WASHINGTON (AP) — President Joe Biden has blocked the nearly $15 billion proposed deal for Nippon Steel of Japan to purchase Pittsburgh-based U.S. Steel — affirming his earlier vow on the presidential campaign trail to prevent the acquisition of Steeltown USA’s most storied steel company.
The proposed deal kicked up an election year political maelstrom across America’s industrial heartland and blocking it drew a threat of litigation from Nippon Steel.
“We need major U.S. companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests,” Biden said in a Friday morning statement.
Nippon Steel and U.S. Steel blasted the decision, saying in a joint statement that Biden’s blocking the deal “reflects a clear violation of due process and the law” in a process it said was “manipulated” to advance Biden’s political agenda.
It also insisted that Biden cited no credible evidence of the deal presenting a national security problem and suggested it will sue, saying “we are left with no choice but to take all appropriate action to protect our legal rights.”
Biden’s decision comes after the Committee on Foreign Investment in the United States, known as CFIUS, failed to reach consensus on the possible national security risks of the deal last month, and sent a long-awaited report on the merger to Biden. He had 15 days to reach a final decision.
The committee, chaired by Treasury Secretary Janet Yellen and made up of other Cabinet members, can recommend that the president block a transaction, and federal law gives the president that power.
A U.S. official familiar with the matter, who spoke on condition of anonymity, told The Associated Press last month that some federal agencies represented on the panel were skeptical that allowing a Japanese company to buy an American-owned steelmaker would create national security risks.
The decision comes just weeks before the Democratic president is set to leave office and could damage relations between the U.S. and Japan, which is America’s biggest ally in Asia and its largest foreign holder of U.S. debt.
In their statement, the two steel companies said it’s “shocking — and deeply troubling” that the U.S. would reject a transaction that advances U.S. interests and “treat an ally like Japan in this way.”
“Unfortunately, it sends a chilling message to any company based in a U.S. allied country contemplating significant investment in the United States,” the companies said.
Biden previously came out against the deal during the presidential campaign — and was backed by the United Steelworkers, concerned over whether the company would honor existing labor agreements or slash jobs, as well as over the firm’s financial transparency.
“It is important that we maintain strong American steel companies powered by American steel workers,” Biden said in a March statement, while he was still seeking reelection to the presidency before dropping out of the race. “U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated.”
President-elect Donald Trump has also opposed the acquisition and vowed in December on his Truth Social platform to block the deal and to use tax incentives and tariffs to boost U.S. Steel’s fortunes.
On Friday, Steelworkers President David McCall said the union is grateful for Biden’s move to block the sale and, in a video news conference, called it the “right move for our members and for America’s national security.”
McCall had long questioned Nippon Steel’s status as an honest broker for U.S. national trade interests and reiterated that Friday, calling Nippon Steel a “serial trade cheater” that would degrade U.S. steelmaking and had, for decades, undermined the domestic steel industry by dumping its products into U.S. markets.
“Allowing it to purchase U.S. Steel would have offered it the opportunity to further destabilize our trade system from within and in the process, compromise our ability to meet our own national security and critical infrastructure needs,” McCall said.
McCall insisted that U.S. Steel — which is profitable and reported $1.8 billion on its balance sheet — has the financial wherewithal to make the company strong. Nippon Steel’s offer was a “huge windfall” for executives and investors, but not for America or workers, McCall said.
However, U.S. Steel has warned that, without Nippon Steel’s cash, it will shift production away from its aging blast furnaces to cheaper non-union electric arc furnaces and move its headquarters out of Pittsburgh.
For its part, Nippon Steel had said it is best positioned to help American steel compete in an industry dominated by the Chinese and to invest billions in United Steelworkers-represented facilities, including the company’s aging blast furnaces in Pennsylvania and Indiana.
It pledged to protect U.S. Steel in trade matters, and promised not to import steel slabs that would compete with the blast furnaces.
Nippon Steel announced in December 2023 that it planned to buy the steel producer for $14.9 billion in cash and debt, and committed to keep the U.S. Steel name and Pittsburgh headquarters. Despite that, its proposal raised concerns about what the transaction could mean for unionized workers, supply chains and U.S. national security.
The announcement came during a tide of renewed political support for rebuilding America’s manufacturing sector and followed a long stretch of protectionist U.S. tariffs that analysts say have helped reinvigorate domestic steel.
Nippon Steel waged a public relations campaign to consolidate support, even offering $5,000 in closing bonuses to U.S. Steel employees, a nearly $100 million expense.
A number of conservatives and business groups like the U.S. Chamber had publicly backed the deal, as Nippon Steel began to win over some Steelworkers union members and mayors in areas near its blast furnaces.
Nippon Steel was the world’s fourth largest steelmaker in 2023, according to World Steel Association figures. U.S. Steel was 24th.
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Levy reported from Harrisburg, Pennsylvania.
