Despite Nippon Steel, the US and Japan say relations are stronger than ever. From Reuters

(Corrects name to Takeshi, not Takashi, in paragraph 3 of January 7 story)

By David Brunnstrom, Simon Lewis (JO:), Trevor Hunnicutt and Tim Kelly

TOKYO/WASHINGTON (Reuters) – The foreign ministers of Japan and the United States said on Tuesday their countries’ ties are stronger than ever, even after the Japanese prime minister criticized U.S. President Joe Biden’s decision to withdraw the $14.9 billion Nippon Steel’s offer to block US Steel. confusing.”

Biden’s move last Friday came as a shock to U.S. efforts to strengthen ties, while the political crisis in neighboring South Korea may complicate a deepening trilateral relationship between Washington, Seoul and Tokyo, formed to counterbalance China’s growing military power.

On Monday, Japanese Prime Minister Shigeru Ishiba expressed confusion over Biden’s decision, but after meeting in Tokyo on Tuesday, US Secretary of State Antony Blinken and Japan’s Foreign Minister Takeshi Iwaya hailed the bilateral relationship as stronger than ever.

Blinken did not mention Nippon Steel in his comments to the media, which were not answered, but a Japanese Foreign Ministry statement said he and Iwaya “exchanged their views on the economy, including the takeover of United States.” Steel (NYSE:)” Corporation by Nippon Steel Corporation.”

It said they “reaffirmed the importance of Japan-U.S. economic relations, including investments by Japanese companies in the United States.”

Blinken said the two countries are “at the forefront” of cooperation between like-minded countries, adding: “I have great confidence that this will continue for many, many years to come.”

After meeting Ishiba at his residence, Blinken did not respond to questions from reporters about the potential impact of Biden’s decision on bilateral relations.

Analysts say that while this could have a chilling effect on Japanese investment in the US, the damage to their broader relations will likely be limited given both countries’ shared security concerns about China.

Business lobbyists in both Japan and the U.S. have pushed hard for the merger, backing their arguments with warnings about its impact on vital U.S.-Japan relations.

But it still faced resistance from both Biden and President-elect Donald Trump, who takes office on January 20 and has been eagerly courted by Japan in the run-up to his re-election.

Ahead of his trip, the State Department said Blinken wanted to build on the momentum of trilateral cooperation between the United States, Japan and South Korea.

Blinken reiterated his confidence in South Korea’s handling of the political unrest in Seoul on Monday as investigators there sought to extend an arrest warrant for indicted President Yoon Suk Yeol.

Trump’s allies have also assured Seoul and Tokyo that he will support continued efforts to improve relations and promote military, economic and diplomatic cooperation in the fight against China and North Korea, Reuters reported ahead of the US election.

TENSION, LIMITED DAMAGES DUE TO NIPPON STEEL’S DECISION

Nippon Steel and US Steel filed a lawsuit Monday accusing Biden of violating the U.S. Constitution by blocking their merger through what they called a sham national security review. They demanded that the US federal court overturn the decision.

A Japanese diplomat told Reuters that Biden’s move could blunt foreign direct investment, but hoped that close U.S.-Japan ties would continue, with an emphasis on restoring the strong ties with Trump from his previous administration and the The increasingly restrictive mood in Washington about China is to be exploited.

Nicholas Szechenyi, a Japan expert at the Center for Strategic and International Studies in Washington, said Japan would not allow the decision to poison U.S.-Japan relations. “It is too important for Japan’s national security,” he said.

Trump reiterated after his election victory that he was “totally against” the merger and promised to block it as president and support US Steel with tax breaks and tariffs.

A former senior official in Trump’s first administration told Reuters he believed Trump would have taken the same approach as Biden.

Marc Busch, a fellow at Georgetown University’s McDonough School of Business, predicts a “significant impact” on U.S. efforts to work with allies to create resilient supply chains in the face of Chinese dominance or competition in key areas.

“Japan and other allies will have doubts about investing in or joining politically sensitive U.S. supply chains,” he said. “China has to smile that it could never have hoped for a better result.”