As depicted in the Google satellite image below, I (red) was merging onto the southbound lane of Route 89. At the yield sign (at location of the red dot) I observed that there were no approaching cars in the southbound lane. However, there was a car (blue) in the northbound lane who had their turn signal on to turn left into the Cafe parking lot. I did not see my interaction with this vehicle to be any different than if I had already been on Route 89 and I proceeded without stopping.
However, based on the blue vehicles actions, it is clear that they thought that I should have stopped at the yield sign and allowed them to turn in front of me.
Who had the right of way in this instance?
Note that projected paths are dotted and already traveled paths are solid in the above image.
The location is rural Pennsylvania.
I should note that I understand the importance of defensive driving and being ready and aware of what others actually do, even if it is not in line with the rules. I'm simply trying to understand what the rule is in this situation. Who actually has the right-of way here and who "should" be yielding?