Can you explain what nefarious things Japan - one of the US’s closest allies by the way - could do by owning 12% of the USA’s steel output in the form of physical factories that are on US soil?
Report to other governments the allocation and distribution of government steel purchasing, and thereby provide estimates for the production and maintenance of warships, subs, tanks, and other vehicles.
Japan might be infiltrated by spies that report that to US's enemies, like the US might be infiltrated by spies. But Japan's government isn't going to institutionalize spying the US, what a ridiculous thing to suggest.
The number of ships the US builds and other general quantities of war materiel is public knowledge. Beyond government accountability, US policy is designed around deterrence, where you want your potential adversaries to see just how big a stick you're carrying so as to prevent them attacking you in the first place. With modern satellites, it would be impossible to hide any large scale production even if we tried to keep it secret. The US certainly does have some classified military procurement, but these items are too small to have any critical details revealed by a crude analysis of steel consumption.
