President Joe Biden is expected to block Nippon Steel’s $14.9 billion bid to acquire US Steel, following an assessment by his administration that the deal poses a national security risk that cannot be mitigated by the US and Japanese companies involved.
Sources familiar with the situation indicated that the White House is preparing to prevent the acquisition of Pittsburgh-based US Steel on national security grounds. The decision comes as Democratic presidential nominee Kamala Harris intensifies her efforts to win blue-collar voters in Pennsylvania, a critical swing state in the upcoming US election.
Speaking in Pennsylvania earlier this week, Harris echoed the administration’s stance, saying that US Steel should remain “American owned and American operated,” a position Biden has also taken since Nippon Steel announced the deal last year.
While Biden has expressed opposition to the transaction, the Committee on Foreign Investment in the United States (Cfius), a Treasury-led panel that reviews foreign deals for security risks, has been evaluating the proposal. According to insiders, Cfius recently informed Nippon Steel that the acquisition presents national security concerns that cannot be addressed.
Although the timing of the formal announcement remains unclear, Harris is scheduled to attend a rally in Pittsburgh on Thursday. Both she and Republican candidate Donald Trump, who also opposes the takeover, will participate in a presidential debate in Philadelphia next week.
Following news of Biden’s expected intervention, US Steel shares plummeted by 22%, dropping from $7.75 to $27.85, well below the $55 per share value of Nippon Steel’s original offer made in December.
Earlier on Wednesday, US Steel warned that thousands of jobs in Pennsylvania could be at risk if the acquisition fails, adding that the absence of a deal would cast doubt on the company’s ability to keep its Pittsburgh headquarters.
Neither the Treasury nor the White House commented directly on whether Biden would block the deal. A White House official, however, stated: “Cfius hasn’t transmitted a recommendation to the president, and that’s the next step in this process.” Nippon Steel has declined to comment.
The Biden administration is reportedly hopeful that the decision to block the deal will garner support from union workers in Pennsylvania, where Harris and Trump are in a tight race. Trump has previously stated that he would immediately block the deal if elected, though his campaign did not respond to requests for comment.
The decision has sparked criticism from foreign policy experts, with many noting that Japan, a close ally of the United States in the Indo-Pacific region, has worked extensively with Washington to counter China. Nonetheless, the political calculus appears to favor blocking the deal in an election year.
Nancy McLernon, head of the Global Business Alliance, expressed concern over the political motivations behind the move: “Unfortunately, both sides of the aisle seem to view blocking this deal as a smart political move in an election year. However, it’s workers in Pennsylvania and ultimately the country that will pay the price for this shortsighted stance.”
The acquisition has also faced opposition from several lawmakers in Pennsylvania and Ohio, including influential Democratic senator Sherrod Brown, who is facing a tough re-election battle in November.
Although US Steel shareholders approved the transaction earlier this year, the acquisition is still undergoing a Cfius review. Additionally, the US Justice Department is conducting an antitrust review to assess the deal’s impact on domestic industry.