President Biden speaking at the United Steelworkers headquarters in Pittsburgh in April. - andrew caballero-reynolds/Agence France-Presse/Getty Images
President Biden blocked the sale of U.S. Steel to Japan’s Nippon Steel, fulfilling his pledge to keep the storied steelmaker domestically owned.
Biden’s decision comes after the Committee on Foreign Investment in the U.S., a federal interagency panel, spent months reviewing the $14.1 billion deal for potential national-security risks. In an order Friday, the White House required the companies to abandon the deal within 30 days unless Cfius agrees to extend the timeline.
“We need major U.S. companies representing the major share of U.S. steelmaking capacity to keep leading the fight on behalf of America’s national interests,” Biden said.
U.S. Steel is the nation’s third-largest steelmaker. - Ted Shaffrey/AP
Nippon Steel is the world’s fourth-largest steelmaker. It had pursued U.S. Steel as a way to enter the American market, where tariffs have helped keep prices higher than other parts of the world.
In a joint statement the companies said the president’s order did not present any “credible evidence of a national security issue” and criticized the committee’s review of the deal. Nippon Steel has said it plans to challenge the decision on due process grounds.
“Instead of abiding by the law, the process was manipulated to advance President Biden’s political agenda,” the companies said.
Shares in U.S. Steel closed Friday down nearly 7% to $30.47, while ADRs of Nippon Steel declined 1%.
Biden’s rejection of the deal is the latest sign of the U.S. government’s tilt toward protectionist policies to boost homegrown businesses. Foreign companies have bought and operated steel plants in the U.S. for decades.
“The United States remains an open economy with record foreign direct investment under President Biden’s leadership. This is not about Japan or any other ally but ensuring a strong domestic steel industry,” said White House spokeswoman Robyn Patterson.
It also clouds the future of 124-year-old U.S. Steel, where executives have said they might close plants and shift production to lower-cost facilities if the sale didn’t proceed. U.S. Steel is the nation’s third-largest steelmaker, with production mainly focused on sheet steel used by the automotive, appliance and construction industries.
The decision hands a victory to the United Steelworkers union, whose leaders vociferously opposed the deal since it was announced in December 2023. Union leaders argued that Nippon Steel’s ownership of U.S. Steel would be bad for steelworkers and harm the American steel industry’s ability to produce steel. The union’s pushback kept other Democratic elected officials from endorsing the sale for fear of crossing a major political ally in organized labor.
“We’re grateful for President Biden’s willingness to take bold action,” said Dave McCall, the union’s president. “We have no doubt that it’s the right move for our members and our national security.”
Japan is one of the U.S.’s closest allies and one of the biggest foreign investors in businesses in the country. Nippon Steel has said the national-security review process was unfairly influenced by opposition from the steelworkers union, Biden, and Cleveland-Cliffs, a company that sought to acquire U.S. Steel but was outbid. The company said the decision “sends a chilling message” to companies in allied countries planning an investment in the U.S.
“It is incomprehensible and unfortunate that such a decision was made,” said Yoji Muto, head of Japan’s Ministry of Economy, Trade and Industry.
Under the terms of the deal, Nippon Steel is on the hook to pay U.S. Steel $565 million if the deal can’t be completed.
The deal became entangled in election-year politics soon after it was announced, drawing opposition from both Republican and Democratic candidates for office. President-elect Donald Trump vowed to scuttle the deal, and Vice President Kamala Harris adopted Biden’s position that U.S. Steel should remain domestically owned and operated.
Trump levied tariffs on steel imports in 2018 during his first term and has pledged to use tariffs aggressively again in his next administration. Biden expanded requirements for made-in-America metal on government-funded projects and viewed himself as an advocate for blue-collar workers and unions.
Nippon Steel and U.S. Steel worked for months to build support for the deal in Washington, D.C., and especially in Pittsburgh, where the companies used social-media messages, TV commercials and billboards to drum up public support. During the spring and summer, Nippon Steel Vice Chairman Takahiro Mori met with dozens of small-town mayors, union members, congressmen and business leaders to counter opposition emanating from the steelworkers union and candidates on the campaign trail.
Nippon Steel Vice Chairman Takahiro Mori met with dozens of leaders and union members to counter opposition to the deal. - City of Gary, Ind.
The Japanese steelmaker promised to invest billions of dollars to upgrade U.S. Steel’s plants, including more than $1 billion at Mon Valley Works, the company’s oldest mill, and its second-oldest in Gary, Ind. The company also agreed to honor terms of the steelworkers’ contract with U.S. Steel that runs through 2026.
The Cfius review was happening over the same time frame as Nippon Steel’s charm offensive. Some members of the panel viewed Nippon Steel’s large size and overseas mills as possible threats to U.S. Steel’s production and the country’s steel output, according to correspondence between the committee and Nippon Steel viewed by The Wall Street Journal.
On Dec. 23, Cfius members notified the president that it had deadlocked over whether to recommend the deal. That left the decision up to Biden, who months ago said he was against foreign ownership of the Pittsburgh-based company.
Nippon Steel offered to mitigate concerns about the deal by giving the federal government broad oversight of U.S. Steel’s operations. Earlier this week, the company said it wouldn’t reduce steel production capacity at U.S. Steel’s plants for 10 years without the permission of the federal government.
