Biden Blocks $15 billion Takeover of U.S. Steel on 'National Security Concerns'

What Happened?

President Joe Biden announced Friday a decision to block a nearly $15 billion takeover proposal by a Japanese company to purchase U.S. Steel, the most storied American steel company.

The move marks a significant use of executive authority just weeks before Biden leaves office.

It also reportedly comes as a critical blow to Japan's Nippon Steel after a year of review and a large premium paid to help make the deal happen.

Concessions were also included to give the U.S. government veto power over any potential cuts to U.S. Steel's production capacity, according to reports.

Why it Matters

Nippon and U.S. Steel criticized Biden's decision in a joint statement, calling the decision 'a clear violation of due process and the law governing CFIUS (Committee on Foreign Investment in the United States.)'

U.S. Steel added, 'the process was manipulated to advance President Biden’s political agenda' and will 'take all appropriate action' to protect their legal rights.

In a statement, Biden said, '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.'

This is one of the main reasons Biden stated that U.S. Steel needs to be led by major American companies to 'keep leading the fight on behalf of America’s national interests.'

Biden says the decision aims to 'level the playing field' for U.S. steelworkers and producers by tripling tariffs on China steel imports.

'For too long, U.S. steel companies have faced unfair trade practices as foreign companies have dumped steel on global markets at artificially low prices, leading to job losses and factory closures in America,' added Biden.

Steel remains an important commodity that powers many markets in the U.S., including infrastructure, the auto industry, and the nation's defense industrial base.

Although Biden made his final decision to block the transaction on national security grounds, CFIUS reportedly failed to reach an agreement last month on exactly what those national security were.

President-elect Donald Trump also opposed the acquisition in a December social media post, vowing to block the deal and 'through a series of tax incentives and tariffs' grow U.S. Steel.

The two steel companies still viewed the outcome as 'shocking — and deeply troubling' considering Japan's relationship with the U.S. as an ally.

How it Affects You

The decision is a relief for unions like the United Steelworkers that represent many of U.S. Steel's employees.

But U.S. Steel shares were down more than 6% Friday after the president's announcement.

It is unknown how this move ultimately impacts foreign relations with Japan.

More importantly, the course of action the incoming administration will take to revive the nation's steel footprint for the future.