US President Joe Biden has formally blocked the proposed $14.9bn acquisition of US Steel by Japan’s Nippon Steel, citing national security risks. This decision marks a significant turn in the high-stakes deal that had been under review for over a year, with significant opposition from various political and labor groups.
The deal, announced in 2023, was seen by Nippon Steel as a vital move to help its smaller US counterpart, US Steel, remain competitive. However, the transaction faced mounting political pressure from the United Steelworkers union, which voiced concerns about potential job losses and plant closures. Their opposition became a point of contention, particularly in Pennsylvania, a key battleground state in the 2024 presidential race.
Despite some advisors warning that blocking the deal could strain US-Japan relations, Biden chose to prioritize national security concerns. The US government panel responsible for reviewing foreign investments could not reach a consensus on the transaction, forcing Biden to make the final decision. In his statement, Biden stressed the importance of maintaining domestic control over the steel industry, a cornerstone of US infrastructure, defense, and economy. “Steel production… is the backbone of our nation,” he said, emphasizing that without strong domestic steel production, the US would be less secure.
The decision has drawn mixed reactions. While some labor unions and local politicians supported the move, fearing job cuts and plant closures, business groups warned it could deter international investment in the US. Nippon Steel and US Steel have hinted at potential legal action if the deal remains blocked.
Professor Stephen Nagy of the International Christian University in Tokyo described the move as politically motivated, pointing to Biden’s broader commitment to protecting domestic industries and following in the footsteps of the Trump administration’s “America First” policies.
The Biden administration’s stance underscores its commitment to strengthening US industry, even at the cost of potential diplomatic tensions with key allies like Japan.
