Getty ImagesUS President Joe Biden has blocked a takeover of US Steel by a major Japanese firm, making a political promise despite fears the move could damage Washington’s relationship with Tokyo and scare off some foreign investors.
Biden cited threats to national security by rejecting the purchase of Nippon Steel, saying US ownership is essential to keeping the US steel industry and its supply chains strong.
His intervention followed pressure from the United Steelworkers union, which opposed the deal, which was a hot political issue in the 2024 US presidential campaign.
Nippon Steel and US Steel said Biden’s decision showed the review of the agreement was “corrupted” for political gain.
The two companies, which have threatened to sue the government if the agreement is not reached, said on Friday that they would take “appropriate measures to protect their legal rights”.
“We believe that President Biden has sacrificed the future of American steel workers for his political goals,” the companies said in a statement, adding that the move sent “a sad message to any company based in a US ally that is considering a major investment in the United States”.
Biden’s decision comes a year later Nippon Steel initially announced the $14.9bn (£12bn) deal. to buy its smaller rival in Pennsylvania.
It raises important questions about the way forward for the company, a 124-year-old name that was once a symbol of American industry but is now much diminished.
It spent months searching for a buyer before announcing a merger with Nippon Steel, the world’s fourth-largest steelmaker, in December 2023.
US Steel has warned that it may have to close factories without the investment that would come with a new owner, a concern echoed by some workers and local politicians.
The two companies have pledged not to cut jobs and make other deals in an effort to gain support for the deal. Just this week, they pledged to fund a workforce training center – and reportedly gave the government the right to block potential productivity cuts.
But the arguments have failed to convince Biden, who came out against the deal early last year, as the election season heats up and the state of Pennsylvania is poised to play a key role.
The deal was also criticized by President-elect Donald Trump and incoming vice president JD Vance, whose appeals to union workers formed a large part of their campaign message.
A US government panel charged with reviewing the deal on national security risks failed to reach an agreement in late December, leaving the decision up to Biden, who needed to act within a 15-day deadline.
In his announcement on Friday, he said that foreign ownership posed a risk and ordered the companies to withdraw from the agreement within 30 days.
“A locally owned and operated steel industry represents a national security imperative and is critical to steel supply chains,” he said.
“That’s because steel powers our country: our infrastructure, our auto industry, and the backbone of our defense industry. Without domestic steel production and domestic steel workers, our nation is weaker and less secure.”
The United Steelworkers union called the decision “a step in the right direction for our members and for national security”, saying its opposition was motivated by concerns about the long-term viability of its industry.
“We are grateful for President Biden’s determination to take bold action to keep the domestic steel industry strong and his lifelong commitment to American workers,” said President David McCall.
Professor Stephen Nagy, of the Department of Politics of International Studies at the International Christian University in Tokyo, called Biden’s decision “political”, noting that the administration from the beginning promised a “middle-class” foreign policy.
“This was a direct response and continuation of Trump’s MAGA agenda of Making America Great Again,” he said. “The Biden administration would not be seen as weak in foreign business, whether it was an ally or an adversary.”
Shares of US Steel were down about 5% in morning trading on Friday.
But analysts say the move may not spell the end of the deal. Biden’s order says the Committee on Foreign Investment in the United States can extend the 30-day deadline to complete the task.
Professor Nagy said he thinks the companies may decide to try again under Trump, possibly offering different terms that will allow the new president to say he has negotiated a better deal.
Political analyst Terry Haines of Pangea Policy also said that Trump, despite his criticism of the deal, may have reason to reconsider the decision.
“One of the difficult things about this decision is that Japan is very close to the US,” he said. “The government has a huge burden of proof to justify what they’re doing today — and it’s damaging bilateral relations with Japan, something Trump will want to avoid.”
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