The President of the United States, Joe Biden, has blocked $14.9 billion sale of US Steel based in Pittsburgh, Pennsylvania to Japan’s Nippon Steel.
Friday’s move deals a potentially fatal blow to the merger plan, which has been under consideration by the US government for a year.
Top Republicans and Democrats largely opposed the merger during the 2024 presidential election season. But while Biden had criticized plan, withheld a final decision due to concerns over strained ties with ally Japan.
In his statement announcing the move, Biden cited the strategic need to protect domestic industry. “This acquisition would place one of America’s largest steel producers under foreign control and create a risk to our national security and our critical supply chains,” he said.
“That’s why I’m taking action to block this deal.”
For their part, Nippon Steel and US Steel characterized the merger as a lifeline for the ailing American company, which is the second largest steel producer in the US. Nippon paid a hefty premium for the purchase and faces paying a $565 million fine to US Steel after the deal collapsed.
Opponents, including the powerful United Steelworkers (USW) union, warned that the Japanese owners would cut jobs after the acquisition. Despite these warnings, there was movement among some rank-and-file members of the national union to support the merger.
Attempts by Nippon Steel to assuage concerns by promising a pause in any layoffs or union plant closings through the current union contract, which expires in September 2026, have failed to attract wider acceptance of the deal. The company also promised to move its US headquarters to Pittsburgh.
On Friday, USW International President David McCall called the decision “the right move for our members and our national security.”
“We are grateful for President Biden’s willingness to take bold steps to maintain a strong domestic steel industry and his lifelong commitment to American workers,” McCall said.
Meanwhile, the Nikkei business daily reported that Nippon Steel will file a lawsuit against the US government challenging the actions that led to the Biden order.
Japanese Prime Minister Shigeru Ishiba’s office and the country’s Ministry of Economy, Trade and Industry did not immediately respond to Biden’s announcement.
However, in a letter in November, Ishiba urged Biden to approve the merger to avoid spoiling recent efforts to strengthen ties between the two countries, according to the Reuters news agency.
Japan is a key U.S. ally in the Asia-Pacific region, and Tokyo and Washington have strengthened ties in recent years over shared concerns about China’s economic and military rise, as well as threats from North Korea.
‘Backbone of our nation’
The Committee on Foreign Investment in the US (CFIUS) previously spent months reviewing the deal over national security risks, but failed to reach a consensus.
The decision was made then postponed Biden, who legally had to act before the expiration of the 15-day period.
In his statement, Biden said he was taking steps to level the playing field, blaming U.S. Steel’s decline on unfair trade practices. He said a mix of protectionism and subsidies had returned the industry to a healthy state.
“Steel production — and the steelmakers who make it — are the backbone of our nation,” Biden said.
“A strong domestically owned and operated steel industry is an essential national security priority and is critical to resilient supply chains.”
President-elect Donald Trump, who takes office on January 20, also opposed the deal, previously describing the proposed sale as a “terrible thing”.
