WASHINGTON, Jan. 3 (Xinhua) — U.S. President Joe Biden on Friday formally blocked Nippon Steel’s proposed acquisition of U.S. Steel on nationwide safety grounds — a call that economists say might damage American steelworkers and the U.S. economic system.
“A strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains,” Biden mentioned in a press release launched by the White House. “This acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.”
In an government order signed on the identical day, Biden cited the 1950 Defense Production Act, stating that he believes that Nippon Steel “might take action that threatens to impair the national security of the United States.”
In late 2023, Nippon Steel introduced plans to accumulate U.S. Steel, which is headquartered in Pennsylvania, one of many key swing states within the 2024 presidential election. Before Biden withdrew from the race, each he and his then-opponent, Donald Trump, had expressed opposition to the acquisition.
Biden’s financial crew had beforehand mentioned that the Committee on Foreign Investment within the United States (CFIUS) would conduct a evaluation of the acquisition.
Recently, CFIUS expressed considerations, believing that the deal might result in a decline in U.S. metal manufacturing and pose a nationwide safety risk. However, because of an absence of consensus throughout the committee on whether or not to dam the acquisition, it selected to not present a proper suggestion on whether or not the deal needs to be allowed.
Nippon Steel mentioned the considerations raised by CFIUS had been “littered with factual inaccuracies and omissions, misleading and incomplete statements, conjecture and hypotheticals that have no basis in fact and are plainly illogical.” It beforehand said that it was ready to take authorized motion if the acquisition is blocked.
U.S. Steel had additionally beforehand urged Biden to approve the deal. Following the CFIUS referring choice on pending transaction with Nippon Steel to the president, U.S. Steel mentioned in a press release that it is a transaction that needs to be accepted on its deserves, and one which needs to be a mannequin for “friendshoring” funding.
“It is the best way, by far, to ensure that U.S. Steel, including its employees, communities, and customers, will thrive well into the future,” it mentioned.
In a joint assertion Friday, the 2 corporations mentioned they’re “dismayed” by Biden’s choice to dam Nippon Steel’s acquisition of U. S. Steel, “which reflects a clear violation of due process and the law governing CFIUS. “
“The President’s statement and Order do not present any credible evidence of a national security issue, making clear that this was a political decision,” the assertion mentioned. “Unfortunately, it sends a chilling message to any company based in a U.S. allied country contemplating significant investment in the United States.”
“Following President Biden’s decision, we are left with no choice but to take all appropriate action to protect our legal rights,” it added.
Gary Clyde Hufbauer, a nonresident senior fellow on the Peterson Institute for International Economics, advised Xinhua that that is actually “bad news” for the U.S. economic system and American steelworkers. “Nippon Steel has superior blast furnace technology and the cash to implement capital improvements. U.S. Steel has neither, nor do potential U.S. buyers,” he mentioned.
“Two years from now, U.S. Steel workers, along with shareholders, will sadly regret Biden’s decision as the firm sheds workers and shares drop in value. Meanwhile, (President-elect) Trump will likely impose still higher tariffs on U.S. steel imports, imposing high costs on the U.S. economy. A bad outcome all around,” mentioned Hufbauer.
The outgoing president’s choice is “a departure from America’s long-established culture of open investment, one that could have wide-ranging implications for the U.S. economy,” The New York Times mentioned in an article.