President Biden reportedly fulfilled his commitment to maintain domestic ownership of the renowned steelmaker by preventing the sale of U.S. Steel to Japan’s Nippon Steel.
The Committee on Foreign Investment in the U.S., a federal interagency panel, spent months evaluating the $14.1 billion transaction for potential national-security risks prior to Biden’s final decision.
In an order issued on Friday, the White House mandated that the companies terminate the agreement within 30 days unless Cfius consents to an extension of the current timeline.
Nippon Steel is the fourth-largest steel manufacturer in the globe. It had pursued U.S. Steel as a means of entering the American market, where tariffs have contributed to the elevation of prices in comparison to other regions of the globe.
In the morning trading session, U.S. Steel’s shares experienced a 7% decline, while Nippon Steel’s ADRs experienced a 1% decline.
Biden’s rejection of the agreement is the most recent indication of the United States government’s shift toward protectionist policies in order to support domestic enterprises.
For decades, steel facilities in the United States have been acquired and operated by foreign companies.
It also casts a shadow over the future of 124-year-old U.S. Steel, as executives have indicated that they may close plants and relocate production to lower-cost facilities if the transaction does not go through.
U.S. Steel is the third-largest steel manufacturer in the United States, with a primary concentration on the production of sheet steel that is utilized in the automotive, appliance, and construction sectors.
The United Steelworkers union, whose leaders have been vocally opposed to the agreement since it was announced in December 2023, has been granted a victory by the decision.
Union leaders contended that the American steel industry’s capacity to produce steel would be harmed and that Nippon Steel’s ownership of U.S. Steel would be detrimental to steelworkers.
The union’s opposition prevented other Democratic elected officials from supporting the sale, as they were apprehensive about potentially alienating a significant political ally in organized labor.
Japan is a significant foreign investor in the United States’ enterprises and one of its closest allies. Nippon Steel has stated that the agreement would not jeopardize U.S. national security or compromise critical manufacturing supply chains.
U.S. Steel is entitled to receive $565 million from the Tokyo-based steelmaker in the event that the agreement is not finalized.
Nippon Steel has also claimed that the national-security review process was unjustly influenced by the steelworkers union, Biden, and Cleveland-Cliffs, a company that attempted to acquire U.S. Steel but was outbid.
The agreement was quickly embroiled in election-year politics, attracting opposition from both Republican and Democratic candidates for office, shortly after it was announced.
President-elect Donald Trump declared his intention to terminate the agreement, and Vice President Kamala Harris endorsed Biden’s assertion that U.S. Steel should continue to be owned and operated domestically.
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