Biden’s Decision to Block Buying US Steel Angers Japan

The US government’s decision to block a $14.1 billion acquisition of US Steel Corp. by Nippon Steel Corp is snowballing into a major crisis with Nippon Steel making it clear on Monday that it will seek legal recourse to protect its interests.

Even the Japanese Prime Minister Shigeru Ishiba warned on Monday of potential repercussions for bilateral trade following President Joe Biden’s decision to block the deal.

His remarks came as the Japanese steelmaker, the world’s fourth-largest by production volume, was preparing to file a lawsuit over the outgoing US President Biden’s decision, which was announced on Friday.

Speaking to media persons on Monday, Ishiba said he would seek clarification regarding the national security risk cited by Biden.

“Unfortunately, it is true that the Japanese business circles have expressed concern over the future investments between Japan and the US and we will have to take it very seriously,” he said.

Ishiba said that it would be inappropriate for the Japanese government to comment on the management of an individual company that was under review as per the US domestic law.

“But we will strongly call on the US government to take steps to dispel these concerns,” Ishiba said and added that the US need to be able to explain clearly why there is a national security concern, or else further discussions on the matter will not work.

Will Never Give Up

On the other hand, determined to challenge Joe Biden’s decision, Nippon Steel President Tadashi Imai said that they will pursue every possible measure as they will never give up on expanding the company’s US operations.

This was the first time a US President has blocked a merger and acquisition deal involving a Japanese company on the pretext that the takeover will create risk for the US national security and its critical supply chains.

The outgoing Democratic president’s decision has drawn criticism from the Japanese business community, with some insisting that he has set a bad precedent for other domestic firms pursuing acquisitions in the United States, a key ally of the Asian country.

In a joint statement released after the decision, Nippon Steel and the US Steel said that the review of deal by US authorities was manipulated to advance President Biden’s political agenda and they will take all appropriate action to protect our legal rights.

“We are confident that our transaction would revitalise communities that rely on American steel, including in Pennsylvania and Indiana, provide job security for American steelworkers, enhance the American steel supply chain, help America’s domestic steel industry compete more effectively with China and bolster national security,” the statement said.

Nippon Steel is the only partner both willing and able to make the necessary investments – including at least $1 billion to Mon Valley Works and approximately $300 million to Gary Works as a part of $2.7 billion in investment that it has already committed – to protect and grow the US Steel as an iconic American company for the benefit of the communities in which it operates and the entire American steel industry, the two companies said.

“Blocking this transaction means denying billions of committed investment to extend the life of the US Steel’s aging facilities and putting thousands of good-paying, family-sustaining union jobs at risk. In short, we believe that President Biden has sacrificed the future of American steelworkers for his own political agenda,” the statement said.

The two companies are expected to claim in court that Biden did not present sufficient evidence to prove the acquisition would pose a threat to the US national security and that his decision violated due process under the US Constitution and a law governing the Committee on Foreign Investment in the US.