Biden Blocks Nippon Steel’s $14.9 Billion Acquisition of U.S. Steel, Citing National Security Concerns

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President Joe Biden has officially rejected Japanese steel giant Nippon Steel Corp.’s $14.9 billion bid to acquire U.S.-based United States Steel Corp. (U.S. Steel), a decision that has sparked controversy and potential legal action. The ruling, announced after a protracted review process, focuses on national security risks and the importance of maintaining a robust, domestically controlled steel industry.

In his statement, Biden emphasized that a strong, U.S.-owned steel sector is essential for national security, supporting American jobs and supply chains. “It is my solemn responsibility as president to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad... and it is a fulfillment of that responsibility to block foreign ownership of this vital American company. U.S. Steel will remain a proud American company—one that’s American-owned, American-operated, by American union steelworkers—the best in the world,” Biden stated, outlining his decision to block the transaction. He further highlighted that foreign steel imports, often sold at artificially low prices, have put U.S. steelmakers at a competitive disadvantage, leading to significant job losses and plant closures across the country.

The decision, which also reflects broader concerns about the risks of foreign ownership of critical infrastructure, has been met with strong opposition from both Nippon Steel and U.S. Steel. The two companies argue that the deal would have strengthened the U.S. steel industry, generating billions of dollars in investment, preserving jobs, and enhancing national security by bolstering the domestic steel supply chain. Nippon Steel had pledged to invest at least $1 billion in U.S. Steel’s Mon Valley Works in Pennsylvania and $300 million at its Gary Works plant in Indiana, as part of a broader $2.7 billion investment plan.

Despite these assurances, the Committee on Foreign Investment in the United States (CFIUS) failed to reach a consensus on the deal, ultimately leaving the final decision in the hands of President Biden. While the CFIUS review process raised concerns, Nippon Steel and U.S. Steel had proposed multiple mitigation measures, including governance changes and strict compliance with U.S. regulations, to address potential national security risks.

In response, the companies have condemned Biden’s decision as unlawful and politically motivated. They argue that the blocking of the acquisition undermines the future of U.S. steelworkers, potentially risking the closure of U.S. Steel’s blast furnace facilities and jeopardizing thousands of union jobs. “...we believe that President Biden has sacrificed the future of American steelworkers for his own political agenda,” the companies stated in a joint response.

The merger had been met with resistance from several political figures, including members of Congress and former President Donald Trump, who voiced concerns about foreign control of key industries. The United Steelworkers (USW) union, which represents a significant portion of U.S. Steel’s workforce, also opposed the deal, favoring alternative bids that would prioritize the consolidation of U.S. steelmaking capacity.

The Biden administration’s stance comes amid ongoing concerns over the role of foreign investment in critical industries, with national security implications at the forefront of many discussions. While the U.S. government remains wary of foreign control in sensitive sectors, the decision to block the acquisition may have broader consequences for U.S.-Japan relations and future foreign investment in the U.S. steel sector.

Nippon Steel and U.S. Steel now face a 30-day window to abandon the deal, unless further extensions are granted by CFIUS. In the meantime, the companies have vowed to explore all legal options to overturn the ruling, signaling a protracted legal battle ahead.