements and avoid the need for immediate layoffs at the Pittsburgh-based company.
U.S. Steel CEO David Burritt wrote on the company’s website that Mr. Biden had “insulted Japan, a vital economic and national security ally, and put American competitiveness at risk. … The Chinese Communist Party leaders in Beijing are dancing in the streets.”
On the Tokyo-based conservative news website Japan Forward, Grant Newsham, a retired U.S. Marine officer with extensive experience in the region, wrote, “Team Biden is doing so many strange things on its way out the door.”
Citing U.S. military competition with China across the Indo-Pacific region, he said, “Telling Japan, ‘We want you to fight China with us, but we don’t want you to own U.S. Steel’ won’t be well received in Tokyo.”
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