Biden prevents Japan’s Nippon Steel from buying US Steel

US President Joe Biden has formally blocked the takeover of US Steel by a larger Japanese company, saying foreign ownership could pose national security risks.

The controversial decision comes a year later Nippon Steel first announced the $14.9bn (£12bn) deal.It described it as a lifeline to its smaller, Pennsylvania-based rival.

But the deal ran into near-immediate problems, after leaders of the United Steelworkers union vocally opposed the deal, creating political pressure in a key state during the 2024 presidential election.

Biden ultimately decided to cancel the deal despite concerns from some advisers that it could harm Washington’s relations with Tokyo, a key ally.

Nippon Steel and US Steel, which had previously threatened to sue the government if the deal did not go through, on Friday accused Biden of manipulating the review of the deal for political gain.

They said they would take “appropriate measures to protect their legal rights.”

“We believe President Biden has sacrificed the future of American steelworkers for his own political agenda,” the companies said in a statement, adding that the move sent “a chilling message to any company based in a U.S.-allied country considering a major investment in the United States.” US”.

Biden’s decision raises important questions about the path forward for US Steel, a 124-year-old company that was once a symbol of American industrial power but is now much diminished.

It spent months searching for a buyer before announcing the partnership with Nippon Steel, the world’s fourth-largest steelmaker.

In the months following the announcement, both companies pledged not to cut jobs and made other concessions in an attempt to win support.

And just this week, they offered to fund a workforce training center – reportedly giving the government the right to veto potential production cuts.

U.S. Steel also warned that it may have to close plants without the investment that would come with a new owner, concerns echoed by some workers and local politicians.

Other business groups said they feared rejecting the deal would scare off international investors at a time of increasing protectionism in the United States.

But the arguments failed to convince Biden, who announced his opposition to the agreement early last year.

The deal has also been criticized by President-elect Donald Trump and incoming Vice President J.D. Vance.

The US government panel tasked with reviewing the deal for national security risks failed to reach consensus by late December, leaving the decision to Biden, who was required to act within a 15-day deadline.

Maintaining American ownership is important to keep the American steel industry and its supply chains strong, he said in his announcement Friday.

“As I have said many times, steel production — and the steelworkers who produce it — are the backbone of our nation,” he said.

“That’s because steel powers our country: our infrastructure, our auto industry, and our defense industrial base. Without domestic steel production and domestic steelworkers, our nation becomes less strong and less safe.”

The United Steelworkers union called the decision “the right move for our members and our national security,” saying its opposition was driven by concerns about the long-term viability of its industry.

“We are grateful for President Biden’s willingness to take bold action to preserve a strong domestic steel industry and for his lifelong commitment to American workers,” President David McCaul said.

Shares of US Steel fell about 5% in morning trading on Friday.

But Pangea Policy’s Terry Haines said he doesn’t think the move necessarily represents the end of the deal.

“One of the difficult things about this decision is that Japan is a very close ally of the United States,” he said. “The government has frankly shouldered a high burden of evidence to justify what it is doing today — and this is damaging to bilateral relations with Japan, something Trump would like to avoid.”

Professor Stephen Nagy, of the Department of International Political Studies at International Christian University in Tokyo, said he also believes companies may decide to try again under Trump, potentially offering different terms that would allow the new president to claim he negotiated a better solution. deal.

He described Biden’s decision as “political,” noting that the administration promised from its inception a foreign policy for the “middle class.”

“This was a direct response and continuation of Trump’s MAGA agenda to Make America Great Again,” he said.

He added: “The Biden administration cannot appear weak before foreign companies, whether allies or adversaries.”