US plans to block Nippon Steel takeover of US Steel – US media

President Joe Biden is reportedly preparing to block Nippon Steel’s $15 billion bid to acquire US Steel, a move that has sparked controversy and raised concerns about job losses and the impact on foreign investment in the U.S. The deal, announced last year, was set to create one of the world’s largest steel companies outside of China, but it has faced significant resistance from politicians and labor unions.

Nippon Steel, a major Japanese steel manufacturer, and US Steel, a storied American company with a 123-year history, hoped the merger would address the latter’s financial challenges and strengthen their global position. However, the proposal has encountered substantial opposition from various quarters, including U.S. Steelworkers Union and several lawmakers who are wary of the company’s shift into foreign hands.

The potential block of the takeover has already had financial repercussions. US Steel’s share price dropped nearly 20% following news of the potential decision, which comes as the company is headquartered in Pennsylvania—a key swing state during a contentious election season.

President Biden had previously indicated his concerns about the deal, citing national security reasons, and had initiated an investigation into the merger. Both presidential candidates, Donald Trump and Kamala Harris, have also voiced their opposition to the acquisition, further complicating the situation.

US Steel has yet to receive an official update regarding the formal decision. The company has expressed its commitment to the deal, emphasizing Japan’s role as a close ally of the United States. “We fully expect to pursue all possible options under the law to ensure this transaction, which is the best future for Pennsylvania, American steelmaking, and all of our stakeholders, closes,” a company spokesperson stated. The company also held a rally to garner support for the merger, arguing that blocking the deal would jeopardize “thousands of jobs” and could lead to factory closures and the potential relocation of its headquarters from Pennsylvania.

David Burrit, US Steel’s CEO, highlighted the economic implications of halting the acquisition. “We want elected leaders and other key decision makers to recognize the benefits of the deal as well as the unavoidable consequences if the deal fails,” Burrit said during the rally.

The Committee on Foreign Investment in the U.S. (CFIUS), a Treasury Department-led body responsible for reviewing foreign acquisitions for national security risks, has been overseeing the deal. Treasury officials declined to comment on the potential block, which was first reported by the Washington Post and Financial Times. White House Press Secretary Karine Jean-Pierre indicated that CFIUS had yet to deliver a formal recommendation to the president, and a White House official did not confirm or deny the reports but noted that receiving the CFIUS recommendation is the next step in the process.

Historically, CFIUS has blocked only a handful of foreign investments, specifically those involving Chinese firms. Nippon Steel, as a Japanese company, does not present the same geopolitical concerns as companies from rival nations. However, there are concerns that politicizing such reviews could deter future foreign investments, a point raised earlier this year by the U.S. Chamber of Commerce.

Political interference in the steel industry is not unprecedented. Alan Wolff, a visiting fellow at the Peterson Institute for International Economics and former trade lawyer, pointed out that trade protection measures for the steel industry have been implemented by previous administrations. George W. Bush, despite his free-trade stance, enacted steel tariffs over two decades ago. Similarly, Donald Trump’s administration was marked by trade disputes and tariffs aimed at protecting U.S. steelmakers. Although Biden has adjusted some of these protections, he has maintained certain safeguards, reflecting the sector’s enduring significance in American industry and politics.

Despite its reduced economic stature, US Steel remains a symbol of American manufacturing, with its historical significance continuing to influence public perception and policy decisions. “It has a big part in our view of where manufacturing has gone and the threat to manufacturing jobs,” Wolff noted. This context underscores the Biden administration’s stance and its impact on the ongoing electoral and economic landscape.