US President Joe Biden has blocked the proposed $14.9 billion acquisition of US Steel by Japan’s Nippon Steel, citing national security concerns and fulfilling a campaign promise to protect American industries. The decision has raised tensions with Japan and sparked fears about its impact on future foreign investments in the US.
Biden explained that foreign ownership of US Steel posed risks to national security, emphasizing that maintaining a strong, domestically-owned steel industry is essential for national defense and infrastructure. “Steel powers our country: our infrastructure, our auto industry, and our defense industrial base,” Biden said in a statement. He also stated that the transaction would undermine the resilience of US supply chains, particularly in critical sectors.
The move follows pressure from the United Steelworkers union, which had expressed concerns over the potential loss of jobs and the long-term viability of the steel industry. The union hailed Biden’s decision as “the right move for our members and our national security.”
Nippon Steel and US Steel, however, strongly condemned the decision, claiming that the review process had been manipulated for political purposes. The two companies stated they would take “appropriate action to protect their legal rights,” signaling the possibility of a legal challenge. They also argued that the merger would have strengthened the US steel industry, improved competitiveness, and safeguarded American jobs.
Japanese officials reacted swiftly, with Yoji Muto, Japan’s industry and trade minister, expressing disappointment over Biden’s decision. Muto warned that it could harm future investment between Japan and the US, adding that the Japanese government would take the matter seriously. The decision has also raised concerns within the business communities of both nations.
The proposed merger, announced in December 2023, had been closely watched by both governments. Nippon Steel, the world’s fourth-largest steelmaker, had aimed to expand its presence in the US by acquiring US Steel, a company with a storied history in American industry. US Steel had warned that without the merger, it might be forced to close factories, affecting workers and local communities, particularly in Pennsylvania, a crucial swing state in the upcoming 2024 election.
Despite the companies’ efforts to allay concerns, including pledges to protect jobs and fund workforce training programs, Biden stood firm in his opposition. The decision has drawn criticism from various quarters, including conservatives and business groups, some of whom argue that it could deter foreign investments in the US.
White House spokesperson John Kirby defended the move, clarifying that it was not aimed at Japan but at preserving US steel-making capabilities. Analysts speculate that Nippon Steel and US Steel may attempt to renegotiate the deal under a future administration, potentially with more favorable terms.
The fallout from the decision could have lasting effects on US-Japan relations, with some questioning the impact on bilateral ties and future economic cooperation.
