U.S. Steel’s Clairton Coke Works facility in Pennsylvania. President Biden said a sale to Nippon Steel would ‘create risk for our national security and our critical supply chains.’ - Justin Merriman/Bloomberg News
President Biden went against top national-security aides when deciding to tank a Japanese takeover of U.S. Steel and instead align with his domestic advisers to bolster his pro-union legacy.
Staff presented Biden two broad options in recent days, administration officials said: block the $14.1 billion deal entirely, or delay an approval until Nippon Steel could allay concerns that its ownership would harm the American manufacturing supply chain.
During closed-door discussions, national security adviser Jake Sullivan and Secretary of State Antony Blinken were among the foreign policy-minded aides pushing for options that could keep the deal alive, not wanting to damage a crucial relationship with an East Asia ally, according to the officials. Steve Ricchetti, counselor to the president, and other domestically focused staff said it was best to side with leaders of the United Steelworkers’ union, who had been vocal opponents of the deal since it was announced in December 2023, the officials said. Biden has called himself the most pro-union president in American history.
Biden’s national-security advisers weren’t uniformly supportive of finding a path to approve the deal: U.S. trade representative Katherine Tai, for example, was a proponent of scuttling the takeover. But the officials said it became clear that the final arguments pitted Biden’s political instincts against global considerations.
A senior administration official said that both national security and economic matters “were represented throughout the process and in discussions with the president.”
Secretary of State Antony Blinken and national security adviser Jake Sullivan were among the White House aides pushing for a path to approving the deal, officials said. - Win McNamee/Getty Images
Ultimately, Biden—who for months vowed not to let U.S. Steel fall into foreign hands—ended a year of backroom discussions on Friday by following through on his promise.
“It is my solemn responsibility as president to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry,” Biden said in a statement.
Leaders of the Steelworkers union said the sale would put steel-mill jobs at risk if Nippon Steel reduced production. The union predicted Nippon Steel would continue U.S. Steel’s strategy of moving production from older mills to a newer, lower-cost plant with a smaller workforce.
By stopping Japan, a country that has been close to the U.S. since World War II, from acquiring an American firm, Biden undercut his own strategy of making the U.S. an unshakable ally that always stands with its partners. Still, the move fit within the administration’s approach of protecting crucial industries even if it perturbs friendly nations, such as when the Inflation Reduction Act—a law packed with green-tech subsidies for American companies—led Europeans to decry the U.S. as too protectionist.
The Committee on Foreign Investment in the U.S., the interagency panel known as Cfius, reviewed the national-security ramifications of the takeover for months. Aides representing the Treasury, State and Defense departments, among others, couldn’t reach consensus on whether to recommend the deal to the president. The group split over whether Nippon’s large size and global scale presented a risk to the domestic steel industry by potentially replacing U.S. Steel’s production with imports from its overseas mills.
Biden cited this concern in his statement killing the move: “This acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.”
President-elect Donald Trump on the campaign trail repeatedly vowed to block the deal, a rare point of agreement between Biden and him. With just weeks to go before Trump becomes president, officials said time had effectively run out for the Japanese company to convince the administration it could protect U.S. supply chains.
“Nippon had about a year to address the national-security concerns and failed to do so,” even after Cfius gave the company more time following a review-period extension, the senior administration official said. In the end, the official said, that is why Biden decided to reject the deal outright, instead of blocking it with conditions that, if met, could eventually have given the company a path toward getting the sale approved.
Nippon Steel complained that Cfius refused to respond to multiple proposals and draft agreements with the federal government that included nearly $3 billion of investments in U.S. Steel’s plants, guarantees to produce steel in the U.S. and offers to provide the federal government with oversight of U.S. Steel’s operations.
President Biden, shown in April at United Steelworkers’ headquarters in Pittsburgh, aligned with his domestic advisers to oppose the U.S. Steel sale. - Andrew Caballero-Reynolds/Agence France-Presse/Getty Images
As part of the final offer made directly to the White House early this week, Nippon Steel promised to refrain from closing any of U.S. Steel’s production capacity for 10 years without the government’s approval.
Lawyers for Nippon Steel and U.S. Steel argued the objections and concerns raised by Cfius often went far beyond a review of national-security issues. The companies in a Dec. 17 letter accused the panel of creating “imaginary risks that have no basis in fact.” The companies said the committee’s investigation of the transaction reflected “impermissible influence” from the White House.
“If these falsehoods carry the day, the result will taint the legacy of Cfius and all involved in this process, including President Biden,” the letter said.
Over the past year, Nippon Steel sought support for the deal from politicians in states with U.S. Steel operations. Some leaders withheld public support to avoid appearing out of step with the union and some constituents. U.S. Steel’s chief executive had warned that the company would eventually close its steel plants near Pittsburgh and could move its headquarters out of the city if the deal failed. On Friday, Pennsylvania Gov. Josh Shapiro said he expects U.S. Steel to keep its commitments to workers and not threaten jobs or its headquarters in the state.
An ad for Japan’s Nippon Steel at a Tokyo train station; administration officials say Biden still welcomes Japan’s investments in the U.S. economy. - Richard A. Brooks/Agence France-Presse/Getty Images
Pennsylvania’s Democratic Sen. John Fetterman praised Biden for his decision. But not all members of the party are happy. Jason Furman, who served as chair of the Council of Economic Advisers during the Obama administration, posted on X that the move was “a pathetic and craven cave to special interests that will make America less prosperous and safe. I’m sorry to see him betraying our allies while abusing the law.”
Administration officials insist that Biden holds no animus toward Japan. In recent calls with officials in Tokyo, aides said Biden emphasized that he still wants Japan’s investment in the U.S. economy and that the decadeslong relationship will endure beyond this rough patch.
“We have proven time and time again, particularly in the Indo-Pacific, that we are a reliable partner, that we do take our treaty alliances and our commitments seriously,” John Kirby, a National Security Council spokesman, told reporters after Biden’s announcement. “I just frankly don’t think that this decision, or any other decision, points to anything other than solid, steady, consistent American leadership here and around the world.”
