A powerful government panel failed Monday to reach consensus on the possible national security risks of a proposed nearly $15 billion deal by Japan’s Nippon Steel to buy U.S. Steel, leaving the decision to President Joe Biden, a long-time opponent of the agreement.
The Committee on Foreign Investment in the United States, known as CFIUS, sent its long-awaited report on the merger to Mr Biden, who formally came out against the deal in March this year and now has 15 days to make a final decision. , said the White House. A U.S. official familiar with the matter, speaking on condition of anonymity to discuss the private report, said some federal agencies represented on the panel were skeptical that allowing a Japanese company to buy a U.S. steelmaker would create risks to national security.
Mr. Biden and President-elect Donald Trump have courted union workers at US Steel and committed to blocking the acquisition amid concerns over foreign ownership of a flagship U.S. company. The economic risk, however, is that Nippon Steel also has the financial resources to invest in and upgrade plants, which could help preserve U.S. steel production.
The interagency committee reviews these agreements taking into account potential risks to national security. Monday was the deadline to approve the deal, recommend that Mr. Biden block it or extend the review process.
The Washington Post previously reported on CFIUS’ submission of its report.
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Under the terms of approximately $14.9 billion all-cash dealUS Steel will retain its name and headquarters in Pittsburgh, where it was founded in 1901 by JP Morgan and Andrew Carnegie. It would become a subsidiary of Nippon Steel and the combined company would be among the world’s three largest steel-producing companies, according to 2023 figures from the World Steel Association.
Mr. Biden, backed by the United Steelworkers union, said earlier this year that it was “vital for (US Steel) to remain a nationally owned and operated American steel company.”
Trump also opposed the acquisition and pledged earlier this month on his Truth Social platform to “prevent this deal from happening.” Trump proposed reviving US Steel’s flagging fortunes “through a series of tax incentives and tariffs.”
The metalworkers union said it did not believe Nippon Steel would maintain jobs at unionized plants, honor collectively bargained benefits or protect U.S. steel production from cheap foreign imports.
“Our union has called for a rigorous review of the government sale since it was announced. It is now up to President Biden to determine the best path forward,” David McCall, president of the Steelworkers, said in a statement Monday. . “We continue to believe this means that US Steel remains domestically owned and operated.”
Facing political opposition, Nippon Steel and US Steel waged a public relations campaign to convince the skeptics.
US Steel said in a statement Monday that the agreement “is by far the best way to ensure that US Steel, including its employees, communities and customers, will thrive in the future.”
A growing number of conservatives had publicly supported the deal, as Nippon Steel began to win over some metalworkers’ union members and local officials around its blast furnaces in Pennsylvania and Indiana. Many backers said Nippon Steel had a stronger financial balance sheet than rival Cleveland-Cliffs to invest the cash needed to upgrade U.S. Steel’s aging blast furnaces.
Nippon Steel pledged to invest $2.7 billion in facilities represented by the United Steelworkers union, including US Steel’s blast furnaces, and promised not to import steel slabs that could compete with blast furnaces. furnaces.
He also pledged to protect US Steel in trade matters and not lay off employees or close plants during the term of the basic labor agreement. Earlier this month, she offered $5,000 in closing bonuses to U.S. Steel employees, an outlay of nearly $100 million.
Nippon Steel also said it was best positioned to help U.S. steel compete in an industry dominated by the Chinese.
The proposed sale comes amid renewed political support for rebuilding America’s manufacturing sector, a presidential campaign in which Pennsylvania was a favored battleground, and a long period of protectionist U.S. tariffs that , analysts say, have helped reinvigorate domestic steel.
Chaired by Treasury Secretary Janet Yellen, CFIUS reviews trade deals between U.S. companies and foreign investors and can block sales or force parties to change the terms of a deal in an effort to protect national security.
The committee’s powers were significantly expanded in 2018 through an act of Congress called the Foreign Investment Risk Review Modernization Act, known as FIRRMA.
In September, Mr. Biden issued an executive order expanding the factors the committee should consider when reviewing deals, such as the deal’s impact on the U.S. supply chain or endangering sensitive personal data of Americans.
Nippon Steel already has manufacturing operations in the United States, Mexico, China and Southeast Asia. It supplies the world’s largest automakers, including Toyota Motor Corp., and produces steel for railways, pipelines, appliances and skyscrapers.
