Jan. 3 (UPI) — President Joe Biden officially announced on Friday he has blocked Nippon Steel’s $14.1 billion purchase of U.S. Steel, setting up a likely federal court battle and leaving the domestic steel producer in a wake of uncertainty.
Biden, however, cited steps his administration has taken to strengthen the steel industry in the United States while warning that national security concerns if such a prominent steel company was owned by foreigners.
“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 chain,” Biden said in a White House statement. “That is why I am taking action to block this deal.
“It is my solemn responsibility as president to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad; and it is a fulfillment of that responsibility to block foreign ownership of this viral American company.”
Biden touted steps his administration has taken to make the steel industry more competitive in the United States, from tripling tariffs on cheaper Chinese steel imports to investments in manufacturing that have allowed more than 100 new still and iron mills to open.
“U.S. companies are producing the cleanest steel in the world,” Biden said. “Today, the domestic steel industry is the strongest it has been in years.”
He complained that U.S. steel companies face unfair trade practices overseas with foreign companies “dumping” cheap steel on the global market at artificially low prices. He said those actions have led directly to job losses in the U.S. steel industry.
While political leaders have mostly lined up against the deal, prospects of the Nippon-U.S. Steel falling through became real when the Committee of Foreign Investment in the United States last month failed to make a recommendation on it.
The CFIUS is made up of departments of the Treasury and Justice and other critical agencies make recommendations to the administration on such large international transactions. Instead, the committee voiced concern over national security and the threat to domestic steel production.
Nippon, however, said the billion-dollar agreement has been caught up in election-year politics and both parties have promised legal action if Biden or Trump follow through with threats to nix the deal.
If the purchase falls through, U.S. Steel’s dilemma may be just beginning because it will still need a buyer to help it financially. Cleveland-Cliffs Inc., which lost out to Nippon in its bid to purchase U.S. Steel, has since purchased a Canadian steel producer.
That has lessened its appetite to chase U.S. Steel again and there are few interested parties beyond them.
