Biden Administration Raises National Security Concerns Over Nippon Steel’s Acquisition of U.S. Steel

By Alexandra Alper and David Shepardson

WASHINGTON (Reuters) – The Biden administration informed Nippon Steel via letter on Saturday that its $14.9 billion acquisition of U.S. Steel poses a national security risk, threatening the American steel industry. This adds to the growing evidence that the U.S. is likely to block the deal.

The acquisition faces bipartisan opposition, with Vice President Kamala Harris, a Democratic presidential candidate, asserting on Monday that she wants U.S. Steel to remain “American owned and operated.” Her Republican counterpart, Donald Trump, has also pledged to prevent the deal if he is elected.

According to reports, the Committee on Foreign Investment in the United States (CFIUS) indicated in their letter that the deal could hurt American steel production and diminish U.S. Steel’s motivation to pursue trade remedies. The companies involved were given until Wednesday to respond.

The letter cited several risks to U.S. national security stemming from the acquisition. In their response, excerpts of which were shared with Reuters, the companies voiced concerns similar to those previously expressed by U.S. Steel. They warned that rejecting the transaction might lead to the idling of U.S. Steel’s blast furnace facilities, potentially costing thousands of jobs and undermining the quality and reliability of the steel supply for U.S. industries.

The companies claimed that the U.S. government’s actions were driven by politics rather than factual or legal considerations relating to national security. The White House declined to comment on the matter. The Department of the Treasury, which oversees CFIUS, did not respond to inquiries.

Representatives for Nippon Steel and U.S. Steel refrained from commenting on the letter but pointed to past statements maintaining that the acquisition does not pose national security risks and would bolster the U.S. steel sector. U.S. Steel’s spokesperson added their intention to explore all legal options to complete the transaction, which they believe is vital for the future of Pennsylvania and American steelmaking.

On Thursday, Nippon Steel’s shares saw a 0.8% increase, while U.S. Steel’s shares dropped by 17.5% on Wednesday.