Japan’s bid for U.S. Steel falls to Joe Biden after expert panel review of deal stalls

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A U.S. panel reviewing Nippon Steel’s proposed takeover of U.S. Steel failed to agree on whether President Joe Biden should support the $15 billion deal, making it more likely that he will block it in his final weeks in office.

The Committee on Foreign Investment in the United States (Cfius) reported to the White House on Monday that its nine agencies had not reached consensus that the deal did not pose a security risk, according to Nippon Steel and a person familiar with the matter. Monday is the deadline for Cfius to make a decision.

The failure to reach an agreement leaves the decision on the merger – agreed upon more than a year ago – in the hands of Biden, who has expressed opposition to the Japanese company’s takeover plan and is widely expected to block it.

If CFIUS concludes that an acquisition does not pose any national security concerns, it will be more difficult for the president to justify doing so.

Under the rules, the president has 15 days to make a decision or extend the timeline, which could hand the responsibility to Donald Trump, who has also publicly opposed the bid.

Government officials on both sides said the deal’s failure could shake confidence in the strength of the most important alliance between the United States and Asia-Pacific nations and risk exposing flaws in a highly politicized national security process.

The interagency investment review body said allowing Nippon Steel to acquire U.S. Steel could lead to a decline in domestic steel production and pose a “national security risk,” people familiar with the matter said.

Nippon Steel confirmed that the Committee on Foreign Investment in the United States had submitted the decision to the US president after failing to reach consensus.

The company urged Biden to “reflect on our efforts to address any national security issue.”

The company added that it had committed to “growing U.S. steel, protecting American jobs and strengthening the overall steel industry” and believed the deal should be accepted “if its merits are fairly assessed.”

The CFIUS committee is divided over whether Nippon Steel’s proposed remedies to ensure those outcomes, such as appointing U.S. citizens to top management and board positions, are sufficient, people familiar with the matter said.

“We have received the CFIUS assessment and the president will review it,” a White House spokesman said.

The U.S. Treasury Department, which chairs the Cfius panel, referred questions to the White House.

The Financial Times previously reported that the main source of opposition to the deal on the Cfius panel was U.S. Trade Representative Katherine Tai, although the agency concluded that acquiring the iconic U.S. steelmaker did not pose a security risk .

Nippon Steel has opened the door to legal action with the U.S. government if the deal is rejected.

Nippon Steel Vice President Takahiro Mori has been conducting a last-minute charm offensive between Washington and Pennsylvania in recent weeks, trying to win over policymakers and steelworkers.

One major obstacle is strong opposition from the United Steelworkers, a powerful union led by David McCaul, who is close to Biden.