This Monday, Japan’s Nippon Steel Corporation (NSC) announced its plans to acquire U.S. Steel (USS) for more than $14 billion. The public reaction has been mixed. While the global investor community was happy to see their stock values and dividends skyrocket, some voices expressed concern that an iconic American company could be owned by “foreigners.”

It has only been a couple of days since the acquisition was proposed, and it remains to be seen how this historic investment by a company from an allied country will ultimately benefit our economy and national security. Initial reactions from concerned stakeholders are understandable, but history tells us that these transactions often turn out to be a net positive for us.

Economically, foreign direct investment (FDI) is usually welcomed as an outside infusion of resources that boosts our domestic incomes, tax proceeds, and resilience while offering employment opportunities. The United States is certainly no stranger to foreign investments from allies and partners. After all, we are the world’s top destination for FDI, according to the International Monetary Fund, and that’s a good thing.

In fact, Samsung, the South Korean tech giant, announced in September that it will invest $2 billion to build its second electric vehicle battery plant in the United States. In December 2022, Taiwan Semiconductor Manufacturing Company (TSMC) announced the opening of its second semiconductor plant in Arizona, increasing its investment to $40 billion—the largest FDI in Arizona’s history. 

Those who focus their criticism of the proposed sale of USS to NSC because of the iconic nature of U.S. Steel should recall that Chrysler, an American original in the car industry, was acquired by the Dutch company Stellantis in 2021, and before that, it was owned by Italy’s Fiat.  Furthermore, the American bus company Greyhound, with its distinctive logo and place in American pop culture, was acquired by the German company FlixMobility in 2021. Perhaps most importantly, these foreign acquisitions served to keep American companies alive, improve services and products, and preserve jobs in the United States.

Equally important is that FDI from our allies and partners strengthens not only our economy but also our national security, as these business ties reinforce our overall bilateral relationships. As someone who has spent decades working on the U.S.-Japan Alliance, I am perplexed at criticisms of the proposed acquisition on national security grounds. Japan is arguably our closest treaty partner in Asia. It hosts more U.S. military personnel and their families than any other country in the world. It has committed to doubling its defense budget, much of which is spent on buying U.S. defense hardware, thus also boosting our economy. Moreover, Japan is geographically, politically, and militarily at the forefront of deterring Chinese, Russian, and North Korean aggression. Yet, there are detractors who question the intent of a Japanese company making a historic investment in the United States and its steel industry. 

It would be somewhat ironic, if not insulting, to say that we trust Japan with almost 100,000 American soldiers, sailors, airmen, marines, and their families but question the national security implications of letting a Japanese company buy an American company.

Some are surprised that the Biden administration has allowed this acquisition to occur, given vocal objections from some quarters. There are two points to be addressed here. First, this is still a proposed acquisition, meaning that the deal has yet to be closed, and relevant authorities like those in Congress and the Committee on Foreign Investment in the United States (CFIUS) will still scrutinize the transactions. These safeguards in our government processes will objectively confirm that the Nippon-U.S. Steel deal will observe the relevant law and accord with the best interests of our country.

Secondly, from day one, the Biden administration has emphasized the so-called rebuilding of our relations with key allies in the Indo-Pacific. President Biden’s intentions to do so are clearly reflected in Japanese Prime Minister Fumio Kishida’s visit to Washington earlier this year, as well as the recent trilateral talks with South Korea and Japan hosted at Camp David. Cooperation with key allies will be crucial to effectively compete with China in all domains and enhance integrated deterrence. The NSC-USS deal will be another link in our critical alliance with Japan.

So far, some have been quick to dismiss Nippon Steel Corporation’s proposed purchase of USS primarily on emotional grounds. However, we must start acting rationally and objectively by assessing the real value of partner countries’ investment in the United States from economic and security perspectives in this age of Great Power Competition. Otherwise, we risk spurning future investments from our allies that could otherwise bolster our economy as well as our national security.

Heino Klinck is a global strategist, business executive, retired U.S. Army colonel, former diplomat, and international defense policy expert.