US Legal Updates for Japanese Companies from the First Half of 2026

This newsletter reports on U.S. legal matters from January to June 2026 that are relevant to Japanese companies. In this issue, we summarize various matters, including the latest news concerning U.S. tariffs and Japan-U.S. trade.

As most of our readers will already know, Japan and the United States entered into a 2025 agreement that continues to govern the Japan-U.S. trade relationship. Since then, the U.S. Supreme Court has invalidated U.S. tariffs imposed under the International Emergency Economic Powers Act (IEEPA) and the Trump administration has pivoted to other types of tariffs.

New U.S. Tariffs

Section 122 Tariffs 

After the Supreme Court invalidated the IEEPA tariffs in Learning Resources v. Trump, President Donald Trump invoked a different tariff law, Section 122 of the Trade Act of 1974, to impose an immediate 10% import surcharge on all countries.¹ Section 122 authorizes the president to impose a temporary surcharge for up to 150 days to address “fundamental international payments problems,” including “large and serious United States balance-of-payments deficits.”²

On May 7, the Court of International Trade (CIT) invalidated the Section 122 tariffs, concluding that they exceeded the president’s statutory authority.³ In particular, the CIT found that the administration’s reliance on trade and investment deficits were not the type of “large and serious” balance-of-payments deficits contemplated under the statute and enjoined the government from enforcing the tariffs against the plaintiffs.⁴ The government appealed to the Federal Circuit, which stayed the CIT’s order.⁵ As a result, the Section 122 tariffs remain in place and are still being paid.

Section 232 Tariffs

In April 2026, the president used Section 232 of the Trade Expansion Act of 1962 to impose 100% tariffs on pharmaceutical products and to strengthen existing tariffs on steel, aluminum and copper.⁶ Section 232 permits the president to impose tariffs on goods if the secretary of commerce determines that the importation of those goods into the United States would threaten U.S. national security, including the economic welfare of the United States.⁷

The pharmaceutical tariff did not affect Japan, which remained subject to a 15% tariff on covered pharmaceuticals under the 2025 U.S.-Japan trade agreement.⁸ The 2025 agreement did not exempt Japan from the increased tariffs on metals and their derivative products, but on June 1, the U.S. adjusted certain metal tariffs and Japan was one of the partner economies that then became eligible for a 15% maximum combined duty on certain derivative products.⁹

Section 301 Tariffs

Section 301 of the Trade Act of 1974 authorizes the United States Trade Representative (USTR) to investigate and impose sanctions on countries that are violating trade agreements with the United States or engaging in unjustifiable, unreasonable or discriminatory acts or practices.¹⁰ At present, there are two investigations pending that could implicate Japan. First, Japan is listed among 60 economies the USTR has found to have failed to impose and effectively enforce a prohibition on imports of goods produced with forced labor.¹¹ The USTR is proposing a 12.5% tariff on Japan¹², with hearings to begin in July.¹³ Second, Japan is included among economies that are being investigated for maintaining excess capacity and production in certain manufacturing sectors.¹⁴ As of today, both investigations remain pending.¹⁵

In June 2026, the USTR stated that the United States would respect its trade agreements with Japan in connection with these new Section 301 tariff proposals, reflecting the agreed understanding that overall U.S. tariff rates on covered Japanese products would not exceed 15%.¹⁶

Litigation in the U.S.

Court Dismisses Consumer Challenge to Nippon Steel’s Acquisition of U.S. Steel

On March 17, the U.S. District Court for the Northern District of California dismissed with prejudice consumers’ antitrust lawsuit challenging Nippon Steel’s now-closed acquisition of U.S. Steel. Sixteen consumers of various steel‑dependent products sought to enjoin the merger, alleging that the merger would increase concentration in the U.S. steel manufacturing market and lead to anticompetitive effects, including higher prices, lower output, and reduced choice and innovation.¹⁷

In granting Nippon Steel’s motion to dismiss, the court held that the plaintiffs failed to plausibly allege “antitrust injury” because only participants in the very market whose competition is being restrained can suffer antitrust injury and the plaintiffs did not purchase steel directly or indirectly from steelmakers.¹⁸ The court also held that the plaintiffs failed to make a prima facie case that the merger would create “anticompetitive effects” because the complaint did not plausibly allege that Nippon Steel had already entered or was ready to enter the U.S. market prior to the transaction, meaning that the merger did not eliminate a competitor in the market.¹⁹ On April 23, the consumer plaintiffs appealed the court’s ordered and the matter is still pending in the Ninth Circuit.²⁰

Supreme Court Rejects Sony’s Copyright Claims Against Cox Over Subscribers’ Online Infringement

On March 25, the U.S. Supreme Court reversed the Fourth Circuit’s decision and held that Cox Communications, an internet service provider (ISP) serving approximately 6 million subscribers, was not liable for copyright infringement committed by its subscribers.²¹

In this copyright infringement action, Sony Music Entertainment and other major music copyright owners alleged that Cox was liable for its users’ uploading digital copies of copyrighted music to make them available for others to download. In particular, the plaintiffs alleged that Cox contributed to its users’ infringement by continuing to provide internet service to its users despite receiving more than 163,000 infringement notices that their IP addresses were linked to infringement. The Supreme Court denied Cox’s contributory liability, holding that a service provider is contributorily liable for a service user’s infringement only if it (i) actively induced the infringement, or (ii) provided a service tailored to the infringement, noting that “mere knowledge that a service will be used to infringe is insufficient to establish the required intent to infringe.”²² The Supreme Court therefore reinforced its long-standing position that a company is not liable as a copyright infringer merely because they know some users will exploit their service for that purpose.

Although this case fortifies defenses for U.S. digital platforms, such as ISPs, which may face copyright claims relating to the actions of their users, the Cox case limits copyright holders in their ability to combat online infringement. Copyright owners may need to reassess risk models and consider alternative enforcement strategies, including direct actions against individual infringers.

Trade Court Sustains Harsher Steel Duties for Nippon Steel Corp.

On April 8, the CIT sustained the second remand redetermination of the U.S. Department of Commerce (DOC) in an antidumping duty dispute involving Nippon Steel Corp.²³ This case arose from the 2018-2019 administrative review of an antidumping duty order in which (i) Nippon Steel did not provide requested downstream cost and sales data from its affiliated reseller, and (ii) DOC thereafter applied an adverse inference and filled gaps in the record with unfavorable assumptions.²⁴ Previously, the CIT had held twice that DOC’s application of adverse inference was erroneous, and the April 8 decision concerns DOC’s second remanded redetermination.

DOC can apply an adverse inference if it “finds that an interested party has failed to cooperate by not acting to the best of its ability” to provide requested information.²⁵ The court upheld DOC’s determination that Nippon Steel failed to act “to the best of its ability” to obtain the data, emphasizing that its efforts were insufficient given that Nippon Steel had known, from previous administrative reviews, that the particular affiliate had not been cooperative, and therefore it was reasonable for DOC to expect that Nippon Steel would do more than merely request data several times.²⁶ The court further held that DOC’s determination that Japanese antitrust law did not preclude Nippon Steel from using its economic strength to obtain data from its affiliates for purposes of the antidumping proceeding was supported by substantial evidence on the record, including certain guidelines on the Japanese antitrust law.²⁷ Accordingly, the court concluded that DOC’s application of an adverse inference and its results were supported by substantial evidence and were consistent with law.²⁸

The decision reinforces that U.S. courts give DOC broad discretion in antidumping administrative reviews and companies should engage U.S. counsel early to anticipate DOC’s data verification and cost allocation approaches and to ensure complete and consistent initial submissions.

Cross-Border Transactions

Mitsubishi Corp. To Acquire U.S. Haynesville Shale Gas Business for $5.2B

On Jan. 16, Mitsubishi Corp. announced that it had entered into an agreement to acquire all the equity interests in Aethon III LLC, Aethon United LP and related entities (collectively, Aethon), a U.S.-based group engaged in the development, production and sale of shale gas in the Haynesville Shale basin, which spans Texas and Louisiana. According to the press release, the total acquisition price is approximately $5.2 billion. Aethon’s assets are primarily located in the Haynesville Shale basin and have an average net production volume of approximately 2.1 billion cubic feet per day. Mitsubishi stated that the acquisition will strengthen its natural gas and liquefied natural gas (LNG) business by securing upstream gas resources in the United States and supporting the development of an integrated LNG value chain. The transaction is expected to close by the first quarter of Mitsubishi’s fiscal year 2026.²⁹

This aligns with the Japan Ministry of Economy, Trade and Industry (METI) directive to secure upstream LNG assets and bypass spot market volatility. In early 2025, METI outlined a strategic energy plan to support Japanese firms in investing directly in upstream projects to gain equity in supply, rather than relying solely on purchasing on the open market.³⁰ As of 2026, Japan is intensifying its Strategic Buffer LNG (SBL) program, urging domestic suppliers to secure extra “buffer” LNG to be released during emergency supply shortages.³¹ And by 2030, Japan aims to have its companies handle 100 million tons per year of LNG to strengthen its influence in the global market.³²

Otsuka Pharmaceutical To Acquire Transcend Therapeutics for up to $1.225B

On March 27, Otsuka Pharmaceutical Co., Ltd. announced that it had entered into an agreement to acquire U.S.-based Transcend Therapeutics, Inc. through its wholly owned subsidiary Otsuka America, Inc. for total potential consideration of up to $1.225 billion.³³ The acquisition is expected to close in the second quarter of 2026 and is intended to bolster Otsuka’s focus on neuropsychiatric diseases by incorporating Transcend’s clinical‑stage, rapid‑acting neuroplastogen program, including TSND‑201, a potential treatment candidate for post‑traumatic stress disorder.

PayPay Completes Nasdaq Initial Public Offering of $880M

On March 30, PayPay Corp. announced that it had completed its initial public offering (IPO) of American Depositary Shares (ADSs) on March 13 in connection with its listing on the Nasdaq Global Select Market. The ADSs began trading on the Nasdaq on March 12, closing up by over 13% on the first day. According to PayPay, a total of 63,235,295 ADSs were offered and sold in the IPO, resulting in net proceeds of $603 million.³⁴ The offering valued the company at around $12.1 billion at the close, making it one of the largest fintech IPOs.

The PayPay IPO is notable not only for its size but also as a meaningful example of how Japanese companies can access U.S. capital markets. It was widely reported that PayPay had engaged in “meticulous regulatory alignment” to reconcile Japanese technology operations under domestic regulatory rules with U.S. capital market standards.

This included anticipating U.S. Securities and Exchange Commission disclosure mandates, including cyber threat and incident response oversight that is a tech company high priority for the SEC, and reconciling Japanese corporate governance with U.S. shareholder protection standards as a Foreign Private Issuer.

This IPO demonstrates that Japanese companies with established domestic platforms and regulatory preparation can align with U.S. investor expectations and global corporate governance standards.

Kirin Completes Sale of Four Roses Bourbon Business to Gallo for up to $775M

On April 2, Kirin Holdings Company, Limited announced that it had completed the sale of its U.S.-based Four Roses bourbon whiskey business to E. & J. Gallo Winery for total consideration of up to approximately $775 million.³⁵ When the sale was announced, it was reported that Kirin would be shifting its focus toward its healthcare and pharmaceutical business. It was also reported that the market for high-end spirits in the United States and abroad was correcting, allowing Kirin to exit while the brand was still highly valued.

New Energy Projects From U.S.-Japan Trade Deal

On March 20, DOC announced three new energy infrastructure projects as part of the $550 billion U.S.-Japan investment framework, which Trump had unveiled on Oct. 28, 2025, during a summit with Japan. The framework is intended to strengthen U.S. economic and national security by channeling large‑scale Japanese investment into critical U.S. industries, with a particular focus on energy infrastructure.³⁶

One of the announced projects includes the deployment of BWRX‑300 small modular nuclear reactors (SMRs) by GE Vernova Hitachi, a joint venture between GE and Hitachi. The SMR project, to be developed in Tennessee and Alabama, represents a major investment under the broader framework and is intended to expand U.S. baseload power capacity, help stabilize electricity prices and further deepen U.S.-Japan cooperation in next‑generation energy technologies.³⁷

JERA Terminates Long‑Term LNG Purchase Agreement With U.S. Commonwealth LNG

JERA Co., Inc., Japan’s largest power generator and LNG buyer, terminated its long‑term LNG sales and purchase agreement with U.S. developer Commonwealth LNG, effective March 3. The agreement, executed in June 2025, contemplated the supply of approximately 1 million metric tons per annum of LNG over a 20‑year term from Commonwealth’s proposed export project in Louisiana.³⁸ Although no reason was publicly disclosed, the termination appears to reflect growing sensitivity among Japanese buyers as to how regulatory, permitting, timing, financing and execution risk is allocated in U.S. LNG export projects, particularly those that have not yet reached a final investment decision (FID).

In recent years, U.S. LNG projects have faced extended approval timelines and heightened political scrutiny, increasing the likelihood that long-term buyers may bear risks unrelated to commodity pricing or operational performance. In response, LNG sales and purchase agreements may in the future place greater emphasis on buyer protective structural features, including expanded exit rights tied to regulatory milestones, clearer consequences for delays in FID or project completion, and more explicit allocation of U.S. policy and permitting risk.

1. Proclamation No. 11,012, Imposing a Temporary Import Surcharge to Address Fundamental International Payments Problems, 91 Fed. Reg. 9339 (Feb. 20, 2026).

2. 19 U.S.C. § 2132(a)(1).

3. Oregon v. United States, No. 26-01472-3JP, 2026 WL 1257669, at 12, 17-20 (Ct. Int’l Trade May 7, 2026), appeal docketed, No. 26-1928 (Fed. Cir. June 10, 2026).

4. Id. at *19.

5. Oregon v. Trump, Nos. 2026-1804, 2026-1805, 2026 WL 1702442, at *4 (Fed. Cir. June 11, 2026).

6. Proclamation 11020, Adjusting Imports of Pharmaceuticals and Pharmaceutical Ingredients Into the United States, 91 Fed. Reg. 18183 (Apr. 9, 2026); Proclamation 11021, Strengthening Tariffs on Steel, Aluminum, and Copper Imports, 91 Fed. Reg. 18201 (Apr. 9, 2026).

7. 19 U.S.C. § 1862(c)-(d).

8. The White House, Fact Sheet: President Donald J. Trump Bolsters National Security and Strengthens U.S. Supply Chains by Imposing Tariffs on Patented Pharmaceutical Products (Apr. 2, 2026), https://www.whitehouse.gov/fact-sheets/2026/04/fact-sheet-president-donald-j-trump-bolsters-national-security-and-strengthens-u-s-supply-chains-by-imposing-tariffs-on-patented-pharmaceutical-products.

9. Proclamation 11032, Further Adjusting the Tariff Regimes for Imports of Aluminum, Steel, and Copper into the United States, 91 Fed. Reg. 34085 (June 4, 2026).

10. 19 U.S.C. § 2411.

11. USTR, Initiation of Section 301 Investigations of Acts, Policies, and Practices of Various Economies Related to the Failure to Impose and Effectively Enforce a Prohibition on the Importation of Goods Produced with Forced Labor, 91 Fed. Reg. 12884 (Mar. 17, 2026).

12. USTR, Notice of Determinations and Request for Comments Concerning Actions in Section 301 Investigations of Acts, Policies, and Practices of Various Economies Related to the Failure to Impose and Effectively Enforce a Prohibition on the Importation of Goods Produced with Forced Labor, 91 Fed. Reg. 34272 (June 5, 2026).

13. USTR, Public Hearings on Proposed Responsive Action in the Section 301 Investigations Relating to Failures to Take Action on Trade in Forced Labor Goods (July 2, 2026), https://ustr.gov/about/policy-offices/press-office/press-releases/2026/july/public-hearings-proposed-responsive-action-section-301-investigations-relating-failures-take-action.

14. USTR, Initiation of Section 301 Investigations: Acts, Policies, and Practices of Certain Economies Relating to Structural Excess Capacity and Production in Manufacturing Sectors, 91 Fed. Reg. 12886 (Mar. 17, 2026).

15. USTR, Section 301 Investigations (last visited July 4, 2026), https://ustr.gov/issue-areas/enforcement/section-301-investigations.

16. See Leigh Thomas, US Will Uphold Tariff Caps in Deals With EU, Japan and Others, Trump’s Trade Chief Says, Reuters (June 4, 2026), https://www.reuters.com/business/us-will-uphold-tariff-caps-deals-with-eu-japan-others-us-trade-chief-says-2026-06-04.

17. Freeland v. Nippon Steel Corp., No. 25-CV-01240-EKL, 2026 WL 747417, at *1 (N.D. Cal. Mar. 17, 2026).

18. Id. at *5-6.

19. Id. at *6.

20. Freeland v. Nippon Steel Corp., No. 26-2522 (9th Cir. Apr. 23, 2026).

21. Cox Commc’ns, Inc. v Sony Music Ent., 146 S. Ct. 959 (2026).

22. Id. at 968.

23. Nippon Steel Corp. v. United States, No. 1:21-CV-00533, 2026 WL 949161 (Ct. Int’l Trade Apr. 8, 2026).

24. Id. at *2.

25. 19 U.S.C. § 1677e(b)(1).

26. Nippon Steel Corp., 2026 WL 949161 at *10.

27. Id. at *6-8.

28. Id. at 10.

29. Press Release, Mitsubishi Corp., Mitsubishi Corporation Announces Acquisition of Haynesville Shale Gas Business in Louisiana and Texas (Jan. 16, 2026), https://www.mitsubishicorp.com/jp/en/news/release/2026/20260116002.html.

30. Policy Document, Agency for Natural Resources and Energy (METI), The 7th Strategic Energy Plan (Feb. 18, 2025), https://www.enecho.meti.go.jp/en/category/others/basic_plan/pdf/7th_outline.pdf.

31. Policy Document, International Energy Agency (IEA), Strategic Buffer LNG (SBL) Programme (Apr. 8, 2026), https://www.iea.org/policies/30820-strategic-buffer-lng-sbl-programme.

32. Special Article, Agency for Natural Resources and Energy (METI), Japan’s New International Resource Strategy for Enhancing LNG Security (July 22, 2020), https://www.enecho.meti.go.jp/en/category/special/article/detail_162.html.

33. Press Release, Otsuka Pharmaceutical Co., Ltd., Otsuka Pharmaceutical to Acquire Transcend Therapeutics (Mar. 27, 2026), https://www.otsuka.co.jp/en/company/newsreleases/2026/20260327_2.html.

34. Press Release, PayPay Corp., PayPay Announces Closing of Initial Public Offering and Full Exercise of Underwriters’ Option to Purchase Additional American Depositary Shares (Mar. 30, 2026), https://about.paypay.ne.jp/en/pr/20260330/01/.

35. Press Release, Kirin Holdings Company, Limited, Completion of the Transfer of Shares in Four Roses Distillery LLC (Apr. 2, 2026), https://www.kirinholdings.com/en/newsroom/release/2026/0402_01.pdf.

36. The White House, Fact Sheet: President Donald J. Trump Drives Forward Billions in Investments from Japan (Oct. 28, 2025), https://www.whitehouse.gov/fact-sheets/2025/10/28195/.

37. U.S. Department of Commerce, Fact Sheet: New Energy Projects from U.S.-Japan Trade Deal (Mar. 20, 2026), https://www.commerce.gov/news/fact-sheets/2026/03/fact-sheet-new-energy-projects-us-japan-trade-deal.

38. Commonwealth LNG, LLC, Notification of Termination of Contract (Apr. 1, 2026), submitted to the U.S. Department of Energy, Docket No. 19‑134‑LNG, available at: https://www.energy.gov/sites/default/files/2026-04/Commonwealth-JERA%20SPA%20Termination%20Acknowledgement.pdf.