President says company should be domestically owned and operated

President Joe Biden announced early Friday he will block the sale of U.S. Steel to the Japanese company Nippon Steel, in one of the last acts of his presidency.

Biden had said that U.S. Steel should remain a domestically owned and operated company, so the order was not a surprise. The White House in December called for “serious scrutiny” of the $14.1 billion deal, which was under review by the Committee on Foreign Investment in the United States, an executive branch body.

“We need major U.S. companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests,” Biden said in a Friday statement. “As a committee of national security and trade experts across the executive branch determined, this acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.

“So, that is why I am taking action to block this deal. It is my solemn responsibility as President to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad; and it is a fulfillment of that responsibility to block foreign ownership of this vital American company. U.S. Steel will remain a proud American company – one that’s American-owned, American-operated, by American union steelworkers – the best in the world,” he said.

The sale, which was valued at $14.9 billion when accounting for assumption of debt, was opposed by the United Steelworkers International union, a powerful labor group that had continually urged Biden, who saw union workers as a key part of his political coalition, to keep U.S. Steel domestically owned. The union renewed that request in a Wednesday social media post.

In a Friday statement, USW President David McCall thanked Biden and said the union members had “no doubt that it’s the right move for our members and our national security.”

“We’re grateful for President Biden’s willingness to take bold action to maintain a strong domestic steel industry and for his lifelong commitment to American workers,” McCall said. “Moving forward, we’re confident that with responsible management, U.S. Steel will continue to support good jobs, healthy communities and robust national and economic security well into the future.”

U.S. Steel and Nippon Steel issued a joint statement that the companies were “dismayed” with the decision and vowed to “take all appropriate action to protect” their legal rights.

The transaction would have boosted the steel industry in the United States, thanks to billions of dollars the Japanese company had planned to put into U.S. facilities.

“Blocking this transaction means denying billions of committed investment to extend the life of U. S. Steel’s aging facilities and putting thousands of good-paying, family-sustaining union jobs at risk,” the joint statement said. “In short, we believe that President Biden has sacrificed the future of American steelworkers for his own political agenda.”

U.S. Steel and Nippon added that they had serious doubts about the process that led to CFIUS’ evaluation, calling it “deeply corrupted by politics” and “pre-determined.” 

Biden issued the order under the Defense Production Act, which allows the president to intervene in private industrial matters if national security is threatened. In his statement, he argued that retaining a strong steel industry was essential for national security.

This story originally was published by the Indiana Capital Chronicle, which is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Indiana Capital Chronicle maintains editorial independence.