According to reports, President Joe Biden just made a massive decision to block Nippon Steel’s $14.9 billion acquisition of the U.S. Steel company.
This massive blow to a key U.S. ally could change the flow of goods between countries in the next few months as Biden prepares to step down from office.
Previous Tariffs
Earlier this year, Biden announced a 25% tariff increase on Chinese products being imported into the United States.
One of the main products targeted in the tariff increase was Chinese steel. The announcement was made at the United Steelworkers Union in Pittsburgh in April during a campaign blitz to show Biden’s support for American-made goods.
Japan Moves Into the Industry
Japan swiftly moved into the industry which caused a large political controversy ahead of the upcoming presidential election in November.
The battleground state of Pennsylvania, which produces most of America’s steel, remains alarmed during talks of the new deal. Biden, Harris, and Trump have all voiced their opposition to the deal.
Biden Remains Consistent on Supporting American Made Steel
John Kirby, the National Security Council spokesman said that he could not officially confirm the report.
But, Kirby, added: ‘The President has been very consistent on this. He believes that American steel companies ought to be American owned.’
Will Blocking the Deal Harm Relations with Japan?
Kirby was not at liberty to discuss his thoughts on whether Biden blocking the deal with Japan could potentially harm relations with the ally country.
Japan had recently become a key ally in Washington’s long-awaited attempts to stop China’s growing economic power and influence on the global scale.
Biden Will Reportedly Kill the Sale
The deal has recently been under investigation by the Committee on Foreign Investment in the United States (CFIUS).
Although the CFIUS review has not yet been completed, Bloomberg News has confirmed that Biden will kill the sale if it reaches his desk.
Japan May Sue
A decision on the sale could be made as early as this week.
However, if Biden blocks the sale, as it is rumored to happen, Nippon can sue the U.S. for a breach of contract.
Nippon Steel
Nippon Steel is Japan’s largest steelmaker and third largest in the world.
Since the late 1800s, the Japanese government has pushed steelmakers to create their own bureaus to increase the industry’s output and revenue. Since the outbreak of the Korean War in the 1950s, the country has been ramping up production to meet global demand. Japan recently surpassed the US by creating more than 47 million tons of steel per year.
Nippon Officials Speak Out
Nippon officials have spoken out about the issue and have urged the U.S. to accept the bid from an allied country in an effort to block China’s steel-making industry.
Currently, China is making its way to the head of the industry by offering low-priced products and undercutting the U.S. and other advanced countries with better worker protection.
Negative Implications for a Blocked Deal
U.S. Steel warned that if the deal fails to pull through, it could put thousands of jobs in peril.
The company also says that it could relocate its headquarters out of Pittsburgh, which could cause irreparable damage to the city and the industry in the United States.
Steel Could Become a Focal Point of the Election
The timer is now on to save the steel industry in the United States.
In the next few months, Pittsburgh and the Steelworkers union could become a main player in the next presidential election.
U.S. Steel Stock Plummeting
Upon news that the deal may be blocked, U.S. Steel stock fell roughly 17%.
The deal was initially announced in December 2023, and the U.S. Steel shareholders approved of the deal in April of this year.
