WASHINGTON, DC, USA – Nippon Steel and US Steel have filed a lawsuit against the US government, alleging that President Joe Biden improperly blocked a $14.9 billion takeover of the American steel giant to gain political favour with trade unions.
The companies claim the decision ignored established procedures and jeopardises foreign investment in the United States.
Allegations of Political Interference
In their lawsuit, Nippon Steel and US Steel accused President Biden of opposing the deal even before a formal review process began, asserting that the decision was made to advance a political agenda.
“President Biden’s undue influence to advance his political agenda manipulated the regulatory review process,” the companies stated, alleging that the Committee on Foreign Investment in the US (CFIUS) failed to conduct a proper national security-focused evaluation.
They have requested a court-mandated review of the decision, arguing that the takeover would strengthen America’s steel industry and enhance its competitiveness against China, which produces 60% of the world’s steel.
National Security Concerns
President Biden formally rejected the proposed deal on Friday, citing concerns over national security and the importance of maintaining a strong domestically owned steel industry.
He highlighted US Steel’s critical role in supply chains for the automotive and defence sectors.
The White House defended its decision, describing foreign ownership of US Steel as a potential security risk.
“The administration acted in the best interest of the nation,” a spokesperson said.
Union and Industry Reactions
The United Steelworkers trade union, whose president David McCall is also named in the lawsuit, welcomed Biden’s decision.
“By blocking Nippon Steel’s attempt to acquire US Steel, the Biden administration protected vital US interests, safeguarded our national security, and helped preserve a domestic steel industry that underpins our country’s critical supply chains,” McCall said, calling the companies’ allegations “baseless.”
The lawsuit also targets Cleveland-Cliffs CEO Lourenco Goncalves, alleging his involvement in actions aimed at undermining the Nippon Steel deal.
Cleveland-Cliffs had submitted a competing $7.3 billion offer for US Steel in mid-2023.
International and Economic Implications
Japan’s Prime Minister Shigeru Ishiba voiced concerns over the US decision, warning it could harm trade relations between the two G7 nations.
“We must insist on an explanation as to why there are security concerns, otherwise there will be no progress in future discussions,” Ishiba said on Monday.
Nippon Steel has reiterated its commitment to investing $2.7 billion in Pittsburgh-based US Steel and has argued that the acquisition would bolster, not weaken, US national security.
Future of the Deal
The takeover, first announced in December 2023, has been in limbo for over a year.
The lawsuit raises the possibility that the deal’s fate could be determined by the next administration.
However, President-elect Donald Trump has also indicated opposition to the deal.
On Monday, he wrote on Truth Social: “Why would they want to sell US Steel now when tariffs will make it a much more profitable and valuable company?”
Trump has pledged to impose sweeping tariffs on foreign steel, similar to those enacted during his first term.
While such tariffs provided modest job gains for steelmakers, economic analyses suggest they also led to job losses in manufacturing industries reliant on affordable steel.
Rare Use of Authority
Since 1990, the US has blocked only eight foreign takeovers, most involving Chinese firms.
The Nippon Steel-US Steel case is one of the few involving a key ally, highlighting the complexities of balancing national security concerns with economic and diplomatic considerations.
As the legal battle unfolds, the case underscores broader questions about the future of foreign investment in the United States and the role of domestic politics in shaping trade and industry policy.
