A $15 billion proposed deal for Nippon Steel of Japan to purchase U.S. Steel has been a topic of contention within the United States government. The Committee on Foreign Investment in the United States (CFIUS) failed to reach a consensus on the potential national security risks of the acquisition, ultimately leaving the decision in the hands of President Joe Biden. This deal has sparked concerns about foreign ownership of a prominent American company, with both President Biden and former President Donald Trump expressing opposition.
The deadline for CFIUS to make a decision on the merger has passed, and the panel has submitted its report to President Biden for review. The President now has 15 days to make a final decision on whether to approve the deal, block it, or extend the review process. Some federal agencies represented on the panel were skeptical of the potential national security risks associated with allowing a Japanese company to acquire an American steelmaker.
President Biden has been a vocal opponent of the deal, stating earlier this year that it is essential for U.S. Steel to remain an American-owned and operated company. Trump has also voiced his opposition to the acquisition, promising to block the deal from moving forward. Both presidents have cited concerns about the impact of foreign ownership on American jobs and steel production.
The proposed acquisition would see U.S. Steel becoming a subsidiary of Nippon Steel, with the combined company ranking among the top three steel producers globally. Despite concerns about foreign ownership, Nippon Steel has pledged to invest $2.7 billion in United Steelworkers-represented facilities, including U.S. Steel’s blast furnaces. The company has also promised not to lay off employees or close plants during the term of the basic labor agreement.
The steelworkers union has expressed skepticism about Nippon Steel’s commitment to preserving American jobs and steel production. Union president David McCall emphasized the importance of keeping U.S. Steel domestically owned and operated, urging President Biden to carefully consider the implications of the acquisition on American workers and industry.
In response to political opposition, Nippon Steel and U.S. Steel launched a public relations campaign to garner support for the deal. U.S. Steel has defended the acquisition as the best path forward to ensure the company’s long-term success. Some conservatives have also backed the deal, citing Nippon Steel’s financial resources and commitment to investing in U.S. facilities.
The acquisition comes at a time of renewed focus on rebuilding America’s manufacturing sector and protecting domestic industries from foreign competition. President Biden’s executive order in September expanded the factors that CFIUS should consider when reviewing deals, including the impact on the U.S. supply chain and sensitive personal data.
Chaired by Treasury Secretary Janet Yellen, CFIUS plays a critical role in screening business deals between U.S. firms and foreign investors to safeguard national security interests. The committee’s powers were expanded in 2018 through the Foreign Investment Risk Review Modernization Act (FIRRMA), giving it greater authority to review and potentially block transactions that pose a risk to national security.
Nippon Steel’s existing manufacturing operations in the U.S., Mexico, China, and Southeast Asia have raised concerns about the potential consolidation of steel production under foreign ownership. The company supplies steel to major automakers and manufactures a wide range of steel products for various industries.
As President Biden weighs the decision on the proposed acquisition, the future of U.S. Steel and the American steel industry hangs in the balance. The outcome of this deal will have far-reaching implications for American workers, steel production, and national security interests.
