President Joe Biden has blocked the acquisition of US Steel by Japan’s Nippon Steel, fulfilling a campaign promise amidst concerns over strained US-Japan relations and potential deterrence to foreign investment.
Biden justified his decision by highlighting national security risks, emphasizing the necessity of maintaining US ownership to ensure the strength of the domestic steel industry and its supply chains. This action came after significant pressure from the United Steelworkers union, which had loudly opposed the deal, particularly as it became a focal point in the 2024 presidential election.
The Japanese government labeled the decision as “incomprehensible,” while both Nippon Steel and US Steel accused the administration of political manipulation in the review process. They have vowed to pursue legal action to protect their interests, stating in a joint statement that Biden’s move “sacrificed the future of American steelworkers for his own political agenda” and sent a “chilling message” to potential investors from allied nations.
Japanese industry and trade minister Yoji Muto expressed deep concern over the implications for future economic cooperation between Japan and the US, stressing the seriousness with which the Japanese government views this issue.
The deal, initially announced in December 2023 with a valuation of $14.9 billion, was seen as a lifeline for US Steel, which had been struggling and warned of potential factory closures without new investment. Despite efforts by both companies to mitigate opposition through job security promises and offers like funding a workforce training center, these concessions did not sway Biden, especially with Pennsylvania’s pivotal role in the upcoming election.
The decision was also critiqued by President-elect Donald Trump and Vice President-elect JD Vance, who had made appeals to union workers central to their campaign strategy.
After the US government panel couldn’t reach a consensus on the deal’s security implications, the decision fell to Biden, who ordered the deal’s termination within 30 days, arguing that domestic steel production is vital for national security, infrastructure, the auto industry, and defense.
The United Steelworkers union praised the move, viewing it as supportive of their members and national security interests. However, analysts like Professor Stephen Nagy from the International Christian University in Tokyo described the decision as politically motivated, aligning with the Biden administration’s pledge to prioritize middle-class interests over international business.
Despite the White House’s assertion that the decision was not aimed at Japan but at protecting American steel production, the move has led to a more than 5% drop in US Steel’s stock. Analysts speculate that the deal might not be completely dead, as the Committee on Foreign Investment in the United States (CFIUS) could extend the deadline for reconsideration, and there might be an opportunity for renegotiation under a new administration. Political analyst Terry Haines noted the complexity due to Japan’s status as a close US ally, suggesting that maintaining good bilateral relations could be a factor in future revisits to this decision.