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President Joe Biden is expected to block Japan’s Nippon Steel’s $15 billion deal to buy US Steel, ending months of frantic lobbying and setting back Washington’s relationship with its closest Asia-Pacific ally.
In one of his final acts in government, Biden — who has long opposed a takeover — is expected to announce Friday his decision to scrap a proposed acquisition of the iconic U.S. steelmaker, according to two people familiar with the matter.
One of the people said the White House had yet to be notified Nippon steel about the decision.
The president’s expected move comes after an interagency investment review, known as the Committee on Foreign Investment in the US (Cfius), failed to reach a consensus by the December 23 deadline on whether the acquisition poses a threat to national security.
Two people close to the situation said Nippon Steel is likely to take legal action against the outgoing president’s decision.
One person said such action could reveal, during the discovery process, the extent to which the decision was driven by politics rather than national security concerns. The process would also expose the limitations of the Cfius process and its vulnerability to political interests.
Nippon Steel declined to comment.
President-elect Donald Trump also had one threatened to cancel deal and promised to protect the Pittsburgh-based company through a combination of tariffs and tax incentives.
The conclusion of the year-long saga marks the failure of the Japanese group’s daring gambit that soon followed turned into a sensitive political issue in the election year. It also represents a significant departure from the long-standing US open investment environment.
Biden’s decision risks undermining four years of work to convince allies like Japan of their special relationship with the U.S. amid strategic competition with China and a shift toward protectionism, union support and an “America First” sentiment in American politics.
US and Japanese government officials fear broader ramifications for investment and mergers and acquisitions by Japan and other partners in America and implications for the strength of the US-Japan alliance.
Takahiro Mori, vice president of Nippon Steel, has led the Japanese steelmaker’s latest efforts to win over government officials and union members in Washington and Pennsylvania.
Those efforts included a new proposal this week that offered the government veto power over any reductions in steelmaking capacity at most of Nippon Steel’s US plants, adding a series of other guarantees on jobs and investment.
The gesture followed concerns from Cfius that US Steel could reduce Japanese-owned domestic steel production, affecting industries of national importance.
However, those moves were of little use, even as some of Biden’s senior advisers tried to talk him out of obstructing the deal.
His death marks a victory for Katherine Tai, the US trade representative, and David McCall, president of the United Steelworkers union, who were two of the most vocal opponents of the deal.
