U.S.-Japan ties strong despite blocked Nippon Steel deal: ambassador

U.S. Ambassador to Japan Rahm Emanuel on Thursday played down concerns over the potential repercussions from President Joe Biden's decision to block the $14.1 billion acquisition of United States Steel Corp. by Japan's Nippon Steel Corp, saying the bilateral ties are "stronger" than a single business transaction.

As the world braces for Donald Trump's second term as president -- and the unpredictable diplomacy and transactional approach he could take with allies -- the outgoing ambassador was also hopeful that the next administration will carry on valuing the ties it has with allies in the Indo-Pacific in dealing with an assertive China.

Speaking in Tokyo ahead of his departure from Japan, Emanuel said the two countries are "in a relationship now that's been reinvigorated, reenergized," touching on Japan's commitment to drastically increasing its defense spending, moves to upgrade the alliance's command and control frameworks for better coordination, as well as cooperation in space, technology and other fields.

Biden, taking over from Trump in January 2021 after his predecessor championed the "America First" agenda, has been credited for recommitting to multilateralism and pursuing what the administration calls a "latticework" of partnerships and alliances to address various challenges in the Indo-Pacific.

An outspoken critic of China, the 65-year-old ambassador said Beijing's aggressive "wolf-warrior" diplomacy was an "absolute debacle" that "woke all of this region up," from Japan, South Korea, Australia to the Philippines.

"China's entire strategy is to isolate each of the players in the region," he said. "Our strategy is to isolate China -- and China does a pretty good job helping us do that."

But the Biden administration draws to a close with Japan expressing dismay over the doomed deal between Nippon Steel and U.S. Steel, which would have otherwise showcased companies of the close allies joining forces to counter China's dominance in the key industry.

Emanual, however, said, "The U.S.-Japan alliance is stronger than a single financial business transaction."

"I think I can give you a list much longer than one transaction that says we are friends, we are trusted allies, we work together," he said, citing as an example a Japanese company's involvement in a $20 billion U.S. port infrastructure investment project to bring crane manufacturing capabilities back to the United States amid concerns of the high reliance on Chinese-made equipment.

As for the trilateral relationship between the United States, Japan and South Korea, which the Biden administration also worked to shore up, the ambassador indicated that further efforts would be needed for it to continue to develop.

"I think it survives. The question is, does it thrive?" he said.

The ambassador pointed to the need to "replicate" the "energy and intensity" brought to the partnership by Biden, Japan's Fumio Kishida who served as prime minister for three years from 2021, and South Korean President Yoon Suk Yeol, whose political fate has become uncertain following the martial law turmoil late last year.

While Trump's return could mean pressure on allies to pay more for U.S. defense, Emanuel said Japan's current plan to raise its spending for defense and other related projects to 2 percent of its gross domestic product by fiscal 2027 -- or some 11 trillion yen ($70 billion) -- is a "significant response" to the changing security environment.

"I think the 2 percent is the right answer at the right time for the right situation," he said.

But he also called for the importance of looking into "the strategic dynamics" in the years ahead for Japan to find the appropriate level of defense outlays to ensure the type of deterrence it wants to project.

Emanuel also said he believes the incoming Trump team would "very quickly realize" that U.S. allies in the Indo-Pacific are "essential" when dealing with "an away game for the United States."

"Japan, Korea, Australia, the Philippines, India level the playing field," he said.

Emanuel, former White House chief of staff to Barack Obama and former Chicago mayor, took on the role of ambassador to Japan in January 2022.

Trump, who will be sworn in as president on Jan. 20 for the second time, has tapped George Glass, a businessman from Oregon with a background in investment banking and real estate, as the next ambassador to Japan. Glass served as ambassador to Portugal under Trump's first term as president.

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