President Joe Biden has blocked a $14.9 billion deal by Japan’s Nippon Steel to buy U.S. Steel, citing national security concerns.

The decision fell to Biden after the Committee on Foreign Investment in the United States, or CFIUS, was unable to reach a consensus on the acquisition and referred the matter to the president late last month. Biden had 15 days to make a decision on the matter.

In a Jan. 3 statement posted on the White House website, Biden said the country needs major U.S. companies representing the major share of U.S. steelmaking capacity.

“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,” Biden said.

Biden said it was his responsibility as president to ensure that “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.”

Nippon Steel and U.S. Steel said in joint press release that the decision to block the acquisition “reflects a clear violation of due process and the law governing CFIUS.”

“Instead of abiding by the law, the process was manipulated to advance President Biden’s political agenda,” the companies said Jan. 3. The acquisition, when announced in December 2023, had been opposed by unions.

“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. Following President Biden’s decision, we are left with no choice but to take all appropriate action to protect our legal rights.”

The companies cited Nippon Steel’s commitment to invest $2.7 billion in U.S. steel and said the deal “would strengthen, not weaken, national security.”

To address CFIUS concern, Nippon Steel had voluntarily committed to various measures enforceable by the U.S. government, including:

Creating a majority of the go-forward U.S. Steel board of directors would be composed of U.S. citizens;

  • Appointing three independent directors who would be approved by CFIUS;
  • Ensuring that key positions such as CEO and CFO would be U.S. citizens;
  • Removing any Nippon Steel involvement in trade measures proposed by U.S. Steel;
  • Prohibiting the transfer of any production and jobs outside the U.S.;
  • Guaranteeing production capacity at U. S. Steel’s facilities in Pennsylvania, Arkansas, Alabama, Indiana, and Texas would not be reduced for 10 years without CFIUS approval;
  • Regularly reporting to CFIUS on the status of compliance with the national security agreement; and
  • Allowing CFIUS to send an observer to the board of directors.
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