Japan warns of possible trade repercussions after blocking Nippon Steel acquisition of US Steel

The Prime Minister of Japan, Shigeru Ishiba, warned this Monday about the possible consequences on bilateral trade following US President Joe Biden’s decision to block Nippon Steel Corp.’s $14.1 billion acquisition of United States Steel Corp..

During a news conference, Ishiba expressed concern about the impact of the measure, citing concerns in Japanese business circles regarding future investments between Japan and the United States. «Unfortunately, it is true that this decision has raised concerns in the Japanese business environment. “We must take this situation with the utmost seriousness,” he stated.

For his part, Nippon Steel president Tadashi Imai announced that the company will explore all legal avenues to challenge Biden’s decision, calling it unjustified. “We will not give up expanding our operations in the United States,” Imai reiterated in a statement issued this Monday.

First time in history

Biden’s decision marks the first time a US president has blocked an M&A deal involving a Japanese company. According to the president, the purchase of US Steel by Nippon Steel would represent “a risk to national security and critical supply chains” of the United States.

Analysts believe the move could be politically motivated, pointing out that it seeks to win the support of the influential United Steelworkers union, a key ally of the Democratic Party that opposed the acquisition.

In a joint statement, Nippon Steel and US Steel claimed that the review by US authorities was “manipulated to advance President Biden’s political agenda” and announced that they will take legal action to protect their rights.

The decision has sparked criticism in Japan, where businessmen believe it sets a worrying precedent for future Japanese investments in the United States, a strategic ally. Japanese Minister of Economy, Trade and Industry Yoji Muto called the move “extremely regrettable and incomprehensible” and said he will continue to work with the US government to allay concerns.

«Economic relations are the basis of our bilateral ties. It is crucial to ensure an environment where companies can make investment decisions without fear,” Muto stated.

Meanwhile, Nippon Steel is expected to argue in court that Biden’s decision lacks sufficient evidence to demonstrate a risk to national security and that it violates due process established by the US Constitution and the laws governing the Committee on Foreign Investments.

According to reports from Washington PostBiden’s decision was contrary to the recommendations of several senior officials, including Secretary of State Antony Blinken and Treasury Secretary Janet Yellen, who expressed doubts about the president’s stance.

Nippon Steel’s response, which includes a press conference scheduled for this Tuesday, will be key in what could become an emblematic case on foreign investment and trade between both countries.