Biden rejects Nippon Steel’s proposed acquisition of US Steel

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WASHINGTON (AP) – President Joe Biden has rejected a proposed $15 billion deal for Japan’s Nippon Steel to buy Pittsburgh-based US Steel – reaffirming his earlier vow to block the acquisition of the storied US steel company Steeltown.

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“We need the big American companies that represent the vast majority of American steelmaking to continue to lead the fight on behalf of America’s national interests,” Biden said in a statement Friday morning.

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His decision comes after the Committee on Foreign Investment in the United States, known as CFIUS, failed to reach an agreement on the potential national security risks of the deal last month, and sent a long-awaited report on the Biden merger. He 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 the 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 government agencies representing the group were skeptical that allowing a Japanese company to buy the U.S.-owned steelmaker would pose a national security risk.

The decision comes a few weeks before the Democratic Alliance president leaves office and could damage relations between America and Japan, America’s neighbor in Asia. Japan is also the largest foreign holder of US debt.

Biden previously came out against the deal last March – and was backed by the United Steelworkers, concerned about whether the company would honor labor agreements or cut jobs, as well as transparency of the company’s finances.

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“It is imperative that we keep strong American steel companies funded by American steel workers,” Biden said in a statement in March, when he was seeking the presidential nomination before dropping out of the race. “US Steel has been an iconic American steel company for more than 100 years, and it is important that it remains an American owned and operated steel company.”

President-elect Donald Trump has also opposed the acquisition and vowed in December at his Truth Social forum to block the deal and use tax incentives and spending to grow the company.

On Friday, Steelworkers President David McCall said the union appreciates Biden’s move to block the sale and called it “the right move for our members and the security of our country.”

McCall had long questioned Nippon Steel’s status as a reliable U.S. trade partner and reiterated that Friday, saying in a statement that “Nippon has proven itself to be a trade fraud.”

“Allowing it to buy US Steel would have given it the opportunity to further undermine our trade system in and out of the process, jeopardizing our ability to meet our national security and critical infrastructure needs,” McCall said.

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McCall stressed that US Steel has the potential to make the company stronger and stronger.

For its part, Nippon Steel said it was well-positioned to help American steel compete in a Chinese-dominated industry and invest billions in facilities representing the United Steelworkers, including the company’s aging furnaces.

It pledged to protect US Steel on trade issues, and promised not to import steel slabs that would compete with explosives.

Nippon Steel announced in December 2023 that it plans to buy the steel producer for $14.9 billion in cash and debt, and pledged to keep the US Steel name and headquarters in Pittsburgh. Despite that, its proposal has raised concerns about what the deal could mean for unionized workers, supply chains and America’s national security.

The announcement came at a time of renewed political support for rebuilding America’s manufacturing sector and followed a long period of protective US tariffs that analysts say have helped revive the domestic steel industry.

Nippon Steel ran a public relations campaign to win back supporters, even giving away $5,000 in closing bonuses to US Steel workers, a cost of nearly $100 million.

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A growing number of conservatives and business groups like the US Chamber publicly supported the deal, as Nippon Steel began to win over other Steelworkers union members and mayors in areas near its mines in Pennsylvania and Indiana.

Mike Pompeo, who served as Trump’s first secretary of state, called the possible rejection of the deal “a misunderstanding” in the Wall Street Journal last month.

“This agreement will strengthen US Steel’s current operations and manufacturing capabilities, benefit its employees and their communities, and improve the competitiveness of the American steel industry,” he wrote.

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Levy reported from Harrisburg, Pennsylvania.

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