US Steel, Nippon Steel File Lawsuit After Biden Blocks $15 billion Merger

What Happened?

U.S. Steel and Japanese steel company Nippon filed a federal lawsuit Monday. It challenged a Biden administration decision to block a nearly $15 billion proposed acquisition of U.S. Steel (X).

The lawsuit, filed in the U.S. Court of Appeals for the District of Columbia Circuit, alleges President Joe Biden violated the Constitutional guarantee of due process by blocking Nippon Steel's bid for U.S. Steel through statutory procedural requirements.

In a prepared statement, the companies also suggest that Biden added unlawful political influence.

Both companies are asking the courts to set aside the CFIUS (Committee on Foreign Investment in the United States) review process and the blocking order in hopes of securing a new review.

Why it Matters

The companies said:

'Nippon Steel and U. S. Steel have engaged in good faith with all parties to underscore how the Transaction will enhance, not threaten, United States national security, including by revitalizing communities that rely on American steel, bolstering the American steel supply chain, and strengthening America’s domestic steel industry against the threat from China.'

A second lawsuit was filed in the U.S. District Court for the Western District of Pennsylvania against Cleveland-Cliffs (CLF), its CEO Lourenco Goncalves, and United Steelworkers (USW) President David McCall.

That separate lawsuit accuses the parties of illegally coordinating to prevent the transaction and undermining U.S. Steel’s ability to compete.

McCall reportedly said the union is reviewing the companies' complaint and will 'vigorously defend against these baseless allegations.'

Biden announced his decision Friday to block the acquisition just weeks before he leaves office, marking a significant use of executive authority.

In a statement, Biden said the 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.'

Biden stated that because of this U.S. Steel needs to be led by major American companies to 'level the playing field' for U.S. steelworkers and producers.

The decision reportedly came as a critical blow to Nippon Steel after a year of review and a large premium paid with concessions to help make the deal happen.

Unions like the United Steelworkers saw the decision as a relief.

According to reports, this marks the first time a U.S. president has blocked a merger between a U.S. and Japanese firm.

Officials have reportedly said the decision to block the merger was unrelated to Japan’s relationship with the U.S.

U.S. Steel, founded in 1901, has faced pressure following several quarters of staggering drops in profit and revenue.

Due to those struggles, many suggest rivals see this as an opportunity to take over and expand their U.S. market share.

Biden has launched moves to triple tariffs on China steel imports.

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

On Monday, Trump took to Truth Social and said, 'Why would they want to sell U.S. Steel now when tariffs will make it a much more profitable and valuable company?'

How it Affects You

While Trump suggests 'it can all happen very quickly,' tariffs alone may not be what helps U.S. Steel fully recover financially.

It’s also possible foreign relations with Japan under Trump may change when he enters office.

The pending outcome can have many implications for future Steel markets including in the U.S.