President Joe Biden has officially blocked the proposed acquisition of U.S. Steel by Japan’s Nippon Steel, valued at $14.9 billion, citing national security concerns. This decision comes after a year-long review and is a significant setback for the deal, which faced bipartisan opposition from the outset.
Key Highlights:
Background of the Deal:
Announced in December 2023, the acquisition quickly drew criticism from both Biden and then-candidate Donald Trump, both of whom pledged to prevent the takeover.
U.S. Steel, once the dominant player in the American steel market, now ranks as the third-largest U.S. steelmaker and 24th globally.
Biden’s Statement:
Biden emphasized the importance of a domestically owned steel industry for national security and resilient supply chains, stating, “Without domestic steel production and domestic steel workers, our nation is less strong and less secure.”
Nippon Steel’s Response:
Nippon Steel, the fourth-largest steelmaker worldwide, criticized Biden’s decision as a “clear violation of due process” and a politically motivated move.
The company expressed intentions to “take all appropriate action” to protect its legal rights.
U.S. Steel’s Position:
U.S. Steel CEO David Burritt described the decision as “shameful and corrupt,” claiming it jeopardizes thousands of jobs and insults Japan.
He noted that the decision would benefit competitors, particularly China.
Union Support:
The United Steelworkers union, which opposed the merger, praised Biden’s decision as a victory for national security.
White House Justification:
White House spokesperson John Kirby clarified that the decision was not an anti-Japan stance but rather about preserving American steelmaking.
Legal and Economic Implications:
Nippon Steel has indicated it may pursue legal action against the U.S. government, although experts suggest such challenges may be difficult.
The Committee on Foreign Investment in the United States reviewed the deal for national security risks and ultimately referred the decision to Biden.
Market Reaction:
Following the announcement, U.S. Steel’s shares dropped 6.5%, closing at $30.47.
International Reactions:
Japanese industry and trade minister Yoji Muto expressed disappointment, highlighting concerns over future investments between Japan and the U.S.
The Japanese government views this decision as a significant concern for bilateral economic relations.
Future of U.S. Steel:
U.S. Steel has been struggling financially, reporting nine consecutive quarters of declining profits amidst a global downturn in the steel industry.
It remains uncertain if another buyer will emerge, especially as Cleveland-Cliffs, a previous bidder, has seen its market value drop below that of U.S. Steel.
Political Reactions:
Democrats in Congress generally supported Biden’s decision, with Senator Sherrod Brown labeling the deal a threat to national security.
Conversely, some critics, including former economic adviser Jason Furman, condemned the decision as detrimental to U.S. prosperity and a betrayal of allies.