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National Security Decision Looms Over Nippon Steel’s Acquisition of U.S. Steel

A government panel tasked with evaluating national security concerns has failed to reach a consensus regarding the proposed $15 billion acquisition of U.S. Steel by Japan’s Nippon Steel. As a result, the decision now rests with President Joe Biden, who has been a vocal opponent of the merger.

The Committee on Foreign Investment in the United States (CFIUS) has submitted its long-anticipated report to the president. With Biden having voiced his opposition to the deal earlier this year, the White House has indicated he has 15 days to make a final determination. Sources familiar with the discussions, who requested anonymity to address the confidential report, revealed that some agencies within CFIUS expressed doubts about the potential national security implications of allowing a Japanese entity to acquire an American steel manufacturer.

Both Biden and former President Donald Trump have shown strong support for U.S. Steel workers, pledging to prevent the acquisition over fears of foreign ownership affecting a cornerstone American enterprise. However, economists have observed that Nippon Steel possesses the financial capacity to invest in U.S. facilities, potentially bolstering domestic steel production.

CFIUS is responsible for scrutinizing foreign investments in U.S. companies for any security risks. Monday was the deadline for the panel to recommend either approval, disapproval, or an extension of the review process to the president.

According to reports, including one from The Washington Post, the deal would see U.S. Steel retain its name and headquarters in Pittsburgh while becoming a subsidiary of Nippon Steel. This merger would position the combined entity among the top three steel producers globally, based on 2023 data from the World Steel Association.

President Biden has, with support from the United Steelworkers, emphasized the importance of U.S. Steel remaining an American-owned company. Similarly, Trump has publicly opposed the acquisition, pledging to thwart it through tax incentives and tariffs aimed at reviving U.S. Steel’s declining market position.

The steelworkers’ union has expressed concerns that Nippon Steel might not uphold employee job security or the benefits established through collective bargaining agreements. David McCall, president of the steelworkers’ union, stated that they have sought stringent government oversight of the sale and believe the optimal outcome is to maintain U.S. Steel as a domestic entity.

Facing significant political resistance, Nippon Steel and U.S. Steel have engaged in a public relations initiative to address skepticism regarding the merger.

U.S. Steel claimed that the acquisition is fundamentally the best route to ensure the company’s prosperity alongside its employees and communities. Meanwhile, increasing numbers of conservative voices have voiced their support for the merger, acknowledging Nippon Steel’s financial strength compared to its rivals. Proponents argue that Nippon Steel’s investment could revitalize U.S. Steel’s aging infrastructure.

Nippon Steel has promised to invest $2.7 billion into facilities represented by the United Steelworkers and has committed to not importing competitive steel slabs. They also assured that there would be no layoffs or plant closures during the basic labor agreement period, along with offering $5,000 bonuses to employees—an expense close to $100 million.

The proposed sale emerges during a period of renewed attention on restoring American manufacturing capabilities, particularly in key battleground states like Pennsylvania. Additionally, ongoing tariffs imposed by the U.S. have played a role in revitalizing the domestic steel industry.

CFIUS, chaired by Treasury Secretary Janet Yellen, is tasked with reviewing business transactions involving foreign actors to safeguard national security. The panel’s authorities were expanded with the passing of the Foreign Investment Risk Review Modernization Act in 2018.

Earlier this year, President Biden also signed an executive order expanding the CFIUS review criteria to cover the impact on America’s supply chains and the risks to sensitive personal information. Nippon Steel already operates manufacturing sites across the U.S., Mexico, China, and Southeast Asia, supplying major automotive manufacturers and producing steel for various industries, including railways and construction.

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