Getty ImagesUS President Joe Biden has blocked a takeover of US Steel by a major Japanese firm, despite fears the move could damage Washington’s relationship with Tokyo and scare off other foreign investors. can
Biden cited national security risks in rejecting the Nippon Steel purchase, saying American ownership is critical to keeping the U.S. steel industry and its supply chain strong.
His intervention follows pressure from the United Steelworkers union, which opposed the transaction, a sensitive political issue in the 2024 US presidential campaign.
Nippon Steel and US Steel said Biden’s decision showed that contract revisions were “corrupted” for political gain.
The two companies, which had previously threatened to sue the government if the deal was not reached, said on Friday they would take “appropriate action to protect their legal rights”.
“We believe that President Biden has sacrificed the future of American steelworkers for his own political agenda,” the companies said in a statement, adding that the move would “restrict the rights of anyone living in a U.S. ally. also sent a chilling message to companies considering significant investment in the United States”.
Biden’s decision comes a year later. Nippon Steel was the first to announce the $14.9bn (£12bn) deal. to buy its smaller Pennsylvania-based rival.
It raises important questions about the path forward for the company, a 124-year-old name that was once a symbol of American industrial might but is now in decline.
It spent months looking for a buyer before announcing a deal with Nippon Steel, the world’s fourth-largest steelmaker, in December 2023.
U.S. Steel has warned it may have to close factories without the investment that would come with a new owner, concerns echoed by some workers and local politicians.
Both companies had pledged not to cut jobs and make other concessions in an effort to win support for the deal. Just this week, he offered to fund a workforce training center — and reportedly gave the government the right to veto potential production cuts.
But the arguments failed to convince Biden, who came out against the deal early last year, as the election season heated up and the key swing state of Pennsylvania prepared to play a key role.
The transaction was also criticized by President-elect Donald Trump and incoming Vice President J.D. Vance, whose appeals to union workers were a major part of their campaign message.
A US government panel charged with reviewing the deal over national security threats failed to reach a consensus by the end of December, leaving the decision up to Biden, who needed to act within a 15-day deadline.
In his announcement on Friday, he said the foreign ownership posed a threat and ordered the companies to abandon the contracts within 30 days.
“A strong domestically owned and operated steel industry represents an essential national security priority and is critical to resilient supply chains,” he said.
“That’s because steel powers our nation: our infrastructure, our auto industry, and our defense industrial base. Without domestic steel production and domestic steel workers, our nation is less strong and less safe.”
The United Steelworkers union called the decision “the right move for our members and our national security,” saying it was opposed by concerns about the long-term viability of its industry.
“We are grateful to President Biden for taking bold action to preserve a strong domestic steel industry and for his lifelong commitment to American workers,” said President David McCall.
Stephen Nagy, a professor of international studies in the Department of Politics at Tokyo International Christian University, called Biden’s decision “political,” noting that the administration has from the beginning promised a foreign policy “for the middle class.” what was
“This was a direct response and continuation of Trump’s mega-agenda to make America great again,” he said. “The Biden administration cannot appear weak on foreign businesses, be they allies or adversaries.”
Shares of U.S. Steel fell nearly 5 percent in morning trading on Friday.
But analysts say the move may not signal the end of the deal. Biden’s order said the Committee on Foreign Investment in the United States could extend the 30-day deadline to terminate the transaction.
Professor Nagy said he thought companies might decide to try again under Trump, possibly offering different terms that would allow the new president to claim he negotiated a better deal. Talked.
Terry Haynes, a political analyst at Pangea Policy, also said Trump, despite his criticism of the deal, may have reason to reconsider the decision.
“One of the things that is difficult about this decision is that Japan is a very close ally of the United States,” he said. “There’s clearly a big evidential burden on the government to justify what they’re doing today — and that damages the bilateral relationship with Japan, which Trump would like to avoid.”