Could Nippon Still Acquire U.S. Steel After Biden Blocked the Deal?

President Joe Biden’s recent decision to block Nippon Steel’s $15 billion bid for U.S. Steel has thrown a wrench into the plans of the two steel giants. Citing national security concerns, the Biden administration argued that placing a critical American steelmaker under foreign control could pose risks. However, Nippon Steel and U.S. Steel are not giving up and are prepared to take legal action to keep the deal alive.

The National Security Argument

The Biden administration’s primary concern is that Nippon Steel, a Japanese company, could jeopardize U.S. infrastructure and defense capabilities by owning a key domestic steel supplier.

• Christine McDaniel, a senior research fellow at George Mason University, pointed out that courts are unlikely to overturn a president’s decision on national security grounds.
• The Committee on Foreign Investment in the United States (CFIUS), which evaluates such deals, sided with Biden’s stance, effectively sealing the deal’s fate—at least for now.

Nippon and U.S. Steel’s Response

Both companies issued a statement calling Biden’s decision unfair, vowing to pursue all legal avenues. Nippon and U.S. Steel argue that the deal would strengthen their ability to compete globally, particularly against China’s steel dominance, and maintain American jobs.

They may also try their luck under the incoming Trump administration, as President-elect Donald Trump recently expressed skepticism about the deal. However, experts like McDaniel note that even under a Trump administration, CFIUS could choose to reopen the investigation if new cabinet members believe the deal warrants further consideration.

Union Concerns and Worker Sentiment

The United Steelworkers union, a significant force in the steel industry, has voiced skepticism about the deal. While Nippon and U.S. Steel pledged to honor existing union contracts, labor experts say U.S. unions often find it more challenging to negotiate with foreign ownership.

• Sean Higgins, of the Competitive Enterprise Institute, acknowledges union concerns but argues that the deal could provide job security for U.S. Steel workers by bolstering the company’s ability to grow.
• If successful, Nippon’s involvement could strengthen U.S. Steel’s position against China’s growing steel exports, a key concern for both companies and the U.S. economy.

A Glimmer of Hope for the Deal?

While the odds seem stacked against Nippon Steel, there’s a small chance the deal could be revived:

1. Trump Administration Review: If the incoming administration is neutral or leans toward supporting the deal, new CFIUS members could reopen the case.
2. Legal Appeals: Nippon and U.S. Steel could argue in court that the deal would enhance, not compromise, national security by creating a stronger competitor to foreign steel producers.
3. Revised Terms: A renegotiated deal with additional safeguards might alleviate some government concerns and gain approval under a future administration.

What’s at Stake?

This deal goes beyond two companies. Key stakeholders include:

• The U.S. Government: Balancing economic growth and job security with national security concerns.
• Nippon Steel: A chance to expand its global footprint and access the U.S. market.
• U.S. Steelworkers: A potential path to job stability amid growing competition from Chinese steel imports.

The Future of U.S.-Japan Business Relations

The blocked deal highlights the complexities of international business in sectors tied to national security. Japan, a close ally of the U.S., could see this decision as a blow to bilateral economic relations.

At the same time, it underscores the Biden administration’s stance on protecting critical industries and American jobs—a policy likely to persist regardless of which party holds power.