Nippon-US Steel fallout: US needs to weigh allies vs. security risks
President Joe Biden has blocked Nippon Steel's (5401.T, NPSCY) proposed $14.9 billion acquisition of US Steel (X), citing various national security concerns and risks. George Mason University Founder and Executive Director of the National Security Institute Jamil Jaffer joins Catalysts to weigh in on this decision. Jaffer points out that the committee responsible for reviewing such deals — the Committee on Foreign Investment in the United States (CFIUS) — "didn't weigh in on the national security risks;" instead, it delegated the final decision to the White House political team. While some risks were identified, he emphasizes that "these are allies. We're talking about the Japanese. We're not talking about an adversary nation-state." Regarding potential changes under the new administration, Jaffer observes that "the Trump administration's been very clear about this. They share the national security and economic security concerns that arise coming out of this transaction," particularly noting the potential impact on 20,000 American jobs. However, Jaffer anticipates the Trump administration will take a strong position on supply chain issues "like core production, like steel, like semiconductors." He points out that for a long time the US has allowed such production to move overseas to regions like China, adding "I think we've learned the lesson of that." "We're not going to bring all that manufacturing back to the United States; it's just not realistic, but can we ally shore it?" He concludes by questioning how the US can effectively balance working with allies while maintaining certain domestic capabilities. To watch more expert insights and analysis on the latest market action, check out more Catalysts here. This post was written by Angel Smith
