Key Points
- President Biden is expected to block Nippon Steel’s acquisition of U.S. Steel, citing national security concerns.
- Bipartisan opposition exists, with key presidential candidates favoring U.S. Steel’s American ownership.
- The decision could affect U.S.-Japan relations and has already impacted the share prices of both companies.
- The United Steelworkers union criticized U.S. Steel’s CEO for making “unlawful threats” to save the deal.
The White House is reportedly close to announcing that President Joe Biden will block Nippon Steel’s $14.9 billion acquisition of U.S. Steel, citing national security concerns. The decision comes amid bipartisan political opposition and fears over the impact on U.S. steel production and jobs. U.S. Steel has warned that failure to secure the deal with Japan-based Nippon Steel could jeopardize thousands of U.S. union jobs and lead to the closure of steel mills, with the potential relocation of its headquarters from Pennsylvania—a key battleground state in the upcoming 2024 presidential election.
A formal decision could be announced later this week, potentially straining U.S.-Japan relations. Shares of U.S. Steel fell 17.5%, while Nippon Steel’s shares saw a brief decline before recovering slightly. Both companies have not received updates from the Committee on Foreign Investment in the United States (CFIUS) and maintain that the deal poses no national security risks.
U.S. Steel emphasized its alliance with Japan, stating it will explore all legal avenues to complete the transaction. Nippon Steel urged the U.S. government to handle the matter according to legal standards. The proposed acquisition has drawn opposition from both Democrats and Republicans. Vice President Kamala Harris and former President Donald Trump, both presidential candidates, have expressed a desire for U.S. Steel to remain American-owned.
The White House, which has yet to receive a formal recommendation from the CFIUS panel reviewing the merger, declined to comment on Biden’s plans. While overseeing the national security review, Treasury Department officials also refrained from commenting.
U.S. Steel employees rallied outside the company’s headquarters, urging political leaders to consider the benefits of the acquisition. U.S. Steel CEO David Burritt highlighted the potential risks to union jobs and community impacts if the deal fails, suggesting a possible headquarters move to the south. In response, the United Steelworkers union criticized Burritt for his statements, accusing him of making “baseless and unlawful threats.”
If the deal proceeds, Nippon Steel has committed to investing over $2.7 billion in union-represented facilities in Pennsylvania and Indiana, whereas U.S. Steel has indicated it would not make similar financial commitments without the acquisition.
