The Biden administration blocked Nippon Steel’s $15 billion acquisition of U.S. Steel Friday.
A national security review referred the decision to the president in December after failing to reach a consensus, with the president opting to keep U.S. Steel domestically owned, according to a White House press release.
“As I have said many times, steel production — and the steel workers who produce it — are the backbone of our nation,” President Joe Biden said in the release. “A strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains. That is because steel powers our country: our infrastructure, our auto industry, and our defense industrial base. Without domestic steel production and domestic steel workers, our nation is less strong and less secure.”
Nippon announced plans to acquire U.S. Steel for approximately $14.9 billion on Jan. 5, 2024, arguing the purchase would help consolidate the steel industry and make the companies more competitive against China’s Baowu Steel Group, according to the Michigan Journal of Economics. Baowu produces 13,184 tons of crude steel annually, whereas Nippon and U.S. Steel produced just under 6,000 tons combined in 2022.
Biden signaled his disapproval for the deal in a March statement: “U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated.”
The United Steelworkers — a general trade union representing millions of steelworkers across North America — opposed the acquisition.
“Today’s action reflects my unflinching commitment to utilize all authorities available to me as President to defend U.S. national security, including by ensuring that American companies continue to play a central role in sectors that are critical for our national security,” Biden said in the Friday White House statement. “As I have made clear since day one: I will never hesitate to act to protect the security of this nation and its infrastructure as well as the resilience of its supply chains.”
U.S. Steel’s stock price fell roughly 8% in premarket trading following the announcement.
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