The Committee on Foreign Investment in the United States (CFIUS) was established to safeguard America’s economic and national security interests by scrutinizing foreign investments for potential threats. However, in its review of Nippon Steel’s proposed acquisition of U.S. Steel, it has failed to come to consensus.
CFIUS’s failure puts steelworkers, their families and the local economies they support at risk. The result also undermines U.S. industrial strength, sends the wrong message to foreign investors, and strains U.S.-Japan relations.
President Biden still has an opportunity to reverse course, approve the deal and deliver a well-deserved (if belated) Christmas present to U.S. Steel’s 22,000 employees, while revitalizing a critical American industry and strengthening our most important alliance in the Indo-Pacific.
One year ago, Nippon Steel offered to acquire U.S. Steel and pledged substantial investments to ensure its future. The deal promised modernized facilities, job security and economic revitalization for communities dependent on U.S. Steel’s operations. However, with Pennsylvania at the heart of U.S. Steel’s operations, Biden, Vice President Harris and former President Trump all publicly opposed the proposal before the election (Trump reiterated his opposition earlier this month).
CFIUS’s scrutiny of foreign direct investments in the U.S., which is critical for genuine national security risks, is clearly misguided in this case. Reportedly, the U.S. Trade Representative (USTR) views Nippon Steel’s acquisition as a national security threat, citing concerns dismissed by other CFIUS members, including the Pentagon and the State Department — the two agencies on the panel tasked with maintaining national security — as well as Treasury, which leads CFIUS reviews. Nippon Steel has been more than willing to take steps to mitigate USTR’s concerns, but USTR has remained unresponsive.
Nippon Steel is a trusted partner, deeply integrated into the U.S. economy through existing ventures. Its advanced technologies and its promise to invest $2.7 billion to modernize U.S. Steel’s aging mills will go a long way toward ensuring their capability to meet defense and infrastructure needs.
Opponents of the deal fail to recognize how it actually benefits U.S. national security, as well as our broader economic and geopolitical interests. The integration of Nippon Steel’s innovations would bolster U.S. Steel’s competitiveness, reduce carbon emissions and align with national priorities, such as reducing reliance on China in critical areas. In 2023, Beijing accounted for 54 percent of global steel production, a dominance that threatens both American and allied industries; collaboration between U.S. and Japanese steelmakers would strengthen the industrial foundations of the U.S.-Japan alliance, the cornerstone of Indo-Pacific security.
As U.S. Ambassador to Japan Rahm Emanuel noted when the deal was first announced, “These two iconic companies are defining the future of the key steel industry and forging a strong bond as they face a more competitive environment.” Indeed, such partnerships exemplify “friendshoring,” building resilient supply chains among allies to counter adversaries like China.
Japan, already the largest foreign direct investor in the U.S., with nearly $800 billion in investments in 2023, has played a critical role in strengthening the U.S. economy. Rejecting Nippon Steel’s bid risks alienating a trusted ally and deterring future investments at a time when America’s industrial base needs revitalization.
Legal and political complications further highlight the inadequacy of the review process. In a Dec. 17 letter, Nippon Steel and U.S. Steel accused the White House of undue influence over the CFIUS review. This accusation, coupled with the Pentagon, State and Treasury finding no security risks from the deal, raises concerns about politicization of a process meant to be shielded from politics in order to safeguard national security, as the secretary of Homeland Security noted in a speech before the annual CFIUS conference last year.
Nippon Steel’s commitments include job protections, modernization investments and a $5,000 bonus for employees upon the deal’s completion. Despite these assurances, critics like USW’s leadership have dismissed the pledges as “simple bribery.” Meanwhile, local union leaders have emphasized the transformative potential of Nippon’s investment, contrasting it with the risks of allowing U.S. Steel to languish or be acquired by less favorable entities. This political impasse has also led to threats of legal action from Nippon Steel, which could further harm America’s reputation as a fair destination for foreign investment.
The geopolitical implications of the deal are just as compelling. Japanese Prime Minister Shigeru Ishiba has personally asked Biden to approve it, underscoring the deal’s importance to the U.S.-Japan partnership. A rejection would strain this alliance at a time when unity is crucial for countering China’s rise. Conversely, approving the deal would reinforce shared economic and security goals, demonstrating America’s commitment to its allies.
Biden now faces a two-week deadline to make a critical decision on whether to allowing the deal to take place. Will he prioritize political expediency and pressures from union leadership, or will he act in the national interest and on behalf of steelworkers?
Approving Nippon Steel’s acquisition of U.S. Steel represents a vital opportunity to secure jobs, strengthen the steel industry and deepen ties with a key ally. In doing so, the president can send a powerful message: the United States values economic cooperation, understands the importance of responsible foreign investment, and is ready to lead in countering global challenges.
The Nippon Steel acquisition is more than a simple transaction; it is a strategic investment in America’s future. Let’s not let politics or misplaced fears turn it into a missed opportunity.
Daniel Bob has worked on U.S. foreign and economic policy toward the Indo-Pacific in senior positions in the U.S. Senate and House.
