Biden rejects Nippon Steel’s proposed deal to acquire US Steel

WASHINGTON (AP) — President Joe Biden has rejected the nearly $15 billion proposed deal for Nippon Steel of Japan to purchase Pittsburgh-based U.S. Steel — affirming his vow in March to block the acquisition.

“We need major U.S. companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests,” Biden said in a Friday morning statement.

His decision comes after the Committee on Foreign Investment in the United States, known as CFIUS, failed to reach consensus on the possible national security risks of the deal last month, and sent a long-awaited report on the merger to Biden who had 15 days to reach a final decision.

The committee, chaired by Treasury Secretary Janet Yellen and made up of other Cabinet members, can recommend that the president block a transaction, and federal law gives the president that power.

A U.S. official familiar with the matter, who spoke on condition of anonymity, told The Associated Press last month that 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.

The decision, which comes just weeks before the Democratic president is set to leave office, could potentially damage relations between the U.S. and Japan, which is America’s biggest ally in Asia. Japan is also the largest foreign holder of U.S. debt.

Biden previously came out against the deal last March — and was backed by the United Steelworkers, concerned over whether the company would honor existing labor agreements or slash jobs as well as the firm’s financial transparency.

“It is important that we maintain strong American steel companies powered by American steel workers,” Biden said in a March statement, while he was still seeking reelection to the presidency before dropping out of the race. “U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated.”

President-elect Donald Trump has also opposed the acquisition and vowed in December on his Truth Social platform to block the deal and to use tax incentives and tariffs to grow the company. Steelworkers’ union President David McCall said last month that the union welcomed Trump’s opposition to the sale and said “it’s time for this deal to be rejected so we can all focus on the future.”

Nippon Steel announced in December that it planned to buy the Pennsylvania steel producer for $14.1 billion in cash — and despite committing to keep the U.S. Steel name and Pittsburgh headquarters — its proposal raised concerns about what the transaction could mean for unionized workers, supply chains and U.S. national security.

Still, the deal had many supporters, including lawmakers and business groups like the U.S. Chamber. Mike Pompeo, who served as Trump’s first secretary of state called a potential rejection of the deal “shortsighted” in the Wall Street Journal.

“The deal would strengthen U.S. Steel’s current operations and production capacity, benefit its workers and their communities, and enhance the competitiveness of the American steel industry,” he wrote in December.

United Steelworkers (USW) International President David McCall issued the following statement in response to Biden blocking the proposed U.S. Steel-Nippon sale:

“The USW welcomes President Biden’s decision to block the U.S. Steel-Nippon deal. We have no doubt that it’s the right move for our members and our national security.

“Throughout the past year, as the proposed transaction was under review, our union’s first and only concern has been the long-term viability of our facilities as we look to ensure a strong domestic steel industry well into the future.

“Nippon has proven itself to be a serial trade cheater that for decades worked to undermine our domestic industry by dumping its products into our market. Allowing it to purchase U.S. Steel would have offered it the opportunity to further destabilize our trade system from within and in the process, compromise our ability to meet our own national security and critical infrastructure needs.

“It’s clear from U.S. Steel’s recent financial performance that it can easily remain a strong and resilient company. We now call on U.S. Steel’s board of directors to take the necessary steps to allow it to further flourish and remain profitable.

“We’re grateful for President Biden’s willingness to take bold action to maintain a strong domestic steel industry and for his lifelong commitment to American workers. Moving forward, we’re confident that with responsible management, U.S. Steel will continue to support good jobs, healthy communities and robust national and economic security well into the future.”

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