Biden blocks $15B Nippon Steel's U.S. Steel buy over security concerns

The Facts -

Biden Halts Nippon Steel's $15 Billion Bid for U.S. Steel, Citing National Security Concerns

The acquisition of U.S. Steel by Japan's Nippon Steel has been stopped in its tracks by President Joe Biden. Announced on Friday, this decision halts a $15 billion proposal amid discussions about potential threats to U.S. national security.

President Biden's rationale for blocking the deal revolves around the safeguarding of the nation's security, infrastructure, and supply chain resilience. Emphasizing the importance of domestic steel production, he stated, "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."

The Committee on Foreign Investment in the United States (CFIUS), chaired by Treasury Secretary Janet Yellen, had been reviewing the merger for any national security risks. Unable to reach a consensus by December 23, the decision was ultimately left to President Biden. In an executive order accompanying the announcement, Biden noted "credible evidence" that Nippon Steel might pose a threat to U.S. national security.

Despite Biden's firm stance, not all voices within the administration were in agreement. Some federal agencies expressed skepticism about the potential national security risks associated with a Japanese company purchasing a major U.S. steelmaker. However, Biden's stance garnered support from the United Steelworkers, emphasizing the need for U.S. Steel to remain under American control.

As the decision unfolds, U.S. Steel is contemplating legal action against the administration, and potentially Cleveland-Cliffs, whose bid for U.S. Steel was also unsuccessful. Meanwhile, Nippon Steel had proposed granting the U.S. government veto power over changes to U.S. Steel’s production capacity to mitigate concerns over domestic output and workforce reductions.

Both President Biden and President-elect Donald Trump have expressed opposition to foreign ownership of U.S. Steel. Trump, who also vowed to prevent the acquisition, suggested alternatives such as tax incentives and tariffs to boost U.S. Steel's fortunes.

The steelworkers union voiced concerns about job security and benefits under Nippon Steel's ownership, fearing the impact of cheap imports on American steel production. Despite this, some union members and local officials have shown support for Nippon Steel, citing its financial strength as an asset for upgrading U.S. Steel’s facilities.

In September, President Biden issued an executive order broadening the criteria CFIUS should consider during its reviews, including the impact on the U.S. supply chain and personal data security.

Nippon Steel, a major player globally with operations in the U.S., Mexico, China, and Southeast Asia, serves top automakers like Toyota and produces steel for various industries, including railways and skyscrapers. The company's proposal brought attention to its potential to invest and modernize U.S. Steel's operations but faced staunch political opposition.

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