The Biden administration on Tuesday extended its review of Nippon Steel’s proposed $14.9 billion acquisition of U.S. Steel, effectively pushing a final presidential decision on the matter past Election Day.
U.S. officials have decided to permit Nippon Steel to resubmit its application for a national security review of its plan to buy U.S. Steel, said the person, who spoke on the condition of anonymity to describe a matter not yet made public.
President Joe Biden had been preparing to announce that he would block the transaction, but the administration appeared to backtrack after an outcry over the potential economic and political consequences of the deal falling through.
The interagency Committee on Foreign Investment in the United States (CFIUS), which is led by Treasury Secretary Janet L. Yellen, has been reviewing the potential transaction.
The secretive review was scheduled to conclude by Sept. 23 with a recommendation to the president. Tuesday’s announcement effectively adds an additional 90 days to the process, pushing a final decision well past Election Day. Vice President Kamala Harris, former president Donald Trump and Biden have all said they oppose U.S. Steel being purchased by the Japanese firm.
A White House spokeswoman insisted there had been no delay, as the CFIUS review had not concluded. Under the law, the president can reject a transaction involving a foreign company only after receiving a formal recommendation from CFIUS.
“The President’s and the Vice President’s position is that it is vital for U.S. Steel to remain an American steel company that is domestically owned and operated,” White House spokeswoman Saloni Sharma said in a statement.
Biden, who describes himself as the most pro-union president in the nation’s history, opposed the deal after the United Steelworkers union objected to it. Union officials said the Japanese steelmaker would favor U.S. Steel’s nonunion plants in the South at the expense of its union facilities in the Pittsburgh area.
Earlier this month, Biden had begun preparing to kill the deal, alarming industry executives. After investors, local officials in Pennsylvania steel towns and some union members objected, fearing the loss of Nippon Steel’s promised $2.7 billion investment in U.S. Steel’s aging blast furnaces, the administration appeared to back off plans to move imminently.
Nippon Steel had earlier asked to withdraw its application and resubmit it to CFIUS, a frequent maneuver companies use to obtain extra time to resolve government concerns.
In letters to both Nippon Steel and U.S. Steel, CFIUS said it had identified serious national security problems with the proposed takeover, according to a person who had seen the letter but was not authorized to discuss it publicly.
The panel concluded that the merger could reduce domestic steel production and potentially interrupt steel supplies for “sectors critical to national security, particularly transportation, infrastructure, construction and agriculture.”
Both companies have disputed that conclusion, pointing to the Japanese company’s plans to modernize U.S. Steel’s traditional steelmaking operations.
Many independent analysts also are skeptical that the deal with a company from Japan, a close U.S. ally that is home to 55,000 American military personnel, could represent a national security threat. Under a 1951 mutual defense pact, the United States is bound to defend Japan militarily if it is attacked.
Restarting the CFIUS clock gives lawyers from Nippon Steel and U.S. Steel more time to seek potential remedies that would ease the government’s security concerns.
Opposition from the United Steelworkers, however, is unlikely to change. On Tuesday, the union leadership repeated its call for the administration to block the deal.
“Ultimately, nothing has changed regarding the risks that Nippon’s acquisition would pose to national security or the critical supply chain concerns that have already been identified,” said David McCall, the USW president.
