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President Joe Biden is expected to block Japan Steel’s $15 billion deal to acquire US Steel, ending months of frenzied lobbying and disrupting Washington’s relations with its closest Asia-Pacific allies.
Biden, who has long opposed takeovers, is expected to announce his decision on Friday to halt a proposed takeover of the iconic U.S. steelmaker in one of his final acts in government, according to two sources familiar with the matter.
One of the people said the White House had not yet notified Nippon Steel of the decision.
The president’s expected action comes after the interagency investment review review, known as the Committee on Foreign Investment in the United States (Cfius), failed to reach a consensus by a Dec. 23 deadline on whether the acquisition posed a national security threat.
Two people familiar with the situation said Nippon Steel would likely take legal action over the outgoing president’s ruling.
One official said such a move could reveal the extent to which decisions during discovery were driven by politics rather than national security concerns. This process also exposes the limitations of the Cfius process and its vulnerability to political interests.
Nippon Steel declined to comment.
President-elect Donald Trump also threatened to cancel the deal and pledged to protect the Pittsburgh-based company with a mix of tariffs and tax incentives.
The conclusion of this year-long saga marks the failure of a bold maneuver by the Japanese group that soon turned into a sensitive political issue in an election year. It also marks a significant departure from America’s long-standing open investment environment.
Biden’s decision shortcuts a four-year effort to assure Japan and other allies of a special relationship with the United States amid strategic competition with China, protectionism, support for labor unions and a shift toward an “America first” sentiment in U.S. politics. There is a risk of doing so.
U.S. and Japanese government officials are concerned about the broader ramifications of investments and M&A by Japan and other U.S. partners and the impact on the strength of the U.S.-Japan alliance.
Takahiro Mori, vice president of Nippon Steel, led the Japanese steel company’s last-ditch effort to persuade government officials and union members in Washington and Pennsylvania.
Those efforts include a new proposal this week that would give the government a veto on reducing steel production capacity at most Nippon Steel plants in the U.S. and add other guarantees for jobs and investment.
The gesture follows Cfius’ concerns that U.S. Steel could reduce domestic steel production under Japanese ownership, impacting a nationally important industry.
But despite some of Biden’s top advisers trying to talk him out of blocking the deal, the move went to little avail.
The breakdown represents a victory for the agreement’s strongest opponents, U.S. Trade Representative Katherine Tai and United Steelworkers union leader David McCall.
