As signs emerged that the president was Biden. getting ready To prevent Japanese steelmaker Nippon Steel from acquiring Pittsburgh-based U.S. Steel, top Japanese officials Warned again and again that canceling the merger would disrupt economic relations between the allies;
Keidanren, Japan’s largest business lobby, said in September that US investment would suffer if Nippon Steel’s $15 billion bid was blocked. Japanese Prime Minister Shigeru Ishiba contacted Mr. Biden and asked him to approve the deal, which he described as a critical juncture.
In the United States, during a heated presidential campaign, both Mr. Biden and his opponent, Donald J. Trump, came out against the Japanese acquisition of US Steel, a famous American company, in a key electoral state. Mr. Biden on Friday prevented the integration from proceeding.Arguing that foreign control of US Steel would threaten US national security.
Nippon Steel and US Steel attacked Mr. Biden’s decision, calling the deal review “deeply flawed by politics” and its rejection “shocking.” The companies said Friday they would consider taking legal action to try to restore the deal.
But while Mr. Biden’s decision sends a worrisome signal to Japanese leaders about the dangers of American politics, it is not expected to deter other companies from doing business in the United States.
Japanese businesses have had no choice but to move significantly toward the U.S. in recent years, as they have had difficulty investing in China. Now, in anticipation of a second Trump administration, executives are even more busily making fresh investments in the US.
For decades, Japanese companies have sought growth opportunities outside the country, where the population is large. Aging and Decayand Currency fluctuations Export activities have been affected. Much of this expansion has been aimed at the United States and China, which have long sought to become Japan’s largest trading partners.
But it has become more difficult for Japanese firms to operate in China because of less friendly regulations and Competition from state-backed competitors. China’s share of Japanese foreign direct investment. There was a steady decline During the last half decade, while it has climbed in the United States. Japan became the top investor in the US in 2019 – a position it has maintained every year.
While the volume of Japanese-led deals in the U.S. slowed slightly last year, trade experts expect investment to pick up again when President-elect Trump takes office. This is because the threat of increased tariffs gives Japanese and other foreign companies more incentive to invest and produce in the US than in other countries, particularly China.
Japanese power companies are eyeing potential investments in natural gas and other energy projects promoted by Mr. Trump. At a Trump news conference last month Masayoshi sonThe chief executive of Japanese technology giant SoftBank pledged to invest $100 billion in the United States over the next four years.
Masahiko Hosokawa, a professor at Massey University and a former senior official at Japan’s Ministry of Trade, said, “Business leaders like Nippon Steel have unique cases. will not look at and will not make decisions to withhold investment in the United States.” “It’s not a case of harm, especially in the medium to long term.”
Nikkei, Japan’s biggest business publication, wrote on Saturday that Nippon Steel’s crushed bid was the result of a miscalculation that “economic rationality” would prevail even in a presidential election year.
In December 2023, when Nippon Steel announced its plans to acquire US Steel, company executives thought the deal would move quickly. As the deal was reviewed by the Committee on Foreign Investment in the United States, Nippon Steel doubled down on its bet on the U.S. by withdrawing from a longstanding joint venture in China that had raised suspicions from regulators.
Instead, Nippon Steel’s bid drew a backlash from some politicians and union leaders, who argued that the purchase of a storied U.S. manufacturer by a foreign firm would harm national security and local industry. will deliver Initially, both President Biden and President-elect Trump said they were against the deal.
As part of its bid, Nippon Steel offered a large premium over American Steel shares and promised to invest billions in the company’s American plants. Takahiro Mori, the Nippon Steel executive in charge of the deal, made repeated trips to the United States to meet with more than 1,000 employees, local officials and others with a stake in the deal.
Late last month, the review committee, known as CFIUSsent a letter to the White House saying he was unable to decide whether to allow Nippon Steel to buy U.S. Steel. That paved the way for President Biden to close the deal.
At the same time, China is trying to strengthen relations with Japan. Some speculate that the moves are in anticipation of a trade war between the US and China that is expected to worsen after Mr Trump takes office.
In November, Beijing resumed a policy allowing Japanese citizens to make short-term visa-free visits. Japan is working to ease visa requirements for Chinese visitors. In September, China said it would Gradually resume Japanese seafood imports. After Japan banned them in response to releasing treated radioactive water into the ocean.
William Chu, deputy director of the Japan Policy Center at the Hudson Institute, a Washington think tank, said he sees the Nippon Steel case as a “one-off.”
“The US has a long history of being a stable environment, and China is not an attractive place to raise investment right now,” Mr Chu said. “But that doesn’t mean Japan won’t feel inclined to hedge its bets.”
In July, as signs emerged that the acquisition of Nippon Steel might not be approved, one of its distributors, Marubeni-Atocho Steel, said it would buy a stake in the Spanish steel company.
A person with knowledge of the purchase said Nippon Steel is eager for Marubeni-Itochu Steel to expand its presence in Europe, an increasingly important market, as hopes fade that Nippon Steel will gain a larger share in the United States.