In keeping with his earlier promise made during the presidential campaign to stop the acquisition of Steeltown, USA’s most illustrious steel company, President Joe Biden has vetoed the roughly $15 billion proposed deal for Nippon Steel of Japan to acquire Pittsburgh-based U.S. Steel.
Nippon Steel threatened to sue to halt the proposed sale, which sparked a political storm throughout America’s industrial heartland during election year.
“To continue leading the fight on behalf of America’s national interests, we need major U.S. companies that represent the major share of US steelmaking capacity,” Biden said in a statement released Friday morning.
In a joint statement, Nippon Steel and U.S. Steel denounced the ruling, claiming that Biden’s decision to stop the purchase is a blatant breach of the law and due process, which was allegedly rigged to further Biden’s political goals.
Additionally, it asserted that Biden had not provided any reliable proof that the agreement posed a national security threat and threatened to file a lawsuit, stating that we had no other option but to take all necessary steps to safeguard our legal rights.
Biden’s decision follows the Committee on Foreign Investment in the United States, or CFIUS, sending him a long-awaited report on the merger last month after failing to agree on the deal’s potential national security dangers. He had fifteen days to make up his mind.
Under federal law, the president has the authority to suggest that the committee, which is led by Treasury Secretary Janet Yellen and consists of other Cabinet members, prohibit a transaction.
Some government agencies represented on the panel were dubious that permitting a Japanese business to acquire an American-owned steelmaker would pose national security threats, a U.S. official familiar with the situation, who spoke on condition of anonymity, told The Associated Press last month.
The decision, which could harm ties between the United States and Japan—America’s closest ally in Asia and its largest foreign debt holder—comes only weeks before the Democratic president is scheduled to step down.
The two steel companies stated in their statement that it is stunning and extremely concerning that the United States would treat an ally like Japan in this manner and reject a deal that serves American interests.
Unfortunately, the corporations stated that it sends a chilling message to any company situated in a U.S. ally country that is considering making a big investment in the United States.
The United Steelworkers, who were worried about the company’s financial transparency and whether it would uphold current labor agreements or eliminate employment, supported Biden when he first spoke out against the deal in March of last year during the presidential campaign.
In March, Biden, who was still running for reelection before withdrawing from the contest, said, “It is important that we maintain strong American steel companies powered by American steel workers.” It is essential that U.S. Steel continue to be a domestically owned and operated American steel company, as it has been a symbol of the country for over a century.
Additionally opposed to the acquisition, President-elect Donald Trump pledged in December on his Truth Social platform to thwart the transaction and employ tariffs and tax breaks to expand the business.
David McCall, the president of Steelworkers, stated on Friday that the union is appreciative of Biden’s action to stop the sale and that it is the best course of action for our members and national security.
In a statement released on Friday, McCall reaffirmed his long-standing doubts about Nippon Steel’s integrity as a broker for American national trade interests, claiming that the company has demonstrated itself to be a persistent trade cheater.
According to McCall, allowing it to acquire U.S. Steel would have given it the chance to further undermine our trading system from within, jeopardizing our capacity to satisfy our own key infrastructure and national security needs in the process.
McCall maintained that U.S. Steel possesses the financial resources necessary to build a robust and resilient business.
Nippon Steel, for its part, had stated that it is in the best position to assist American steel in competing in a Chinese-dominated economy and to spend billions in facilities represented by United Steelworkers, including the company’s outdated blast furnaces.
It promised not to import steel slabs that would compete with the blast furnaces and to defend American steel in trade disputes.
In December 2023, Nippon Steel declared its intention to purchase the steel manufacturer for $14.9 billion in debt and cash, with the pledge to retain the Pittsburgh headquarters and the U.S. Steel identity. Nevertheless, its plan sparked questions about the potential effects of the deal on supply chains, unionized workers, and American national security.
The move follows a lengthy period of protectionist U.S. tariffs that economists believe have helped revive domestic steel and coincided with a wave of increased political enthusiasm for rebuilding America’s manufacturing sector.
In an effort to gain supporters, Nippon Steel spent about $100 million on public relations, even giving $5,000 in closure bonuses to U.S. Steel workers.
As Nippon Steel started to gain favor with some Steelworkers union members and local mayors in the vicinity of its blast furnaces in Pennsylvania and Indiana, an increasing number of conservatives and business organizations, including the U.S. Chamber, had openly supported the agreement.
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