President Biden announced Friday that he will block Japan’s Nippon Steel’s $15 billion proposal buy US Steel after a government panel recently failed to reach a consensus on the deal’s potential national security risks.
Mr. Biden he has long opposed the deal and was awaiting a report on the merger to be issued by the Committee on Foreign Investment in the United States, known as CFIUS, to announce its final decision. The interagency committee, chaired by Treasury Secretary Janet Yellen, reviews these deals for potential national security risks and can block sales or force changes in terms to protect national security. CFIUS said on Dec. 23 that it could not reach a consensus on the deal, leaving it up to Mr. Biden.
“It is my solemn responsibility as president to ensure that, now and in the future, America has a strong domestically owned and operated steel industry that can continue to fuel our national sources of strength at home and abroad. ‘foreign; and it is a fulfillment of that responsibility to block foreign ownership of this major American company,’ the president said in a statement Friday announcing his decision to block the deal. “US Steel will remain a proud American company, one American-owned, American-operated, by American union steelworkers, the best in the world.”
Mr. Biden, who is backed by the United Steelworkers, said earlier this year that it was “vital that (US Steel) remain a domestically owned and operated American steel company.”
But a U.S. official familiar with the matter, speaking on condition of anonymity to discuss the private report, said some federal agencies represented on the panel were skeptical that allowing a Japanese company to buy a steel maker from American property would pose risks to national security.
Both Mr. Biden and President-elect Donald Trump courted union workers at US Steel during the presidential campaign and pledged to block the takeover amid concerns about foreign ownership of a flagship American company. However, the appeal of the Nippon Steel acquisition was that it had the financial resources to invest in the factories and improve them, possibly helping to preserve steel production in the US.
Trump also opposed the takeover, vowing in a Truth Social post earlier this month that he would “block this deal from happening.” Trump proposed reviving US Steel’s strong fortunes “through a series of tax incentives and tariffs.”
The steel union said it doubted Nippon Steel would keep jobs at unionized plants, benefit from collectively bargained benefits or protect US steel production from cheap foreign imports.
Faced with political opposition, Nippon Steel and US Steel mounted a public relations campaign to win over skeptics. US Steel said in a statement Monday, Dec. 23, that the deal was “by far the best way to ensure that US Steel, including its employees, communities and customers, thrive in the future.”
A growing number of conservatives had publicly backed the deal as Nippon Steel began to win over some steel union members and local officials around its blast furnaces in Pennsylvania and Indiana. Many backers said Nippon Steel has a stronger financial balance sheet than rival Cleveland-Cliffs to invest the cash needed to upgrade aging U.S. steel blast furnaces.
Nippon Steel has manufacturing operations in the US, Mexico, China and Southeast Asia. It supplies the world’s major automakers, including Toyota Motor Corp., and makes steel for railroads, pipelines, household appliances and skyscrapers.
In September, Biden issued an executive order expanding the factors the Committee on Foreign Investment in America should consider when reviewing deals, such as how the deal affects the supply chain of USA or if it would put the sensitive personal data of Americans at risk.
contributed to this report.