President Biden announced Friday that he is blocking the $15 billion proposal by Japan’s Nippon Steel to buy U.S. Steel after a government panel recently failed to reach consensus on the possible national security risks of the deal.
Mr. Biden long opposed the deal and was waiting for a report on the merger to be issued by the Committee on Foreign Investment in the United States, known as CFIUS, to announce his final decision. The interagency committee, chaired by Treasury Secretary Janet Yellen, reviews such deals with an eye toward potential national security risks, and can block sales or force changes in the terms to protect national security. CFIUS said on Dec. 23 that it was unable to reach a consensus on the deal, leaving it to Mr. Biden.
“It is my solemn responsibility as president to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad; and it is a fulfillment of that responsibility to block foreign ownership of this vital American company,” the president said in a statement Friday announcing his decision to block the deal. “U.S. Steel will remain a proud American company – one that’s American-owned, American-operated, by American union steelworkers – the best in the world.”
Mr. Biden, backed by the United Steelworkers, said earlier this year that it was “vital for (U.S. Steel) to remain an American steel company that is domestically owned and operated.”
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 an American-owned steelmaker would create national security risks.
Both Mr. Biden and President-elect Donald Trump courted unionized workers at U.S. Steel during the presidential campaign and vowed to block the acquisition amid concerns about foreign ownership of a flagship American company. However, the appeal of Nippon Steel’s acquisition was that it has the financial resources to invest in the mills and upgrade them, possibly helping to preserve steel production within the U.S.
Trump also opposed the acquisition and vowed in a Truth Social post earlier this month to “block this deal from happening.” Trump proposed to revive U.S. Steel’s flagging fortunes “through a series of Tax Incentives and Tariffs.”
The steelworkers union said it doubted Nippon Steel would keep jobs at unionized plants, make good on collectively bargained benefits or protect American steel production from cheap foreign imports.
In the face of political opposition, Nippon Steel and U.S. Steel waged a public relations campaign to win over skeptics. U.S. Steel said in a statement Monday, Dec. 23, that the deal was “the best way, by far, to ensure that U.S. Steel, including its employees, communities, and customers, will thrive well into the future.”
A growing number of conservatives had publicly backed the deal, as Nippon Steel began to win over some steelworkers 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 necessary cash to upgrade aging U.S. Steel blast furnaces.
Nippon Steel has manufacturing operations in the U.S., Mexico, China and Southeast Asia. It supplies the world’s top automakers, including Toyota Motor Corp., and makes steel for railways, pipes, appliances and skyscrapers.
In September, Mr. Biden issued an executive order expanding the factors that the Committee on Foreign Investment in the United States should consider when reviewing deals, such as how the deal impacts the U.S. supply chain or whether it would put Americans’ sensitive personal data at risk.
Kathryn Watson and
contributed to this report.
