Biden preparing to block Nippon Steel purchase of U.S. Steel

President Joe Biden is preparing to announce that he will formally block Nippon Steel’s proposed $14.9 billion acquisition of U.S. Steel, according to three people with knowledge of the matter, who spoke on the condition of anonymity to describe a matter not yet made public.

The decision would be a stunning rejection of a deal proposed by Japan, a U.S. ally, that became a major political controversy ahead of the November election. The proposed acquisition has been under investigation by the Committee on Foreign Investment in the United States, or CFIUS.

A White House official declined to comment, but said in a statement that CFIUS had not yet transmitted its recommendation to the president.

The deal would have created the third-largest global steelmaker in a bid to compete with Chinese rivals on the global stage.

Last week, Nippon Steel increased its planned investment in the new U.S. Steel by $1.3 billion in addition to the $1.4 billion it had previously detailed. The Japanese company said the extra money would improve two of U.S. Steel’s largest facilities, the Mon Valley Works in Pennsylvania and Gary Works in Indiana.

More than 4,500 steelworkers are employed at the two facilities, including more than 2,200 at Gary Works.

On Wednesday, U.S. Steel CEO David Burritt warned that the deal’s collapse would put at risk “thousands of good-paying union jobs” and raise “serious questions” about the likelihood that the company would remain headquartered in Pittsburgh.

Vice President Kamala Harris and former president Donald Trump have also voiced opposition to the deal, with many lawmakers in Congress balking, as well, at a foreign takeover of a once iconic U.S. name.

Biden’s opposition to the deal stirred anger in pro-trade quarters, with the U.S. Chamber of Commerce accusing the president of politicizing an unremarkable business transaction and sending a “chilling signal” to other foreign companies eyeing U.S. investments.

Indeed, the election-year controversy over the Nippon Steel proposal also highlighted a core tension in Biden’s approach to the global economy. The president’s efforts to promote domestic production of semiconductors, renewable energy supplies and other industrial goods were intended to attract private sector investment by U.S. and foreign companies.

Nippon Steel cited Biden’s industrial policies in explaining its bid for U.S. Steel. And yet, the president still decried its move as harmful.

“Japan is an ally. We need our friends at a time when geopolitical tensions couldn’t be higher,” said one industry executive, who spoke on the condition of anonymity to maintain relations with the White House.

Nippon said it planned to spend $300 million to revamp Blast Furnace No. 14 at Gary Works, extending tthe facility’s life by 20 years.