US president Joe Biden on Friday followed through on his pledge to block Nippon Steel’s $14.9bn bid for US Steel, citing concerns the deal could hurt national security.
“US Steel will remain a proud American company – one that’s American-owned, American-operated, by American union steelworkers – the best in the world,” Biden said in a statement.
The move, long expected, cuts off a critical lifeline of capital for the beleaguered American icon, which has said it would have to idle key mills without the nearly $3bn in promised investment from the Japanese firm.
It also represents the final chapter in a high-profile national security review, led by the Committee on Foreign Investment in the United States (CFIUS), which vets investment for national security risks and had until 23 December to approve, extend the timeline or recommend that Biden block the deal.
“We need major US companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests,” Biden said.
Biden added: “As a committee of national security and trade experts across the executive branch determined, 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.”
The proposed tie-up has faced high-level opposition within the United States since it was announced a year ago, with both Biden and his incoming successor, Donald Trump, taking aim at it as they sought to woo union voters in the swing state of Pennsylvania, where US Steel is headquartered. Trump and Biden both asserted the company should remain American-owned.
The merger appeared to be on the fast track to be blocked after the companies received a 31 August letter from the CFIUS, seen by Reuters, arguing the deal could hurt the supply of steel needed for critical transportation, construction and agriculture projects.
But Nippon Steel countered that its investments, made by a company from an allied nation, would in fact shore up US Steel’s output, and it won a 90-day review extension. That extension gave the CFIUS until after the November election to make a decision, fueling hope among supporters that a calmer political climate could help the deal’s approval.
But hopes were shattered in December when the CFIUS set the stage for Biden to block it in a 29-page letter by raising allegedly unresolved national security risks, Reuters exclusively reported.
In the White House statement, Biden struck a tone of economic nationalism that is resonant of Donald Trump – his Republican opponent in last year’s US presidential election before Biden dropped out over concerns about his age and mental acuity.
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“Today’s action reflects my unflinching commitment to utilize all authorities available to me as president to defend US national security, including by ensuring that American companies continue to play a central role in sectors that are critical for our national security. As I have made clear since day one: I will never hesitate to act to protect the security of this nation and its infrastructure as well as the resilience of its supply chains,” Biden said.
Trump eventually beat Biden’s vice-president, Kamala Harris, in November’s poll and is now the US president-elect. He has maintained his stance on American economic nationalism, especially by threatening to impose tariffs on other countries, and sparked global fears of an international trade war. Trump takes office later this month and returns to the White House for his second term.
Reuters contributed reporting