Biden's opposition to U.S. Steel takeover could test ties with key ally Japan

TOKYO — U.S. opponents of a Japanese steelmaker's $14.9 billion bid for U.S. Steel cite concerns about national security and a reluctance to relinquish a storied American company. In Japan, the business community sees election-year politics at play.

President Joe Biden is preparing to formally block the proposed takeover of U.S. Steel by Nippon Steel, two people familiar with the matter confirmed to NBC News last week, over what he says are national security concerns.

That could complicate efforts to strengthen ties with Japan, a key U.S. ally, in an effort to counter China's growing influence in the Asia-Pacific and around the world. Washington has also been pushing Tokyo to align itself with U.S. export controls that limit China's ability to produce advanced semiconductors.

The deal's failure would be an "epic own goal" that could inadvertently help China — which accounts for more than half of the world's steel production — maintain its dominance of the global market, said Jeff Kingston, a professor of history and Asian studies at Temple University Japan.

The opposition to the deal "also places Japan in the unenviable company of China in terms of Washington's politicization of economic issues," Kingston said in an email. "But Japan is used to the twists and turns of presidential campaigns and understands that the Democrats are keen to appeal to Rust Belt voters."

Former President Donald Trump and Vice President Kamala Harris have joined Biden in opposing Nippon's acquisition of U.S. Steel, which is based in the pivotal swing state of Pennsylvania.

Read more from NBC News:

The United Steelworkers union, whose members are part of an important voting bloc in the state, vehemently opposes the deal, even as Nippon Steel vows it