Biden administration delays enforcement of order blocking Nippon Steel and U.S. Steel deal

The Biden administration has delayed enforcing its order for Nippon Steel to abandon its $14.9 billion bid for U.S. Steel until June, the companies announced on Saturday. This delay provides additional time to potentially revive the politically sensitive deal.

On 3rd January 2025, President Joe Biden blocked the acquisition on national security grounds. Treasury Secretary Janet Yellen confirmed this week that the proposed deal had undergone a “thorough analysis” by the Committee on Foreign Investment in the United States (CFIUS), an interagency review body.

Legal challenge prompts extension

The delay will allow courts to review a legal challenge filed by Nippon Steel and U.S. Steel against Biden’s decision. Previously, the companies had 30 days to unwind the transaction.

“We are pleased that CFIUS has granted an extension to June 18, 2025, of the requirement in President Biden's Executive Order that the parties permanently abandon the transaction,” the companies said in a statement. “We look forward to completing the transaction, which secures the best future for the American steel industry and all our stakeholders.”

June 18 is also the expiration date for the current acquisition contract between Nippon Steel and U.S. Steel, according to a spokesperson for Nippon Steel.

Political backdrop

Neither the White House nor the Treasury Department commented on the delay late on Saturday. A lawyer representing the United Steelworkers union, which has opposed the deal, was also unavailable for comment.

Both Biden and his Republican successor, Donald Trump, publicly opposed the acquisition as they sought union support during the November presidential election, which Trump won.

Lawsuit claims unfair review

In a lawsuit filed on Monday, Nippon Steel and U.S. Steel alleged that CFIUS’s review process was unfairly influenced by Biden’s opposition to the deal. The companies asked a federal appeals court to overturn Biden’s decision and allow a fresh review to secure another chance at completing the merger.

CFIUS, chaired by the Treasury Secretary, reviews foreign acquisitions of U.S. companies for national security concerns. In this case, the panel did not reach a consensus, leaving the decision to Biden. Historically, CFIUS has rarely blocked deals involving allied nations like Japan.

Japanese concerns

Japanese Foreign Minister Takeshi Iwaya expressed disappointment over Biden’s decision, calling it “highly regrettable” during a public talk show on Sunday.

“The broader context of the Japan-U.S. alliance is extremely important, and it is essential to handle this transaction appropriately to avoid disrupting it,” Iwaya said.

Iwaya also emphasized Japan’s position as the largest investor in the United States and the unease the decision has caused within the business community. “I will continue urging the U.S. to alleviate these concerns,” he added.

FAQs about the Nippon Steel and U.S. Steel deal

1. What is the reason for the delay in the Nippon Steel and U.S. Steel deal?

The Biden administration has delayed the enforcement of its order blocking the $14.9 billion acquisition of U.S. Steel by Nippon Steel until June 2025. This delay gives the companies additional time to review their legal challenge against the decision.

2. Why did President Biden block the deal?

President Biden blocked the acquisition on national security grounds, as the proposed merger raised concerns about foreign influence on a key American industry, the steel sector.

3. What is the role of CFIUS in this case?

The Committee on Foreign Investment in the United States (CFIUS) is responsible for reviewing foreign investments in U.S. companies to assess national security risks. In this case, the panel failed to reach a consensus, leaving the final decision to President Biden.

4. What legal action are Nippon Steel and U.S. Steel taking?

Nippon Steel and U.S. Steel filed a lawsuit, claiming that CFIUS’s review was prejudiced by Biden’s opposition to the deal. They are seeking to have the decision overturned by a federal appeals court and request a fresh review.

5. How has the Japanese government reacted to the decision?

Japanese Foreign Minister Takeshi Iwaya expressed regret over Biden’s decision, emphasizing the importance of the Japan-U.S. alliance. He urged the U.S. to reconsider the transaction to avoid disruption in their bilateral relationship.

6. What is the significance of the June 18, 2025 date?

June 18, 2025, is the expiration date of the current acquisition contract between Nippon Steel and U.S. Steel. The delay allows the companies more time to finalize or potentially revise the deal.

7. Has there been any response from the White House or Treasury Department?

As of the latest update, neither the White House nor the Treasury Department has provided immediate comments regarding the delay in the enforcement of the order.