Nippon Steel and US Steel have filed a lawsuit against the US government, alleging political interference in President Joe Biden’s decision to block Nippon Steel’s $14.9 billion takeover of US Steel. The companies claim Biden “ignored the rule of law” to curry favor with trade unions and advance his political agenda.
The lawsuit comes after Biden rejected the deal on Friday, citing national security concerns and the need for a strong, domestically-owned steel industry to support critical supply chains, including those for the automotive and defense sectors. Biden argued that allowing the acquisition would undermine US interests despite its potential to bolster Nippon Steel’s competitiveness against China’s steel dominance, which accounts for 60% of global production.
Political Context and Allegations
The proposed takeover, first announced in December 2023, had been in limbo for months. Biden’s decision to block the deal aligns with a campaign promise to protect domestic industries, particularly in Pennsylvania, a key swing state where US Steel is headquartered.
Nippon Steel and US Steel have requested a court-ordered review of the purchase, accusing the Committee on Foreign Investment in the US (CFIUS) of failing to conduct a “good faith, national security-focused regulatory review.” The companies also filed lawsuits against United Steelworkers President David McCall and Cleveland-Cliffs CEO Lourenco Goncalves, alleging “illegal and coordinated actions” to obstruct the deal.
McCall, who supported a $7.3 billion acquisition bid from Cleveland-Cliffs in mid-2023, defended Biden’s decision, stating it safeguarded national security and protected the domestic steel industry.
Japanese Concerns
The move has drawn criticism from Japan. Prime Minister Shigeru Ishiba expressed concerns about the decision’s potential impact on trade relations between the two G7 allies. “We must insist on an explanation as to why there are security concerns; otherwise, there will be no progress in future discussions,” Ishiba said on Monday.
Nippon Steel has reiterated its commitment to investing $2.7 billion in US Steel and emphasized that the acquisition would strengthen the US steel industry, particularly against competition from China.
Future Uncertainty
The lawsuit’s outcome could hinge on the next administration, but prospects remain uncertain. President-elect Donald Trump has also vowed to block the deal, arguing it would undervalue US Steel amid plans for sweeping tariffs on foreign imports.
“Why sell US Steel now when tariffs will make it a much more profitable and valuable company?” Trump wrote on Truth Social, referencing his plans to reintroduce protectionist measures similar to those from his first term.
Economic analyses of Trump’s 2018 tariffs indicate mixed outcomes: modest job gains at steel manufacturers but job losses in other sectors affected by higher steel costs.
The legal battle underscores the tensions between economic nationalism and global trade relations, leaving the fate of the acquisition—and its broader implications for US-Japan ties—in limbo.
