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Blinken met Japanese leaders in farewell trip

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South Korea turmoil potentially complicates trilateral

progress

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Incoming President Donald Trump also opposed steel deal

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U.S. and Japan share concerns about China

By David Brunnstrom, Simon Lewis, Trevor Hunnicutt and Tim

Kelly

TOKYO/WASHINGTON, Jan 7 (Reuters) - The foreign

ministers of Japan and the United States said their countries'

ties were stronger than ever on Tuesday, even after Japan's

prime minister called U.S. President Joe Biden's decision to

block Nippon Steel's ( NISTF ) $14.9 billion bid for U.S. Steel

"perplexing."

Biden's move last Friday was a jolt to U.S. efforts to boost

ties just as neighboring South Korea's political crisis

potentially complicates a deepening trilateral relationship

between Washington, Seoul and Tokyo formed to counter 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, U.S. Secretary of State Antony Blinken and Japan's

Foreign Minister Takeshi Iwaya hailed bilateral ties as stronger

than ever.

In remarks to the media, at which no questions were taken,

Blinken did not mention Nippon Steel ( NISTF ), but a statement from

Japan's foreign ministry said he and Iwaya "exchanged views on

the economy, including on the acquisition of United States Steel

Corporation ( X ) by Nippon Steel Corporation ( NISTF )."

It said they "reaffirmed the importance of Japan-U.S.

economic relations, including investments by Japanese companies

in the U.S."

Blinken said the two countries were "leading the way" in

cooperation between like-minded countries and added: "I have

great confidence that will continue for many, many years to

come."

After meeting Ishiba at his residence, Blinken did not

respond to questions shouted by reporters about the potential

impact of Biden's decision on bilateral ties.

Analysts say that while it could have a chilling effect on

Japanese investment into the U.S., any damage to their wider

relationship will probably be limited given the two countries'

shared security concerns about China.

Business lobbies in both Japan and the U.S. have pushed hard

for the merger, backing their arguments up with warnings about

the effect on the vital U.S.-Japan relationship.

But it still faced opposition from both Biden and

President-elect Donald Trump, who takes office on Jan. 20 and

was assiduously 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 U.S.-Japan-South Korea trilateral

cooperation.

In Seoul on Monday, Blinken reaffirmed confidence in South

Korea's handling of its political turmoil as investigators there

sought to extend a warrant for the arrest of impeached President

Yoon Suk Yeol.

Trump's allies have also reassured Seoul and Tokyo he will

support continuing efforts to improve ties and advance military,

economic and diplomatic cooperation to counter China and North

Korea, Reuters reported ahead of the U.S. election.

TENSION, LIMITED DAMAGE FROM NIPPON STEEL DECISION

Nippon Steel ( NISTF ) and U.S. Steel filed a lawsuit on Monday

charging that Biden violated the U.S. Constitution by blocking

their merger through what they termed a sham national security

review. They called for the U.S. federal court to overturn the

decision.

A Japanese diplomat told Reuters Biden's move could chill

foreign direct investment, but hoped close U.S.-Japan relations

would continue, with a strong emphasis on re-establishing the

strong ties with Trump seen during his previous administration,

and taking advantage of the increasingly hawkish mood in

Washington on China.

Nicholas Szechenyi, a Japan expert at Washington's Center

for Strategic and International Studies, said Japan would not

let the decision poison the U.S.-Japan relationship. "It's too

important for Japan's national security," he said.

Trump reiterated after his election win that he was "totally

against" the merger and vowed to block it as president and

support U.S. 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, forecast "significant fallout" for 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 aligning with politically sensitive U.S. supply chains," he

said. "China must be chuckling to itself that it could never

have hoped for a better outcome."