President Joe Biden has expressed the need for “serious scrutiny” regarding the proposed acquisition of U.S. Steel by Japan’s Nippon Steel, according to a statement from the White House on Thursday. The silence surrounding the transaction, which has raised concerns from the steelworkers union, prompted the president to call for a comprehensive review.
Lael Brainard, the director of the National Economic Council, indicated that the Committee on Foreign Investment in the United States (CFIUS), a secretive body overseeing national security risks from foreign investments, would assess the deal. She emphasized that the purchase of an iconic American-owned company by a foreign entity, even from a close ally, requires careful examination regarding its potential impact on national security and supply chain reliability.
Describing it as the kind of transaction CFIUS is designed to investigate, Brainard stated, “This administration will be ready to look carefully at the findings of any such investigation and to act if appropriate.”
The approximately $14.1 billion all-cash deal, announced on Monday, stipulates that U.S. Steel will retain its name and Pittsburgh headquarters while becoming a subsidiary of Nippon. The combined entity is projected to rank among the top three steel-producing companies globally, based on 2022 figures from the World Steel Association.
CFIUS, chaired by Treasury Secretary Janet Yellen, has the authority to screen and potentially block business deals between U.S. firms and foreign investors, safeguarding national security interests. Its powers were significantly expanded in 2018 through the Foreign Investment Risk Review Modernization Act (FIRRMA), and President Biden’s executive order in September 2022 broadened the factors considered during reviews.
In response to the transaction, the United Steelworkers International, which supported Biden’s 2020 presidential campaign, expressed opposition, citing concerns from the dedicated workforce. David McCall, the president of United Steelworkers, called for government regulators to scrutinize the acquisition to ensure it aligns with national security interests and benefits American workers.