Biden Intervenes in Major Steel Deal: Key Reasons Unveiled

President Biden is poised to block a significant takeover of U.S. Steel by Japan’s Nippon Steel to safeguard American jobs and national security.

At a Glance

President Biden is preparing to block Japan’s Nippon Steel from acquiring U.S. Steel on national-security grounds.
The Committee on Foreign Investment in the United States (CFIUS) is scrutinizing the deal for potential risks.
Concerns include the possibility of U.S. Steel jobs and production being moved overseas.
President Biden and former President Donald Trump both oppose the sale.

Protecting National Security and Jobs

President Joe Biden is set to take a decisive step to block Japan’s Nippon Steel from acquiring U.S. Steel, citing national security concerns and the need to protect domestic employment. This move comes amid rising geopolitical tensions and mounting pressure to sustain critical industries within U.S. borders. The proposed $15 billion deal, announced in December 2023, has faced intense scrutiny from the Committee on Foreign Investment in the United States (CFIUS) and key figures within the Biden administration.

The CFIUS, which includes representatives from various federal departments including State, Defense, and Justice, is analyzing the transaction to assess its potential risks. Treasury Secretary Janet L. Yellen leads the charge. The primary concern is that foreign ownership of U.S. Steel could result in the relocation of jobs and production facilities overseas, undermining America’s capacity to meet its infrastructure and defense needs indigenously.

President Biden is preparing to formally block Nippon Steel's $14.1 billion takeover of US Steel https://t.co/bXV7qLgeh9

— Bloomberg Markets (@markets) September 4, 2024

Bipartisan Opposition and Union Backlash

Among the concerns being raised is the fierce opposition from both President Biden and former President Trump, making this a rare point of bipartisan agreement. Both have emphasized that keeping U.S. Steel American-owned is essential for the security and economic stability of the nation. Vice President Kamala Harris has echoed these sentiments, reinforcing the administration’s stance.

“Biden has voiced opposition to the deal in the past, saying earlier this year ‘it is vital for it to remain an American steel company that is domestically owned and operated.'” – Forbes

Additionally, the United Steelworkers Union has opposed the deal. This union’s stance is particularly significant given its strong influence in Pennsylvania, a key swing state. Despite the resistance, U.S. Steel employees who supported the deal held a rally at the company’s headquarters to display their support for the Nippon Steel transaction.

U.S. Steel Shares Tank Over 20% After Reports Biden Will Block Nippon Steel Takeoverhttps://t.co/tB29T5HfRW pic.twitter.com/pBPNMvmsoV

— Forbes (@Forbes) September 4, 2024

Market Reactions and Future Implications

The anticipation of Biden’s decision has already impacted financial markets, with U.S. Steel shares plummeting by 23% following the reports of the expected block. The stock now sits at its lowest point since August 2023. U.S. Steel’s CEO, David B. Burritt, has highlighted the potential benefits of the deal, warning of dire consequences if it fails.

“The Japanese players appear not to be fully aware of the situation they got themselves in, buying a Pennsylvania steel company in the middle of a presidential election,” Jonathan Grady, the founding principal of the consultancy firm Canary Group, told CBS MoneyWatch.

Blocking the merger could have far-reaching ramifications, potentially upsetting U.S.-Japan relations and raising questions about the U.S.’s commitment to open markets. National security assessments have received mixed reviews from foreign policy experts, some criticizing the rigidity of the criteria used. As the White House continues to downplay the report, noting that CFIUS has not yet transmitted its recommendation, the situation remains fluid, with further updates expected in the coming days.