Biden ready to block Nippon Steel’s $14 billion takeover of U.S. steel over national security concerns

US President Joe Biden — President Joe Biden delivered his third speech to Congress on Tuesday evening, marking the end of the first half of his term (Photo: Tom Brenner/Reuters/File photo)

President Joe Biden is reportedly preparing to block Japan’s Nippon Steel Corporation’s $14.1 billion bid to acquire U.S. Steel, a move that could deal a major blow to the proposed merger and exacerbate tensions in an already fraught political environment. The acquisition, which has been the subject of scrutiny by the Committee on Foreign Investment in the United States (CFIUS), is now at a critical juncture as the committee nears a final recommendation.

While the White House has yet to publicly comment on the president’s position, sources familiar with the situation say Biden is likely to oppose the deal if CFIUS raises any national security concerns. The administration’s hesitation underscores broader concerns about the potential risks of allowing a key U.S. manufacturing company to be under foreign control, even in the hands of a close ally like Japan.

“We continue to maintain that there are no national security issues associated with this transaction, as Japan is one of our staunchest allies,” U.S. Steel said in a statement. The company said it was determined to pursue “all available options under the law” to ensure the deal is completed, signaling a potential legal battle if the deal is blocked.

The stakes are high, with the merger not only representing a significant financial deal but also becoming a flashpoint in the upcoming U.S. election. The deal has drawn strong opposition from both sides of the political spectrum, with key figures like Vice President Kamala Harris and former President Donald Trump voicing their concerns. Harris, who recently declared her opposition at a Labor Day rally in Pittsburgh, echoed Biden’s earlier stance that U.S. Steel should remain “domestically owned and operated.”

The controversy surrounding the deal also underscores the broader economic and political implications of such acquisitions. U.S. Steel, once the epitome of American industrial power, is now a shadow of its former self, facing fierce competition and declining market share. The company has argued that Nippon Steel’s investment is crucial to revitalizing its business, particularly at its union mills in Pennsylvania and Indiana.

Without a merger, U.S. Steel has warned it could be forced to move away from its traditional blast furnace operations, potentially putting thousands of jobs at risk. The company has also hinted at possibly moving its headquarters from Pittsburgh, further stoking concerns about the future of U.S. steelmaking.

Nippon Steel, on the other hand, has made several concessions in an attempt to assuage U.S. concerns. The Japanese company has pledged to maintain a majority American board and management team at U.S. Steel and has assured that no production capacity or jobs will be moved outside the United States. Despite these promises, skepticism remains, particularly among the United Steelworkers (USW) union, which has been a vocal opponent of the deal.

The union’s concerns stem from fears that Nippon Steel could prioritize non-union U.S. Steel plants and move production to Japan, putting American workers at risk. The USW accused U.S. Steel of making “baseless and unlawful threats” in pushing for the merger, calling it “a last-gasp and desperate attempt to save the merger on life support.”