On December 18, 2023, the planned agreement between Nippon Steel and U.S. Steel was revealed. In an all-cash deal, Nippon Steel agreed to pay $14.9 billion to acquire U.S. Steel, but because of resistance from both employees and lawmakers, the process has been postponed several times.
The biggest steel manufacturer in Japan is Nippon Steel Corporation. It was created in 2012 when Sumitomo Metal Corporation and Nippon Steel merged. With its headquarters located in Tokyo, the corporation works in the fields of engineering, steelmaking, chemicals, and system solutions. Nippon Steel is renowned for lowering CO2 emissions and promoting sustainability.
But there has been strong opposition to the agreement, especially from US President Joe Biden, who has raised national security concerns.
Concerns about national security and possible job losses led President Joe Biden to veto Nippon Steel’s acquisition of U.S. Steel.Biden and some legislators were adamantly opposed to the deal, fearing it would threaten U.S. steel supplies. The United Steelworkers Union has also opposed the pact, arguing that it could result in layoffs and a reduction in U.S. steelmaking capability.
The agreement may result in layoffs in the U.S. steel industry and a reduction in local steel production capacity, according to the Committee on Foreign Investment in the United States (CFIUS).
As president-elect, Donald Trump had vowed to thwart the transaction and to assist the Pittsburgh-based business by enacting tariffs and providing tax breaks.
The purchase was also opposed by Trump, who will take office on January 20, who called the proposed sale “a horrible thing.”
Nippon Steel is anticipated to take legal action against the decision of the departing president, according to two people with knowledge of the situation. According to one of them, this may reveal, in the discovery stage, how much the choice was driven more by political considerations than by actual national security considerations. It might also highlight the Cfius process’s shortcomings and vulnerability to political meddling.
The conclusion of the year-long saga underscores the failure of a bold initiative by the Japanese organization that swiftly turned into a contentious subject in an election year. Additionally, this result represents a significant departure from the US’s historically liberal approach to foreign investment.
Efforts to reassure allies like Japan of their close connections with the United States over the last four years may be undermined by President Biden’s choice. In the context of strategic competition with China, it represents the growing power of protectionism, trade union backing, and “America first” views in US politics.
According to an exclusive report by Reuters, Japanese Prime Minister Shigeru Ishiba encouraged President Biden to approve the merger in a letter delivered in November, stressing the significance of maintaining recent efforts to deepen ties between the two countries.
High-end seamless pipes for oil and gas exploration, fossil fuels in coal-fired power generation, carbon capture and storage (CCS), geothermal and biomass power production, hydrogen stations, and other uses are produced by Nippon Steel, a global leader in this field.
Nippon Steel is now facing a 565 million dollar penalty from U.S. Steel after the deal’s collapse, forcing the company to reconsider its overseas growth strategy. The acquisition of U.S. Steel was a key part of Nippon Steel’s plan to boost its global production capacity from 65 million to 85 million metric tons annually, moving closer to its long-term goal of reaching 100 million tons.
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