BANGKOK — U.S. President Joe Biden’s selection to decline a bid by Nippon Steel to acquire U.S. Steel on national safety grounds isn’t the first period friction over trade and fund has irked Washington’s closest friend in Asia.

There have been plenty of scraps over trade in the history few decades, and Secretary of State Anthony Blinken sought to smooth ruffled feathers in a visit to Tokyo on Tuesday.

Nippon Steel Chief Executive Eiji Hashimoto said the top Japanese steelmaker was standing firm on its proposed $15 billion amiable purchase. Nippon Steel and U.S. Steel filed a federal lawsuit challenging the Biden administration’s selection.

But the assertion that the proposed deal could threaten U.S. national safety has stung.

Many in Japan view the selection as a betrayal by Washington after decades of U.S. pressure to lift barriers to fund and trade. The timing doesn’t assist, with Japanese businesses already bracing for potentially damaging tariff hikes once President-elect Donald Trump takes office.

Japanese Prime Minister Shigeru Ishiba was blunt in warning that spoiling the deal might hurt Japanese fund in the U.S.

Here are some key issues at stake:

While in Tokyo in a farewell tour before Biden leaves office, Blinken told reporters he believes that during the history four years the alliance with Japan has “grown stronger than it’s ever been before.” Japan and the U.S. are mutually the largest investors in each other’s economies, he noted, “strengthening the foundation for many years to arrive.” Japan’s Foreign Ministry said in a statement that the U.S. Steel selection came up during Blinken’s conference with Foreign Minister Takeshi Iwaya. But it said only that the two sides had “reaffirmed the importance of Japan-U.S. economic relations, including fund in the U.S. by Japanese companies.”

Before Blinken’s visit, Ishiba, who has struggled to construct back and momentum since he took office in October, was emphatic.

“As for why national safety was cited as an issue, it must be clearly explained. Otherwise, upcoming discussions on the matter will arrive to naught,” he said Monday. “No matter how much we are an friend, I depend that the points I have just made are extremely significant for our upcoming relations.”

He said, “It is an unfortunate truth that Japanese industry has voiced concerns about upcoming fund between the U.S. and Japan. We have to receive this very seriously.”

Japan’s Trade Minister Yoji Muto said the selection was “very regrettable.” Headlines in Japanese newspapers mainly concentrated on Nippon Steel and U.S. Steel’s schedule to fight the ruling in court.

Japan is the biggest and most significant U.S. friend in Asia, a connection forged during the U.S. occupation following Japan’s 1945 loss in globe War II. Nearly 63,000 troops are stationed at dozens of facilities across the country and Washington has urged Japan to construct up its own defense capabilities as a counterweight to China’s growing influence and military power.

Japan counts on the U.S. to provide an umbrella of defense against its neighbors China, Russia and North Korea. Some critics have chafed at the selection to decline Nippon Steel’s bid for U.S. Steel, saying Washington was treating Japan like it does China, a potential adversary.

“When is an friend not a associate? Apparently when a Japanese corporation seeks to purchase an iconic U.S. corporation,” The newspaper The Japan Times said in an editorial. It described the concerns over national safety as “incomprehensible,” adding “depend has been greatly damaged and it is ambiguous what will be required to undo the damage.”

Biden and Trump have both supported higher tariffs on imports of steel and aluminum from China, saying they are needed to insulate American producers from unfair trade practices and a flood of cheap imports. In 2018, Trump imposed 25% tariffs on imports of Japanese steel on “national safety” grounds. The Biden administration agreed to a deal in 2022 to allow a sure quota of some steel products to be imported tariff-free. Any above that amount is subject to the 25% tariff.

Today’s trade frictions pursue decades of negotiations that have led Japan to open its markets much more widely to foreign goods and services, transforming its retailing from mostly ancient-style department stores and mom-and-pop shops into outlet malls and large discount stores. Such “gai-atsu,” or foreign pressure, led Japanese automakers and other manufacturers chose to invest in U.S. factories, creating hundreds of thousands of jobs. Nippon Steel and U.S. Steel contend their deal would save American jobs, and business groups on both sides have objected to seeing the deal fall through as part of a broad shift in recent years away from greater openness.



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