Home » US business news » Biden Administration Prepares to Block Nippon Steel’s $15 Billion Takeover of US Steel
Biden Administration Prepares to Block Nippon Steel’s $15 Billion Takeover of US Steel
https://www.whatjobs.com/news/usa/us-business-news/biden-administration-prepares-to-block-nippon-steels-15-billion-takeover-of-us-steel
By Nagasunder in US business news, posted September 5, 2024
President Joe Biden is reportedly preparing to block the takeover of US Steel by Japan's Nippon Steel.
The move has sparked concerns about potential job losses and a chilling effect on foreign investment in the US.
The $15 billion deal was announced last year. It would have created one of the world’s largest steel companies outside of China and was seen by investors as a solution to US Steel's financial troubles.
However, the acquisition faced stiff opposition from US politicians and the United Steelworkers union. Both groups expressed concerns about the 123-year-old firm falling into foreign hands.
US Steel shares dropped nearly 20 percent following reports of Biden's intention to block the deal. The company is headquartered in Pennsylvania, a key battleground state during the current election season.
National Security and Political Resistance
The deal has been under review by the Committee on Foreign Investment in the US (CFIUS), which evaluates foreign transactions for potential national security concerns.
Earlier this year, Biden voiced opposition to the merger. He cited national security grounds, a stance also shared by both Donald Trump and Kamala Harris, Biden's political rivals.
US Steel expressed disappointment over the development, emphasizing that Japan is one of America's "most staunch allies.
A statement said:
"The company has indicated that it would pursue all legal options to ensure the deal's completion, warning that blocking the takeover could jeopardize thousands of jobs and lead to factory closures or relocation of its headquarters from Pennsylvania.
"We fully expect to pursue all possible options under the law to ensure this transaction, which is [the] best future for Pennsylvania, American steelmaking, and all of our stakeholders, closes," a company spokesperson said.
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Steel Industry’s Political History
Political intervention in the steel industry is not unprecedented. In the early 2000s, President George W. Bush imposed protections for the steel industry, despite being a proponent of free trade.
Donald Trump's administration was also marked by tariffs aimed at protecting US steelmakers, a policy that Biden has modified but left largely intact.
Alan Wolff, a visiting fellow at the Peterson Institute for International Economics, noted the symbolic importance of US Steel in the American psyche.
He said:
"It has a big part in our view of where manufacturing has gone and the threat to manufacturing jobs."
What’s Next?
The Treasury Department, which leads the CFIUS review, declined to comment on the president's decision. White House Press Secretary Karine Jean-Pierre said that the committee had yet to make a formal recommendation to the president.
A White House official stated that the next step in the process would be receiving the CFIUS recommendation.
If Biden proceeds with blocking the deal, it would mark one of the few foreign investments formally stopped by CFIUS in recent years, the majority of which have involved Chinese firms.
While the involvement of a key US ally, Japan makes this case unique, concerns over the political and economic implications of such a move remain high.
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