President Joe Biden has made good on his months of public opposition to the proposed purchase of American company U.S. Steel by Japan’s Nippon Steel, announcing Friday he is blocking the $14.9 billion takeover.
The 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,” he said in a statement. He did not elaborate on how the deal would jeopardize national security.
The collapse of the proposed acquisition represents a victory for the United Steelworkers union. Based in Pennsylvania, an electorally crucial swing state, the union in March endorsed Biden, who at that time was still running for reelection.
“This was clearly a political decision that President Biden had been chewing over for a long time. He is determined to demonstrate that he's going to protect American workers, and particularly in the steel sector,” said Matthew Goodman, director of the Council on Foreign Relations' RealEcon initiative, which explores the U.S. role in the international economy.
“It is an important sector, and it is subject to unfair trade practices, but it's hard to really understand the national security logic of blocking this transaction,” he told VOA.
Federal law gives the president power to block a transaction based on the recommendation of the Committee on Foreign Investment in the United States, chaired by Treasury Secretary Janet Yellen and made up of other Cabinet members. Last month, CFIUS failed to reach consensus on the possible national security risks of the deal.
White House national security spokesperson John Kirby declined to clarify Biden's decision making based on the CFIUS process.
"The committee of national security and economic experts assessed that there was a security risk," Kirby told VOA during his briefing Friday. The president made the decision based on "his concurrence with that assessment and the risk that he saw, and that this is very much about keeping a critical company in American hands."
Biden made the announcement in his remaining days in office, despite some analysts and advisers warning that his rejection of the deal could damage relations with Japan, a key U.S. ally and trade partner — especially with a looming trade war under the incoming Trump administration, which has vowed to slap high tariffs on trading partners.
“We need allies especially in the war — a potential war against China,” said John Ferrari, a nonresident senior fellow at the American Enterprise Institute.
“Japan is a staunch ally in the Pacific. They have prowess in ship building and in manufacturing, and so we need them,” Ferrari told VOA. “Allowing them to invest in the United States would make us stronger.”
President-elect Donald Trump, who is set to come to power on Jan. 20, also opposes the acquisition. In a November social media post, he vowed to block the deal and to use tax incentives and tariffs to grow U.S. Steel.
Both Nippon Steel and U.S. Steel have vowed to pursue legal action, saying that the U.S. government failed to follow proper procedures in considering the acquisition.
“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 statement. "Following President Biden’s decision, we are left with no choice but to take all appropriate action to protect our legal rights."
The White House dismissed U.S. Steel's warning that it may have to close steel mills if the deal with Nippon Steel fell through.
"The president is confident that domestic steel and domestic steel workers are going to continue to thrive because of the work that he's done, because of the commitment that he has to this industry," White House press secretary Karine Jean-Pierre said during her Friday briefing.
The announcement by Biden followed other protectionist moves by the administration. Last year, Biden tripled tariffs on steel imports from China.
“For too long, U.S. steel companies have faced unfair trade practices as foreign companies have dumped steel on global markets at artificially low prices, leading to job losses and factory closures in America,” he said in his statement Friday.
