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Biden blocks Japan's Nippon Steel from buying US Steel Biden blocks Japan's Nippon Steel from buying US Steel
(about 1 hour later)
US President Joe Biden has formally blocked the takeover of US Steel by a bigger Japanese company, saying foreign ownership could pose risks for national security. US President Joe Biden has blocked the takeover of US Steel by a bigger Japanese firm, delivering on a political promise despite fears the move could hurt Washington's relations with Tokyo and scare off other foreign investors.
The controversial decision comes a year after Nippon Steel first announced the $14.9bn (£12bn) deal, describing it as a lifeline for its smaller Pennsylvania-based rival. Biden cited threats to national security in rejecting the Nippon Steel purchase, saying US ownership was important to the strength of its steel industry and its supply chains.
But the transaction ran into near immediate trouble, after leaders of the United Steelworkers union loudly opposed the deal, bringing political pressure to bear in a key state during the 2024 presidential election. His intervention follows pressure from the United Steelworkers union, which had opposed a transaction that was a sensitive political issue in the 2024 US presidential campaign.
Biden ultimately decided to scrap the deal despite concerns by some advisors that it could damage Washington's relations with Tokyo, a key ally. Nippon Steel and US Steel said Biden's decision showed the review of the deal had been "corrupted" for political gain.
Nippon Steel and US Steel, which had previously threatened to sue the government if the deal did not happen, on Friday accused Biden of manipulating the review of the deal for political gain. The two companies, which had previously threatened to sue the government if the deal did not happen, on Friday said they would take "appropriate action to protect their legal rights".
They said 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 sent "a chilling message to any company based in a US allied country contemplating significant investment in the United States"."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 sent "a chilling message to any company based in a US allied country contemplating significant investment in the United States".
Biden's decision raises significant questions about the path forward for US Steel, a 124-year-old company that was once a symbol of American industrial might but is now much diminished. Biden's decision comes a year after Nippon Steel first announced the $14.9bn (£12bn) deal to buy its smaller Pennsylvania-based rival.
It had spent months looking for a buyer before announcing the tie-up with Nippon Steel, the world's fourth largest steelmaker. It raises significant 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 much diminished.
In the months since the announcement, the two companies vowed not to cut jobs and made other concessions in an effort to win support. It spent months looking for a buyer before announcing the tie-up with Nippon Steel, the world's fourth largest steelmaker, in December 2023.
Just this week, they offered to fund a workforce training centre - and reportedly give the government the right to veto potential production cuts. US Steel has warned that it might have to close factories without the investment that would come with a new owner, concerns that had been echoed by some workers and local politicians.
US Steel has also warned that it might have to close factories without the investment that would come with a new owner, concerns that had been echoed by some workers and local politicians. The two companies had pledged not to cut jobs and made other concessions in an effort to win support for the deal. Just this week, they offered to fund a workforce training centre - and reportedly give the government the right to veto potential production cuts.
Other business groups said they feared rejecting the transaction could scare off international investors at a time when protectionism in the US has been on the upswing. But the arguments failed to convince Biden, who had come out in opposition to the deal early last year, as election season heated up and with the key swing state of Pennsylvania poised to play a key role.
But the arguments failed to convince Biden, who had come out in opposition to the deal early last year. The transaction was also criticised by President-elect Donald Trump and the incoming vice-president, JD Vance, whose appeals to union workers formed a big part of their campaign message.
The transaction was also criticised by President-elect Donald Trump and the incoming vice-president, JD Vance.
The US government panel charged with reviewing the deal for national security risks failed to reach a consensus by late December, leaving the decision to Biden, who was required to act within a 15-day deadline.The US government panel charged with reviewing the deal for national security risks failed to reach a consensus by late December, leaving the decision to Biden, who was required to act within a 15-day deadline.
In his announcement on Friday he said maintaining US ownership was important to keeping the US steel industry and it supply chains strong. In his announcement on Friday he said foreign ownership presented a risk.
"As I have said many times, steel production - and the steel workers who produce it - are the backbone of our nation," he said. "A strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains," he said.
"That is because steel powers our country: 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 secure." "That is because steel powers our country: our infrastructure, our auto industry, and our defence industrial base. Without domestic steel production and domestic steel workers, our nation is less strong and less secure."
The United Steelworkers union called the decision the "right move for our members and our national security", saying its opposition had been driven by concerns about the long-term viability of its industry.The United Steelworkers union called the decision the "right move for our members and our national security", saying its opposition had been driven by concerns about the long-term viability of its industry.
"We're grateful for President Biden's willingness to take bold action to maintain a strong domestic steel industry and for his lifelong commitment to American workers," President David McCall said."We're grateful for President Biden's willingness to take bold action to maintain a strong domestic steel industry and for his lifelong commitment to American workers," President David McCall said.
Prof Stephen Nagy, of the Department of Politics International Studies at the International Christian University in Tokyo, called Biden's decision "political", noting that the administration from its start promised a foreign policy "for the middle class".
"This was a direct response and continuation of the Trump MAGA agenda of Making America Great Again," he said. "The Biden administration couldn't appear weak on foreign businesses, whether it's an ally or adversary."
Shares in US Steel fell about 5% in morning trade on Friday.Shares in US Steel fell about 5% in morning trade on Friday.
But Terry Haines of Pangaea Policy said he did not think the move necessarily marked the end of the deal. But analysts said the move might not mark the end of the deal.
Prof Nagy said he thought the companies could decide to try again under Trump, potentially offering different terms that would allow the new president to claim he had negotiated a better deal.
Political analyst Terry Haines of Pangaea Policy also said Trump, despite his criticism of the deal, might have reason to revisit the decision.
"One of the things that's difficult about this decision is that Japan is a very close US ally," he said. "The government's got frankly a big evidentiary burden in order to justify what they're doing today - and it hurts bilateral relations with Japan, something Trump will want to avoid.""One of the things that's difficult about this decision is that Japan is a very close US ally," he said. "The government's got frankly a big evidentiary burden in order to justify what they're doing today - and it hurts bilateral relations with Japan, something Trump will want to avoid."
Prof Stephen Nagy, of the Department of Politics International Studies at the International Christian University in Tokyo, also said he thought the companies might decide to try again under Trump, potentially offering different terms that would allow the new president to claim he had negotiated a better deal.
He called Biden's decision "political", noting that the administration from its start promised a foreign policy "for the middle class".
"This was a direct response and continuation of the Trump MAGA agenda of Making America Great Again," he said.
"The Biden administration couldn't appear weak on foreign businesses, whether it's an ally or adversary."