President Biden is poised to block a major acquisition attempt of U.S. Steel, citing national security concerns.
At a Glance
- President Biden is preparing to block Japan’s Nippon Steel from purchasing U.S. Steel over national-security concerns.
- The Committee on Foreign Investment in the United States (CFIUS) is evaluating the deal.
- The Steelworkers Union and several political leaders oppose the sale.
- Failure of the deal could result in the closure of many U.S. Steel facilities and job losses.
Biden’s Move To Block The Acquisition
President Joe Biden has made a definitive stance against the proposed acquisition of U.S. Steel by Japan’s Nippon Steel, a $15 billion deal first announced in December. The decision underscores his administration’s focus on protecting national security and preserving critical American industries.
The Committee on Foreign Investment in the United States (CFIUS) is meticulously reviewing the transaction. This body consists of members from several key departments, including State, Defense, Justice, Commerce, Energy, and Homeland Security, and is chaired by Treasury Secretary Janet L. Yellen.
President Biden is preparing to formally block Nippon Steel's $14.1 billion takeover of US Steel https://t.co/bXV7qLgeh9
— Bloomberg Markets (@markets) September 4, 2024
Concerns And Opposition
The primary concerns revolve around the potential for U.S. Steel jobs and production to be relocated overseas under foreign ownership. This sentiment is strongly echoed by the Steelworkers Union, which has significant influence in key swing states like Pennsylvania. President Biden and former President Donald Trump have both expressed opposition to the sale, and Vice President Kamala Harris recently affirmed that U.S. Steel should remain American-owned.
“Biden has voiced opposition to the deal in the past, saying earlier this year ‘it is vital for it to remain an American steel company that is domestically owned and operated.'”
The ramifications of the failed deal are already felt on Wall Street, with U.S. Steel shares dropping 23% upon the announcement. CEO David B. Burritt highlighted the potential benefits of the Nippon merger and the adverse consequences if the deal fails, including the closure of several blast furnace facilities and risks to global competitiveness.
Potential Legal And Economic Repercussions
Legal experts warn that President Biden’s intervention might appear political, potentially damaging the U.S.’s reputation for maintaining open markets. John Kabealo, a lawyer specializing in cross-border transactions, commented on the potential negative impact on America’s standing in international markets.
“The U.S. will lose all standing to argue that F.D.I. screening regimes around the world should not be politicized.”
CFIUS is still reviewing the deal, and the Justice Department is investigating potential antitrust issues. The outcome of this review will determine the final stance of the administration. Meanwhile, U.S. Steel has been advocating for the merger, emphasizing that failure could have dire labor implications and impact US-Japan relations.
