Nippon Steel and US Steel have initiated legal action against the US government, claiming that the recent rejection of their proposed takeover was influenced by President Biden’s desire to curry favor with trade unions. The lawsuit accuses the administration of sidestepping legal protocols for political gains.
In his decision to block the $14.9 billion acquisition, President Biden highlighted the importance of a robust, domestically-owned steel industry for national security and supply chain resilience, particularly in vital sectors like automotive and defense manufacturing.
Following the announcement of the merger in December 2023, the deal has faced prolonged scrutiny. The companies are challenging the review process conducted by the Committee on Foreign Investment in the US, asserting that it failed to properly assess national security concerns. They argue that the evaluation did not adhere to a comprehensive and honest review standard.
Additionally, the legal proceedings target David McCall, the president of the United Steelworkers trade union, and Lourenco Goncalves, CEO of Cleveland-Cliffs, claiming their actions were illegally coordinated to obstruct the merger. In response, the United Steelworkers union defended the decision to block the takeover, stating it safeguards both members’ interests and national security, while alleging that Nippon has historically harmed the US steel industry through practices such as product dumping.
Nippon Steel and US Steel have maintained that their merger would bolster, rather than undermine, US national security, emphasizing their commitment to invest $2.7 billion in US Steel’s operations in Pittsburgh.
In related developments, President-elect Donald Trump also expressed strong opposition to the deal, questioning the timing of the sale given the profitability potential of US Steel under current tariff conditions.
Japanese Prime Minister Shigeru Ishiba has raised alarms over the blockade’s implications for trade relations between the US and Japan, acknowledging the concerns of Japanese industries regarding future investment opportunities. He stressed the necessity for clarification on the security concerns that led to the rejection of the deal, indicating that progress in discussions hinges on transparent explanations from US authorities.
