Biden will decide on U.S. Steel-Nippon Steel deal after panel fails to reach consensus on national security risk
A powerful government panel failed to reach consensus on Monday on the national security risks posed by Japan’s Nippon Steel Corp.’s proposed nearly $15 billion deal to buy U.S. Steel Corp., leaving it up to U.S. President Joe Biden to make the decision. Longtime opponent of the deal.
The Committee on Foreign Investment in the United States (CFIUS) sent the long-awaited merger report to Biden, who formally opposed the deal in March and now has 15 days to make a final decision,” the White House said. A reluctant U.S. officials who were named discussing the private report said some federal agencies involved in the panel were skeptical that allowing a Japanese company to acquire a U.S. steelmaker would pose a national security risk.
Both Biden and President-elect Donald Trump have made overtures to union workers at U.S. Steel. Vows to block takeover Due to concerns about foreign ownership of a flagship American company. The economic risk, however, is that Nippon Steel still has the financial resources to invest in and upgrade steel plants, which could help maintain steel production in the United States.
The Interagency Committee reviews such transactions with an eye toward potential national security risks. Monday is the deadline to approve the deal, with Biden advised to block the deal or extend the review process.
The Washington Post earlier reported on the CFIUS report.
Justin Merriman/Bloomberg via Getty Images
According to the terms of approx. $14.9 billion all-cash dealU.S. Steel will retain its name and its headquarters in Pittsburgh, where the company was founded in 1901 by JPMorgan Chase and Andrew Carnegie. It will become a subsidiary of Nippon Steel and the combined company will rank among the world’s top three steel producers, according to 2023 data from the World Steel Association.
Biden, backed by the United Steelworkers union, said earlier this year it was “critical for (U.S. Steel) to continue to be a domestically owned and operated U.S. steel company.”
Trump also opposed the acquisition, vowing to “stop this deal from happening” on his Truth social platform earlier this month. Trump has proposed reviving the declining fortunes of U.S. steel companies “through a series of tax incentives and tariffs.”
The Steelworkers union said it does not trust Nippon Steel to preserve jobs at unionized plants, honor collectively bargained benefits or protect U.S. steel production from cheap foreign imports.
“Since the sale was announced, our union has called on the administration to conduct a rigorous review of the sale,” Steelworkers President David McCaul said in a statement Monday. “It is now up to President Biden to determine the best path forward.” “We continue to believe this means U.S. Steel will continue to be domestically owned and operated.”
Facing political opposition, Nippon Steel and U.S. Steel launched a public relations campaign to win over skeptics.
U.S. Steel said in a statement Monday that the deal “is the best way yet to ensure that U.S. Steel, including its employees, communities and customers, thrive in the future.”
As Nippon Steel begins to win support among some steelworkers union members and local officials around its blast furnaces in Pennsylvania and Indiana, a growing number of conservatives are speaking out in support of the deal. Many backers say Nippon Steel has a stronger financial balance sheet than rival Cleveland Cliffs and can put in the cash necessary to upgrade U.S. Steel’s aging blast furnaces.
Nippon Steel pledged to invest $2.7 billion in facilities represented by the United Steelworkers union, including U.S. Steel’s blast furnaces, and pledged not to import steel billets that compete with blast furnaces.
It also pledged to protect U.S. Steel on trade issues and not lay off workers or close plants during the term of basic labor agreements. Earlier this month, it gave U.S. Steel employees $5,000 end-of-term bonuses, equivalent to nearly $100 million in expenses.
Nippon Steel also said it is best positioned to help U.S. steel compete in an industry dominated by China.
The proposed sale comes amid renewed political support for rebuilding U.S. manufacturing, a presidential campaign in which Pennsylvania has emerged as a key battleground, and analysts who believe longstanding U.S. protectionist tariffs could help revive domestic steel.
CFIUS, chaired by Treasury Secretary Janet Yellen, reviews business transactions between U.S. companies and foreign investors and can block sales or force parties to change the terms of agreements to protect national security.
The commission’s powers were significantly expanded in 2018 through a congressional bill called the Foreign Investment Risk Review Modernization Act, or FIRRMA.
In September, Biden issued an executive order expanding the factors the committee should consider when reviewing a deal, such as how it affects U.S. supply chains or puts Americans’ sensitive personal data at risk.
Nippon Steel already has manufacturing operations in the United States, Mexico, China and Southeast Asia. It supplies the world’s top automakers, including Toyota Motor Corp., and produces steel used in railroads, pipes, appliances and skyscrapers.
