The Outcome of US Steel's Agreement with Japan's Nippon Hinges on Biden, Insiders Assert
The decision regarding Japan's Nippon Steel's acquisition of US Steel now rests with Biden, who is anticipated to prevent it, having advocated for numerous months that the firm should remain under American ownership to safeguard domestic steel jobs. This was first reported by The Washington Post regarding the committee's review.
Throughout the lengthy review process, CNN reported that the Committee for Foreign Investment in the United States, commonly known as CFIUS, was at an impasse regarding whether the deal posed a national security risk beyond simply being a political controversy.
Typically, a concluding report from the committee presents the president's perspective on the potential risks the deal may incur. The Treasury Department oversees the committee, which consists of high-ranking officials from the president's Cabinet agencies responsible for matters of national security.
However, internal dissatisfaction within the committee emerged as a result of the public opposition to the deal voiced by Biden, Vice President Kamala Harris, and former President-elect Donald Trump. This adversely affected the committee's ability to assess the deal objectively.
Neither US Steel nor Nippon have refuted the claim that the deal poses a national security risk. Neither firm immediately responded to a request for comment. US Steel stock (X) fell by 3% in post-markets trading.
A year ago, Nippon Steel agreed to procure US Steel for a price near double that of the hostile offer US Steel had received from US-based Cleveland Cliffs. To obtain approval for the deal, Nippon vowed to invest billions of dollars into US Steel's business in critical states.
The merger became a contentious issue as politicians from both sides of the aisle pledged to safeguard American manufacturing.
US Steel, however, has stressed that the deal is necessary to bolster its ailing business, which has struggled to compete with cheaper foreign steel, primarily from China, for decades. US Steel declared in September that without Nippon's acquisition, it would be forced to close its mills with unionized workers. US Steel has maintained that the multibillion-dollar investment from its Japanese counterpart would better fortify the company's facilities and finances than it could on its own.
Nippon has committed to investing $2.7 billion in US Steel's unionized mills outside of Pittsburgh and in Gary, Indiana.
CFIUS wasn't the sole obstacle in the deal's path: The US Justice Department is also conducting an antitrust review of the potential merger.
It remains uncertain whether Biden will permanently terminate the deal or afford the two steel companies and the United Steelworkers union an opportunity to negotiate a mutually agreeable contract. Even if Biden opts for the latter, Trump may veto the deal once he assumes office.
The president-elect has made it clear that he intends to veto the deal, expressing his intent on social media earlier this month by stating, "Through a series of Tax Incentives and Tariffs, we will make U.S. Steel Strong and Great Again."
Contributions to this report were made by CNN's Chris Isidore.
The acquisition of US Steel by Nippon Steel is a major business deal that has attracted significant attention, with Biden expressing his opposition to it to safeguard domestic steel jobs. Despite the committment by Nippon to invest billions into US Steel's business in critical states, the deal remains a contentious issue due to concerns about national security and potential antitrust violations.
