US President Joe Biden on Friday announced his decision to formally block Nippon Steel Corp.’s $14.9 billion acquisition of US Steel Corp, citing concerns over national security and supply chains.
In a statement explaining his executive order, Biden said the takeover deal would “place one of America’s largest steel producers under foreign control” and create risks to US national security and critical supply chains.
US Steel was founded in 1901. According to a China Central Television report, it played an indispensable role in America’s industrialization process, providing steel for bridges, buildings and the US Navy fleet during World War II. However, in recent years, the company has been suffering from continuous losses, with its steel production and market value significantly lagging behind other American steel companies, leading to the decision to sell.
In December 2023, Nippon Steel announced plans to acquire US Steel, promising to retain the name, its headquarters and invest billions of dollars.
However, the Biden administration has said that maintaining US control over key industries such as steel was an essential part of national security.
Previously, the United Steelworkers Union strongly opposed the deal, fearing that foreign control could lead to job losses. Additionally, there have been lawmakers from both sides of the political divide who have voiced out against the transaction.
Meanwhile, US Steel and Nippon Steel have condemned Biden’s order as unlawful, announcing possible legal action. In a joint statement, the companies said that Biden’s announcement was based on political considerations rather than actual national security needs.
Japanese Digital Minister Taro Kono also expressed his surprise in an interview with China Central Television that the deal has become a security issue. “If the US adopts a politicized approach, we don’t know what else we can do,” he said.
Bill Reinsch, a former official of the Bill Clinton administration and currently a senior advisor at the Center for Strategic and International Studies, told Chinese financial news outlet Cailian Press that regardless of the reasons, the Biden administration has seriously deviated from the principles of globalization, and has widened the definition of “national security.”
Liu Chunsheng, an associate professor at the Central University of Finance and Economics, told CGTN that the acquisition plan – which had promised modernization and retention of the US Steel name – could have had a positive impact on the development of the US steel industry. Additionally, US Steel itself hoped to resolve its operational difficulties through the sale and Biden’s decision may affect its development, Liu said.
