Washington (AFP) – US Steel and Nippon Steel threatened legal action Friday after President Joe Biden blocked a controversial $14.9 billion deal for the Japanese company to buy its American rival. Biden cited a strategic need to protect domestic industry — but the move drew sharp criticism from both companies. The decision came after a government panel failed to reach consensus last month on whether the acquisition threatened US national security, shifting the decision to the veteran Democrat in the waning days of his presidency. The move nevertheless enjoyed rare bipartisan agreement, with Republican President-elect Donald Trump and incoming vice president JD Vance also campaigning against the sale.
“This acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains,” Biden said in a statement. “That is why I am taking action to block this deal.” The United Steelworkers union quickly welcomed the announcement. “We’re grateful for President Biden’s willingness to take bold action to maintain a strong domestic steel industry and for his lifelong commitment to American workers,” USW International President David McCall said.
Nippon Steel and US Steel expressed disappointment with the outcome, saying it “reflects a clear violation of due process and the law.” “The president’s statement and order do not present any credible evidence of a national security issue, making clear that this was a political decision,” the companies said in a joint statement. They added that they would “take all appropriate action” to protect their legal rights. The companies said they engaged transparently with the Committee on Foreign Investment in the United States (CFIUS), which was reviewing the deal. But they alleged that the “process was deeply corrupted by politics,” claiming the outcome had been “predetermined.”
“Unfortunately, it sends a chilling message to any company based in a US allied country contemplating significant investment in the United States,” the statement said. “This is not about Japan,” White House Press Secretary Karine Jean-Pierre told reporters, saying Biden has strengthened ties with allies during his term. “We have been in touch with Japan and conveyed our thoughts directly to them,” she added. US Steel’s shares slumped 6.5 percent on Friday. Japan’s industry minister Yoji Muto said: “It is incomprehensible and regrettable that the Biden administration has made this kind of decision, citing national security concerns.” “The Japanese government has no choice but to regard this seriously,” he said in a statement sent to AFP on Saturday.
Biden’s decision, less than three weeks before he leaves office, followed extended wrangling over competing domestic political, economic and trade demands. The outgoing president, who made the rebuilding of the US manufacturing base a major goal of his administration, had criticized the deal for months, while holding off on a move that could hurt ties with Tokyo. Nippon Steel touted the takeover as a lifeline for a US company that is long past its heyday, but opponents warned that the Japanese owners would slash jobs. Nippon Steel attempted to calm nerves by pledging a pause on any layoffs or closures of unionized facilities for the duration of the current union contract, which expires in 2026.
But McCall warned Friday that allowing Nippon Steel to purchase US Steel would have “offered it the opportunity to further destabilize our trade system from within.” Political intrigue over the deal intensified during the November presidential election, in which Pennsylvania — the home of US Steel — was a critical swing state, giving USW union leaders added influence. The decision was left with Biden after CFIUS reached a deadlock on the transaction. Biden, echoing Trump’s own trade policies, blamed unfair foreign trade practices for the decline of US steel. He said his mixture of protectionism and subsidies had helped revive the industry.
“I have taken decisive action to level the playing field for American steelworkers and steel producers by tripling tariffs on steel imports from China,” Biden said Friday. “A strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains,” he added.
© 2024 AFP
