President Joe Biden will reportedly officially block the purchase of U.S. Steel by Japan’s Nippon Steel due to concerns that the purchase could threaten national security. The president’s decision is expected to be announced as early as Friday. The Japanese corporation had offered to acquire the company for $14.9 billion.
Biden’s decision to block the deal stems from the findings of a Dec. 23 report from the Committee on Foreign Investment in the United States, the Washington Post reported. In its assessment, CFIUS concluded that the purchase could potentially reduce national steel productivity, causing “risks to the national security of the United States.” The president has been a staunch opponent of the deal since it was announced.
“Potential reduced output by U.S. Steel could lead to supply shortages and delays that could affect industries critical to national security,” the panel, which Treasury Secretary Janet L. Yellen chaired, concluded in its analysis of the proposed sale. The transportation and energy sectors would be the most vulnerable in such a scenario, according to the report.
CFIUS also suggested that given Nippon Steel’s international operations, approving its purchase of U.S. steel could jeopardize future U.S. government trade decisions to minimize costs associated with steel imports, according to the Post. In turn, this could incentivize Nippon Steel to prioritize steel production abroad, leaving the country’s economy “more exposed to dumping and unfair subsidization of steel.” Furthermore, CFIUS panelists were unconvinced the company could reduce such potential vulnerabilities with a plan to fill key operational and employment positions with employees from the U.S.
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After meticulous research, the committee could not unanimously decide on the risks associated with Nippon Steel’s proposed purchase. As a result of the stalemate, the decision on whether or not to ultimately proceed with the sale fell back to Biden, according to the Washington Post.
The attempted acquisition of the former titan of steel production in the country was initially announced on Dec. 18, 2023. The proposed purchase was met with controversy over, among other things, concerns that it would result in a loss of U.S. jobs as the headquarters of U.S. Steel is located in Pittsburgh, Pennsylvania, and Nippon Steel is based in Japan. Additionally, objections to the sale stemmed from geopolitical concerns over a foreign country owning the American company, which could conceivably affect national steel production.
Nippon’s proposed acquisition of U.S. steel has drawn criticism and opposition from many politicians, including Sen. John Fetterman (D-PA), President Joe Biden, and President-elect Donald Trump.
