Nippon and US Steel file a lawsuit against the government over the blocked deal
Nippon Steel and US Steel have sued the US government for blocking a takeover, alleging that President Joe Biden “ignored the rule of law to curry favor” with labor unions.
The companies also alleged that Biden, who is entering the final weeks of his presidency, blocked Nippon Steel from purchasing US Steel to pursue his own political agenda.
In rejecting the proposed deal on FridayPresident Biden said a strong, domestically owned steel industry is essential for national security and resilient supply chains, including the automotive and defense industries.
If the $14.9bn (£11.8bn) acquisition goes ahead, it will boost Nippon’s ability to compete with China, which produces 60% of the world’s steel.
The acquisition has remained in limbo since it was first announced in December 2023.
Biden’s decision to formally block the deal was carried out on a policy promise he made during last year’s election — US Steel is based in the swing state of Pennsylvania — despite concerns it could discourage foreign investment and sour relations with key ally Japan.
In their lawsuit against the government, Nippon Steel and US Steel asked the court to order a new formal review of the procurement process.
The companies claimed that Biden’s influence meant that the Committee on Foreign Investment in the United States, which has the power to examine foreign takeovers of US companies, failed to conduct a “good faith regulatory review process focused on national security.”
In addition, the companies are suing the president of the United Steelworkers union, David McCall, and the CEO of rival steel company Cleveland-Cliffs, Lourenco Goncalves, for their “unlawful and coordinated actions aimed at blocking the deal.”
McCall, who backed a $7.3 billion takeover bid from the Cleveland Cliffs in the summer of 2023, said the accusations were “baseless” and reiterated his support for Biden’s decision.
“By blocking Nippon Steel’s attempt to take over US Steel, the Biden administration protected vital American interests, preserved our national security and helped sustain the domestic steel industry that supports our nation’s vital supply chains,” he said.
Nippon Steel and US Steel said they had “cooperated in good faith with all parties” to demonstrate how the deal “will strengthen, not threaten, US national security” and how it will strengthen the US domestic steel industry “against the threat from China.”
They also reiterated that Nippon is ready to invest $2.7 billion in Pittsburgh-based US Steel.
Earlier on Monday, Japanese Prime Minister Shigeru Ishiba expressed concern about the US decision to block the takeover and its impact on trade relations between the two G7 countries.
“Unfortunately, we have heard concerns expressed by Japanese industries about future investments between Japan and the United States. We must view this issue as a serious matter,” Ishiba said.
He added that while it was inappropriate for his government to comment on individual companies: “We must insist on an explanation of why there are security concerns, otherwise there will be no progress in future discussions.”
It is possible that the lawsuit leaves the fate of the deal in the hands of the next administration, but it is not clear that this will improve its chances.
President-elect Donald Trump also said he would block the deal. “Why would they want to sell US Steel now when tariffs would make it a more profitable and valuable company?” he wrote Monday on Truth Social.
Trump said he plans to enact sweeping tariffs, making imports into the United States more expensive.
He said the measures, which he also implemented during his first term, would make it easier for U.S.-based companies to compete with rivals abroad and stimulate a manufacturing boom, increasing demand for steel.
According to economic analyses, tariffs on foreign steel unveiled in 2018 led to modest job gains at steelmakers, but led to job losses at other manufacturing companies that had to deal with rising steel costs.
