US President Joe Biden has formally blocked a takeover of US Steel by a major Japanese company, saying foreign ownership could pose national security risks.
The controversial decision comes a year after Nippon Steel first announced the $14.9bn (£12bn) deal, describing it as a lifeline for its smaller Pennsylvania-based rival.
But the transaction soon ran into political trouble, after leaders of the United Steelworkers union vocally opposed the deal, leading to political pressure in the key state during the 2024 presidential election.
Biden decided to scrap the deal despite concerns from some advisers that it could hurt Washington’s relationship with Tokyo, a key ally.
BBC News contacted Nippon Steel and US Steel for comment.
Nippon Steel has previously denied plans to cut production or cut jobs, while US Steel has warned it may have to close plants without the investment that would come with a new owner.
This concern was echoed by some workers and local politicians.
Other business groups have expressed fear that rejecting the transaction would chill the climate for international investment in the US.
But Biden has expressed longstanding opposition to the deal. The transaction was also criticized by President-elect Donald Trump and incoming Vice President JD Vance.
A US government panel tasked with reviewing the deal for national security risks failed to reach a consensus by the end of December, leaving the decision to Biden, who had 15 days to act.
In his announcement on Friday, he said that maintaining American ownership is important to maintaining the American steel industry and its supply chains.
“As I’ve said many times, steelmaking — and the steelmakers who make 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 steel mill workers, our nation is less strong and less safe.”
Nippon Steel and US Steel have previously suggested they may take legal action against the government if the deal does not happen.
Professor Stephen Nagy, of the Department of Political International Studies at the International Christian University in Tokyo, said this was a “political” decision, noting that the Biden administration had promised “a foreign policy for the middle class” from the start.
“This was a direct response and continuation of Trump’s MAGA agenda to make America great again,” he said.
“The Biden administration could not appear weak on foreign affairs, whether it was an ally or an adversary.”
