An important transaction blocked by Joe Biden. The American president has just vetoed the takeover of US Steel, symbol of the steel industry across the Atlantic, by the Japanese giant of the sector, Nippon Steel. A takeover which “would place one of the largest American steel producers under foreign control and pose risks to our national security and our essential supply chains”, estimated the leader, Friday January 3. The deal was estimated to be worth $15 billion.
This decision was ratified by Joe Biden following inconclusive discussions by the Committee for Foreign Investment in the United States (Cfius), a body responsible for studying projects in this area in the United States. The agency was unable to determine whether or not there was a national security risk regarding US Steel’s merger with Nippon Steel. At the end of December, Cfius therefore left it to Joe Biden to decide on the matter, which has been the subject of lengthy negotiations in recent months.
A rare consensus between Democrats and Republicans
A rare occurrence, all the more so in the tense political context of recent months on the American scene: the choice of the tenant of the White House on this issue wins the consensus of Democrats and Republicans. Despite its proximity to certain Japanese economic players, President-elect Donald Trump, whose inauguration will take place on January 20, also indicated that he too would have refused to authorize Nippon Steel’s proposal. The billionaire said on his Truth Social network that he was “totally opposed to the formerly great and powerful US Steel being bought by a foreign company.”
Why did Joe Biden block this takeover attempt? The decision is above all a political desire not to let a company which was a jewel of American industry fall into foreign ownership. US Steel has long been a flagship of the steel sector in the United States. Founded in 1901, the company today employs around 14,000 people in the country. The group has had a rich past, notably constituting one of the major players in the war economy during the Second World War.
For the Democratic president, the image of a firm falling under the yoke of a foreign group would not necessarily have been easy to have accepted by American public opinion, especially a few days before the transfer of power. with Donald Trump and his protectionist vision. The USW metalworkers union said it was “grateful” for this decision. “We have no doubt that this is the right choice for our members and our national security,” welcomed the organization.
A crucial position in the “Rust Belt”
Another strategic aspect which weighed in this blocking procedure: the geographical location of the company’s sites. US Steel has a strong presence in Pennsylvania and its head office is based in Pittsburgh, a large city in the west of the state. Or in the heart of the “Rust Belt”, this belt of working-class territories which extends over a large part of the northwest of the United States.
A particularly crucial region at the time of the American presidential election, Pennsylvania constituting in these last elections a swing state determining in the results: won in 2020 by Joe Biden, the state was recovered by his Republican rival after the 2024 vote. For the Democratic camp, all the socio-economic policies implemented in this area, traditional cradle of American steel, therefore always has a very sensitive political character.
However, with the abandonment of this takeover project by Nippon Steel, Joe Biden could expose himself to other consequences, this time on the international level. Japan has already expressed its disapproval with the official announcement of the US president’s veto. “[Il est] incomprehensible and regrettable that the Biden government has made a decision of this type citing concerns for national security,” said Japanese Minister of Economy, Trade and Industry Yoji Muto, in a press release sent to the AFP.
A bad signal for foreign investments?
Could the refusal to the company from the Asian country, the main investor on American soil, slow down attempts in this area in other sectors in the United States? The fear is expressed by certain economic experts. “Even though Japan is both a close ally and a long-time investor in the country, we see the abandonment of this project as a clear disincentive for foreign players wishing to engage in the American steel sector “, estimates Bill Peterson, industry analyst at the investment bank JPMorgan and whose comments are reported by Bloomberg.
The two groups, in favor of this takeover, castigated Joe Biden’s decision. According to US Steel, this decision could even put “thousands” of jobs at risk. The American company published a joint press release with Nippon Steel to denounce, according to them, a choice without “any credible evidence of a national security problem”. They say they are considering legal action to challenge the presidential arbitration, promising “to take all appropriate measures to protect [leurs] rights”.