WASHINGTON, Jan. 3 (Xinhua) -- U.S. President Joe Biden on Friday officially blocked Nippon Steel's proposed acquisition of U.S. Steel on national security grounds -- a decision that economists say could hurt American steelworkers and the U.S. economy.

"A strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains," Biden said in a statement released by the White House. "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."

In an executive order signed on the same day, Biden cited the 1950 Defense Production Act, stating that he believes that Nippon Steel "might take action that threatens to impair the national security of the United States."

In late 2023, Nippon Steel announced plans to acquire U.S. Steel, which is headquartered in Pennsylvania, one of the key swing states in the 2024 presidential election. Before Biden withdrew from the race, both he and his then-opponent, Donald Trump, had expressed opposition to the acquisition.

Biden's economic team had previously said that the Committee on Foreign Investment in the United States (CFIUS) would conduct a review of the acquisition.

Recently, CFIUS expressed concerns, believing that the deal could lead to a decline in U.S. steel production and pose a national security threat. However, due to a lack of consensus within the committee on whether to block the acquisition, it chose not to provide a formal recommendation on whether the deal should be allowed.

Nippon Steel said the concerns raised by CFIUS were "littered with factual inaccuracies and omissions, misleading and incomplete statements, conjecture and hypotheticals that have no basis in fact and are plainly illogical." It previously stated that it was prepared to take legal action if the acquisition is blocked.

U.S. Steel had also previously urged Biden to approve the deal. Following the CFIUS referring decision on pending transaction with Nippon Steel to the president, U.S. Steel said in a statement that this is a transaction that should be approved on its merits, and one that should be a model for "friendshoring" investment.

"It is the best way, by far, to ensure that U.S. Steel, including its employees, communities, and customers, will thrive well into the future," it said.

In a joint statement Friday, the two companies said they are "dismayed" by Biden's decision to block Nippon Steel's acquisition of U. S. Steel, "which reflects a clear violation of due process and the law governing CFIUS. "

"The President's statement and Order do not present any credible evidence of a national security issue, making clear that this was a political decision," the statement said. "Unfortunately, it sends a chilling message to any company based in a U.S. allied country contemplating significant investment in the United States."

"Following President Biden's decision, we are left with no choice but to take all appropriate action to protect our legal rights," it added.

Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, told Xinhua that this is really "bad news" for the U.S. economy and American steelworkers. "Nippon Steel has superior blast furnace technology and the cash to implement capital improvements. U.S. Steel has neither, nor do potential U.S. buyers," he said.

"Two years from now, U.S. Steel workers, along with shareholders, will sadly regret Biden's decision as the firm sheds workers and shares drop in value. Meanwhile, (President-elect) Trump will likely impose still higher tariffs on U.S. steel imports, imposing high costs on the U.S. economy. A bad outcome all around," said Hufbauer.

The outgoing president's decision is "a departure from America's long-established culture of open investment, one that could have wide-ranging implications for the U.S. economy," The New York Times said in an article. Enditem

Related

Go to Forum >>0 Comment(s)