Acquisition of U.S. Steel by Nippon Steel: Joe Biden worried about American “national security”

Joe Biden warned Thursday against the takeover of American steelmaker U.S. Steel by the Japanese group Nippon Steel, calling for “a thorough review” in terms of national security and reliability of the supply chain. The American president believes that "the purchase of this emblematic American company by a foreign entity - even that of a close ally - seems to merit in-depth examination in terms of (...) national security and reliability of the supply chain. supply,” Joe Biden’s top economic advisor, Lael Brainard, said in a statement. He believes that U.S. Steel is “essential to our national security,” she stressed.

Monday's announcement of this rapprochement project placed Democratic President Joe Biden, candidate for a second term and who poses as defender of America's industrial sovereignty, in a very delicate position. He cannot in fact openly interfere in the affairs of private companies. An investigation will now be carried out by the American government agency responsible for assessing the risk of foreign investments, CFIUS, to which the two groups have submitted their proposed merger, U.S. Steel told AFP on Thursday.

Japanese Minister of Economy, Trade and Industry, Ken Saito, said that Nippon Steel must cooperate "carefully" with this investigation, while affirming that "the alliance between the United States and Japan is stronger than ever” and recalling that the two countries cooperated closely on security matters. “Japan is an important ally of the United States. This is an important development for American steel, for American jobs and for American national security,” said U.S. Steel.

If the CFIUS considers that a risk exists, it refers it to the President of the United States, who makes the final decision (validation, ban or green light under conditions). The Biden administration is “ready to carefully review the findings of any investigation (...) and take action where appropriate,” the White House said. Joe Biden, who regularly shows his support for unions, received the support of the USW metalworkers union, opposed to this takeover, and which said in a press release that it shared “many concerns” expressed by the White House.

Both boards of directors unanimously approved the combination agreement, which remains subject to approval by U.S. Steel's shareholders and regulatory authorities. Finalization is expected, at the latest, in the third quarter of 2024. But their project immediately aroused criticism in the name of national security and the need to maintain the American group founded in 1901 in American hands.

And Joe Biden is under strong pressure from opponents of this acquisition of US Steel by a Japanese group, including in his own political camp. “This transaction is bad for workers and bad for Pennsylvania,” for example criticized John Fetterman, Democratic senator from this eastern US state, which is home to many steel factories and the headquarters of U.S. Steel, and will be one of the most contested in next year's presidential election. Ohio Senator JD Vance and two other Republicans asked Treasury Secretary Janet Yellen to block the transaction, saying domestic steel production was “vital to American national security.”

Nippon Steel plans to pay a total of $14.9 billion to acquire the American steelmaker. U.S. Steel launched a strategic review in August after receiving several unsolicited offers for a partial or full buyout. At the time, the company rejected an offer from its American competitor Cleveland-Cliffs which valued its target at around $10 billion. Referral to CFIUS is often made by companies themselves when they want to receive a blank check for a cross-border operation in a sector likely to be considered crucial to American national security.