UPDATED at 5:10 p.m. on Feb. 7, 2025.
WASHINGTON - U.S. President Donald Trump said Friday he would back a deal for Japan’s Nippon Steel to invest in U.S. Steel rather than purchasing the company, potentially creating an avenue for the two allies to overcome a growing irritant in their relationship.
Trump announced the deal after talks at the White House with Japanese Prime Minister Shigeru Ishiba, who became the second world leader to meet with Trump since he returned to office in mid-January.
In one of his final acts as president, Joe Biden last month blocked Nippon Steel’s planned purchase of U.S. Steel, citing national security concerns. Trump said last year he was “totally against” the sale.
But at a press conference following talks with Ishiba, Trump said he and the Japanese prime minister had agreed to a slate of changes in the trading relationship between the two countries, including for Nippon Steel to formally drop its effort to purchase U.S. Steel.
“Nissan is going to be doing something very exciting about U.S. Steel. They’ll be looking at an investment rather than a purchase,” Trump said, mistakenly referring to the Japanese automaker.
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Trump said selling what was once “the greatest company in the world” to a foreign company was “psychologically not very good,” but attracting more foreign investment could be counted as a victory.
He said he would oversee a meeting between executives of the companies next week to help hash out the revised deal.
Nippon Steel and U.S. Steel are currently suing the American government for blocking the sale. They have alleged illegal political interference, and not genuine national concerns, undergirded Biden’s decision.
The blocking of the deal has also served as an irritant in ties between the United States and Japan, a close ally and trading partner that is also the largest source of foreign investment in America.
Compliments and compromise
Trump and Ishiba swapped gushing compliments during the press conference, with Trump saying that the Japanese prime minister “had the qualities of greatness” and was a “very strong person” about whom former Prime Minister Shinzo Abe “thought the world.”
“I wish he was a little bit weaker than that, but that’s what I got,” Trump said of Ishiba to laughs. “I have to get strong guys all the time.”
The Japanese premier was even more effusive about Trump.
“For many years, I watched him on television,” Ishiba said, describing the experience of finally meeting the “celebrity” as “quite exciting.”
“I was so excited to see such a television celebrity in person,” he said. “On television, he is frightening, and he has a very strong personality but, when I met with him, he was actually very sincere and very powerful, with a strong will for the United States and the world.”
Ishiba told the press conference that he had pledged to Trump to increase Japan’s foreign investment in the United States even further –- from around $800 million to $1 trillion.
He also said Japan would buy more liquified natural gas, or LNG, from the United States to ease the trade surplus it has with America -– a perennial bugbear for Trump.
Japan is also in the process of doubling its defense spending from 2022 levels by 2027 to 2% of GDP, Ishiba said.
Trump has wanted allies pay more to help ease strains on U.S. defense spending.
Ishiba said the increase was in line with Tokyo’s own desires to beef up its military posture and take more responsibility for its defense.
“It is not that we are told by the United States to do so. Japan on our own, on our own decision, on our own responsibility, we need to increase our defense expenditures,” Ishiba said. “But of course, we need to communicate and consult with the United States.”
You get a tariff
Yet it was trade that dominated the bulk of Ishiba and Trump’s comments. The U.S. president even forthrightly responded “yes” when asked if he was prepared to impose tariffs on imports from Japan if the approximately $68 billion trade deficit was not ultimately reduced.
It’s a rare wrinkle in ties between the two allies that has not come to the fore of ties since the 1980s, when Japan’s surging car and electronics sectors appeared destined to crush American competitors.
Speaking on condition of anonymity ahead of the talks, a senior Japanese government official told Radio Free Asia that despite Trump’s statements, Tokyo would not be rushing to any conclusions about how he will treat Japan during his second presidency.
Ishiba was treating Friday’s talks as a chance to build a baseline for ties with Trump, he said, and was waiting to see what the president puts into practice before evaluating any changes in bilateral ties.
“We have to wait and see what are the real policies taken by the U.S. government,” the official said. “Not only the tariff measures, but also other economic policies, we’d firstly like to analyze their impact on not only the Japanese economy, but also the international economy.”
Japanese officials, he added, had communicated to their American counterparts that blocking Nippon Steel’s purchase in U.S. Steel could lead Japanese businesses to reevaluate the wisdom of investing in the United States in future, but were likewise playing wait-and-see.
“At this moment, we have not prepared any kind of reaction or counter measures to statements made by President Trump,” he said. “During today’s meeting, the primary objective is to firstly establish the personal relationship between leaders and a relationship of cooperation.”
The stance was repeated by Ishiba when asked if Japan would consider introducing reciprocal tariffs on U.S.-made products if Trump imposed tariffs on Japanese exports to the United States.
“I am unable to respond to a theoretical question. That’s the official answer that we have,” Ishiba said to laughter from reporters.
“Wow, that’s very good. He knows what he’s doing,” Trump responded, ushering Ishiba off stage to call and end to the press conference.
Edited by Malcolm Foster. Updated to correct the United States trade deficit with Japan.