President Joe Biden is reportedly preparing to block Nippon Steel’s $14.9 billion acquisition of US Steel, a decision that could deliver a fatal blow to the merger plan. The move follows months of review by the Committee on Foreign Investment in the United States (CFIUS), which ultimately referred the decision to Biden in December due to an inability to reach consensus.
Sources cited by The Washington Post suggest Biden’s decision could be announced as soon as Friday, despite warnings from senior advisers about potential diplomatic fallout with Japan, a key US ally. The decision comes amid a time when the US relies heavily on Japan’s cooperation in countering China’s influence in the Asia-Pacific region.
The deal’s rejection would mark another instance of the administration prioritizing protectionist policies under the guise of national security concerns. Critics have pointed out that while protecting domestic industries is important, shutting out foreign investment from trusted allies like Japan could undermine global partnerships. Steel, a strategic industry for defense and infrastructure, has become a focal point in the administration’s push for tighter scrutiny of foreign acquisitions.
Market reactions were swift, with US Steel shares plunging 7.8% in pre-market trading following the reports. Japan’s stock market remained unaffected due to a public holiday. The potential fallout, however, goes beyond financial markets. Nippon Steel, one of the world’s largest steel producers, is a key player in global supply chains, and the blocked deal could signal to other allies that the US is taking an increasingly insular approach to foreign investment.
This decision could introduce friction into US-Japan relations at a time when diplomatic unity is critical. Tokyo has historically been one of Washington’s most reliable allies, and a move seen as prioritizing economic nationalism over bilateral ties may complicate future cooperation on shared challenges in the region.
As the decision looms, questions arise over whether this is a necessary step to protect national security or a short-sighted move that risks alienating allies. Critics argue that Biden’s approach may ultimately harm the very strategic interests it claims to protect.
