The United States is obstructing a bid by Japan's Nippon Steel to acquire US Steel on the grounds of "national security", employing language often reserved for their common perceived threat: China.
The episode has cast a pall over US-Japan ties, even as Japan's Prime Minister Fumio Kishida - who has entrenched his country's position as the superpower's key ally in Asia - is due to visit the US for his farewell tour before stepping down in October.
Nippon Steel, the world's fourthlargest steelmaker, announced in December 2023 that it intended to buy US Steel.
But the potential US$14.9 billion (S$19.3 billion) sale has run into opposition from US President Joe Biden as well as US Vice-President and Democratic presidential nominee Kamala Harris.
US Steel should "remain American-owned and operated", Ms Harris said on Sept 2.
"I will stop Japan from buying United States Steel," former US president Donald Trump said in August, sending US Steel shares plunging by 6 per cent in one day.
Japanese officials are vexed by the offhand use of rhetoric that blatantly calls into question Japan's status as America's closest ally and most stalwart advocate for US interests in the Indo-Pacific.
Experts blame the episode on awful timing on Nippon Steel's part and political expediency in the US.
On Aug 31, in a letter to both companies, the inter-agency Committee on Foreign Investment in the US (CFIUS), which vets foreign buyers for national security risks, said the deal would create such risks and hurt the supply of steel needed for critical transportation, infrastructure, construction and agriculture projects.
Nippon Steel is now making a last-ditch attempt to salvage the deal to buy US Steel, the world's 24th-largest steel producer, amid reports that a presidential order halting the deal was imminent.
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