Source: ‘regrettable’ that Nippon Steel deal blocked due to security

President Joe Biden controversially blocked the nearly $15 billion proposed acquisition of Pittsburgh-based US Steel by Japan’s Nippon Steel on Friday, honouring a commitment he had made on the pre-election campaign trail.

“We need major US companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests,” Biden said in a statement.

A source inside the Japanese government exclusively told Euronews that “Nippon Steel has explained that this acquisition is an effort for Japanese and US steel companies to combine advanced technologies and increase competitiveness, and that it will contribute to maintaining steel production capacity and employment in the US.”

The source also referenced the upward trend in investment from Japan to the US, as well as “strong concerns” raised by the business communities of both countries, particulaly the Japanese industrial sector,” about future investment between Japan and the US.”

“It is regrettable that this decision was made due to national security concerns,” added the government source, imploring the US government to collaborate with its partner to address issues.

Nippon Steel and US Steel backlash

Both Nippon Steel and US Steel have condemned the decision, issuing a joint statement saying that Biden’s move “represents a clear violation of due process and the law,” and claiming that the process had been “manipulated” to further his political agenda.

The two companies’ joint statement also insisted that Biden cited no credible evidence of the deal presenting a national security problem and hinted at legal action, saying “we are left with no choice but to take all appropriate action to protect our legal rights.”

Biden’s decision comes after the Committee on Foreign Investment in the United States (CFIUS) failed to reach consensus on the possible national security risks of the deal last month, and sent a long-awaited report on the merger to Biden. He had 15 days to reach a final decision.

The decision comes just weeks before the Democratic president is set to leave office and could damage relations between the U.S. and Japan, which is America’s biggest ally in Asia and its largest foreign holder of US debt.

In their statement, the two steel companies said it’s “shocking – and deeply troubling” that the U.S. would reject a transaction that advances U.S. interests and “treat an ally like Japan in this way.”

“Unfortunately, it sends a chilling message to any company based in a US allied country contemplating significant investment in the United States,” the companies said.

A number of conservatives and business groups like the U.S. Chamber had publicly backed the deal, as Nippon Steel began to win over some Steelworkers union members and mayors in areas near its blast furnaces.

Nippon Steel was the world’s fourth largest steelmaker in 2023, according to World Steel Association figures. US Steel was 24th.

Additional sources • AP