President Biden is preparing to block a takeover bid for U.S. Steel by Japan’s Nippon Steel, citing national security and economic concerns.
Biden’s Stance on U.S. Steel Takeover
President Joe Biden is gearing up to block Japan’s Nippon Steel from purchasing U.S. Steel, based on national security grounds. This decision underlines the administration’s concern over maintaining the United States’ infrastructure and defense readiness. Nippon Steel’s $15 billion bid for U.S. Steel, announced in December, has been under intense scrutiny from both the Biden administration and lawmakers.
The administration fears that foreign control over U.S. Steel could result in critical jobs and production moving overseas. This stance aligns with President Biden’s broader objective of protecting American jobs and industries. Both Biden and former President Donald Trump have voiced opposition to the deal, emphasizing the need for U.S. Steel to remain American-owned and operated.
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
CFIUS Review and Broader Implications
The Committee on Foreign Investment in the United States (CFIUS) is actively examining the deal for potential risks to national security. CFIUS, which includes members from the State, Defense, Justice, Commerce, Energy, and Homeland Security Departments, is led by Treasury Secretary Janet L. Yellen. Despite national security concerns, some legal experts warn that blocking the deal could appear politically motivated, damaging the U.S.’s reputation for open markets.
“CFIUS hasn’t transmitted a recommendation to the President, and that’s the next step in this process,” a White House official stated. – source
National security concerns include the potential for U.S. Steel jobs and production capabilities to be moved overseas under foreign control. The United Steelworkers union, influential in the crucial swing state of Pennsylvania, strongly opposes the merger. Vice President Kamala Harris and Pennsylvania Governor Josh Shapiro also stated that U.S. Steel should remain American-owned.
Scoop: Biden prepares to block Nippon Steel acquisition of U.S. Steel, sources tell @davidjlynch & me
Story tk
— Jeff Stein (@JStein_WaPo) September 4, 2024
Impact on U.S. Steel and Market Reactions
U.S. Steel shares dropped by 23% following reports of the expected block. CEO David B. Burritt emphasized the potential benefits of the deal and the consequences if it falls through, including the risk of closing many of U.S. Steel’s blast furnace facilities. This could potentially put thousands of jobs and the company’s global competitiveness at risk.
“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.'” – source
Despite the administration’s reassurances, the blocked merger could have wider labor implications and potentially strain US-Japan relations. Japan is currently navigating political uncertainty with Prime Minister Fumio Kishida expected to step down soon, putting additional pressure on the diplomatic front.