(Bloomberg) -- It was meant to be a final swing through Tokyo topped with a sushi breakfast to cement closer ties with one of the US’s closest allies.
Instead, Secretary of State Antony Blinken got a rebuke from Japan’s foreign minister and ignored reporters’ questions, after President Joe Biden’s decision to label Nippon Steel Corp.’s attempt to buy US Steel Corp. a national security risk soured relations at a stroke.
It may have been even more awkward for Blinken given that he was among senior officials who had tried to convince Biden to allow the deal to happen with caveats, according to people familiar with the internal deliberations.
Instead, Biden blocked the deal last week, casting a shadow over Blinken’s meetings with Prime Minister Shigeru Ishiba and Foreign Minister Takeshi Iwaya on Tuesday.
“Our economies are extraordinarily intertwined,” Blinken said after his talks with Ishiba. “We are the largest investors in each other’s economies. We work together to strengthen and build more resilient supply chains, critical mineral security, shaping the rules of things like artificial intelligence.”
The remarks were jarring coming so soon after Biden’s decision to bar a Japanese company from making a major investment in the US. Had it occurred, the sale would have been worth $14.1 billion. Blinken didn’t address the move in his comments and walked away as reporters asked questions about it.
At a press conference later, Iwaya said he had raised the issue in his lunch meeting with Blinken.
“I said it was extremely regrettable that the decision was made to prohibit the takeover due to national security concerns,” Iwaya said, adding that the deal would’ve benefited both countries.
An account of Blinken’s meeting with Ishiba released by the Japanese foreign ministry hinted the subject came up in their closed-door discussion. “Both men confirmed the importance of the Japan-U.S. economic relationship, including investment in the U.S. by Japanese companies,” the account stated.
On Monday, Ishiba said he wanted an explanation from the US on why the proposed deal for US Steel entails national security risks.
The assertion is particularly hard to understand for Japan because of its close security ties with the US. Around 50,000 US troops are based in Japan, the largest permanent contingent outside the US. Relations have grown closer over shared concerns about China, which is a far more frequent target of US accusations about security risks.
Despite the uncomfortable undercurrent caused by the Nippon Steel issue, Iwaya also highlighted the otherwise close relationship between the nations. Among other issues, military coordination and training has deepened in recent years.
“The Japan-US partnership grew stronger than ever in the past four years,” Iwaya said during opening remarks at his luncheon with Blinken.
There may be further friction over the thwarted steel deal. Earlier on Tuesday, Nippon Steel Chairman Eiji Hashimoto said the company wasn’t giving up on the proposal, shortly after it and US Steel filed US lawsuits to rescue the acquisition.
Still, it’s highly unlikely the plan will go through. President-elect Donald Trump, who is set to return to the White House in about two weeks, has also vowed to block the deal.
Blinken also met with Japan’s national security adviser and other senior officials on a final visit to the region as secretary of state that may have been more eventful than he might have liked.
During a visit to South Korea on Monday, North Korea launched what Pyongyang later claimed was a new type of hypersonic missile to “keep any rivals in the Pacific region in check.”
(Recasts, updates with Iwaya’s remarks, Ishiba meeting details)
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