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Biden Blocks Sale of U.S. Steel to Japanese Steel Company Citing Supply Chain Risks

As his presidency comes to a close over the next few weeks, U.S. President Joe Biden announced that he is officially blocking the proposed sale of U.S. Steel to Japanese steel company Nippon Steel.

About the proposed deal

It was proposed earlier this year that U.S. Steel, the nation’s leading domestically-owned steel company, be acquired by Japan’s Nippon Steel in a deal worth $14.1 billion. During the 2024 presidential campaign, Biden vowed to not allow the sale of U.S. Steel, citing his support of unions in the U.S.

In making his decision, Biden cited security and supply chain risks as the main factors behind his decision. He also vowed to continue to take steps to ensure the safety and success of domestic steel operations within U.S. borders.

What comes next?

Despite the Biden Administration’s decision, it is likely that the acquisition goes through federal courts. This means that, for now, there is a lot of uncertainty on how successfully Biden can block the deal, given that he’s out of office within three weeks. His successor, Donald Trump, may yet allow the deal to go through.

In a statement, President Biden said: “We need major U.S. companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests.” He added that “we are left with no choice but to take all appropriate action to protect our legal rights.”

Both U.S. Steel and Nippon Steel oppose Biden’s actions, and the incoming Trump Administration may change its mind on the issue, not seeing supply chain risks.

In response to Biden’s decision, U.S. Steel and Nippon Steel issued a joint statement that Biden’s decision “reflects a clear violation of due process and the law”, appearing to make a court case a near-certainty.

Beyond the Biden Administration, there is unlikely to be strong support to block the deal. For instance, the Committee on Foreign Investment in the United States (CFIUS) was deadlocked on whether or not there were national security risks involved in the proposed deal. Just having a U.S. company be purchased by a foreign company, particularly by a key U.S. ally, is unlikely to be strong enough evidence of a “supply chain risk” or “national security risk”. At the same time, the supply chain globally remains fragile, and more uncertainty is not what the industry needs at this time.

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