Rumors that Biden blocked the $14.9 billion acquisition of US Steel from Japan

Biden's ability to block Nippon Steel's $14.9 billion acquisition of US Steel could have a major impact on US-Japan relations.

Biden's blocking of Nippon's acquisition of US Steel could have a negative impact on US-Japan relations - Photo: REUTERS

The New York Times on January 3 quoted multiple sources as saying that US President Joe Biden has decided to block the $14.9 billion acquisition of US Steel by Nippon Steel Corporation from Japan, on the grounds that this transaction could threaten national security.

Impact on US-Japan relations

The Committee on Foreign Investment in the United States (CFIUS) has previously referred the decision on whether to approve or block Nippon Steel's acquisition of US Steel to President Joe Biden, who will leave office on January 20.

According to the New York Times , President Biden’s decision to block the deal has a clear reason: US Steel is headquartered in Pennsylvania, a battleground state in the recent election. US Steel’s union has strongly opposed the deal, in part because of concerns that Nippon Steel will not keep its commitment to invest in plants and protect workers’ pensions.

According to observers, Mr. Biden's decision to block the deal could make foreign investors rethink acquiring American companies in sensitive industries, especially those located in important battleground states.

This is also likely to increase tensions in US-Japan relations, a close US ally and one of America's largest sources of foreign investment.

Japanese Prime Minister Shigeru Ishiba has also urged President Biden to approve the deal, to avoid affecting recent efforts to strengthen relations between the two countries.

President Biden's decision to halt the deal came after CFIUS, which includes agencies such as the Treasury Department and the Justice Department, expressed concerns about the transaction in a letter to the companies last month.

According to CFIUS, the deal could pose a threat to US national security, as it could lead to a decline in domestic steel production.

CFIUS officials believe that in the future, Nippon Steel's other global business interests may outweigh the company's commitment to investing in US Steel.

US Steel is going through a difficult financial situation as the company used to have 340,000 workers in the 1940s, but now only has about 20,000 workers - Photo: AFP

Nippon's response

The public debate over the deal has become a key issue in the 2024 presidential election, with Biden, Vice President Kamala Harris and President-elect Donald Trump all publicly saying US Steel should remain American-owned.

However, the decision is likely to face legal challenges, with Nippon indicating it is prepared to sue if the deal is halted.

Last month, Nippon Steel sent a letter to CFIUS accusing the White House of exerting “undue influence” in the process.

Nippon said the concerns raised by CFIUS were “filled with inaccuracies and omissions, misleading and incomplete statements, speculations and suppositions that have no basis in fact and are patently absurd.”

On the morning of January 2, Nippon continued to issue a statement, expressing hope that "President Biden will do the right thing and comply with the law by approving the deal. This will clearly enhance the national security and economic prosperity of the United States."

Nippon has also pledged to keep its corporate headquarters in Pittsburgh and invest in upgrading factories in the state.

US Steel workers rally to support Nippon Steel's bid outside the company's Pittsburgh headquarters in September 2024 - Photo: AFP

As for US Steel, the second-largest steelmaker in the United States, it continues to push ahead with the Nippon Steel acquisition. After CFIUS failed to make a formal recommendation, the company said the deal “is the best way to ensure that US Steel, including its employees, communities and customers, thrives into the future.”

US Steel executives warn that without Nippon, the company may have to lay off workers, relocate its headquarters and invest in plants in the south.

Nippon Steel has paid a high price to win the right to buy the second-largest US steelmaker in an auction in December 2023, but the deal faces opposition from unions representing manufacturing, steel, industrial workers (USW) and politicians.

Source: https://tuoitre.vn/ro-tin-ong-biden-chan-thuong-vu-mua-lai-us-steel-gia-14-9-ti-usd-tu-nhat-ban-20250103150054944.htm