US President Joe Biden backs inquiry into Japanese firm's acquisition of US Steel

President Joe Biden threw a curveball this week, backing an investigation into the proposed purchase of America's iconic steelmaker, US Steel, by Japan's Nippon Steel. Despite Japan being a close ally, this $14.9 billion deal has stirred political anxieties about jobs and national security.

Why the fuss? US Steel, with plants in key election states like Pennsylvania and Michigan, is more than just a company. It's a symbol of American industrial might. So, when Nippon Steel stepped in with a hefty offer, it raised eyebrows across the political spectrum. Many US senators from both parties, such as JD Vance and Fetterman, urged Biden to block the acquisition. Biden, who champions American jobs and unions, found himself facing a dilemma. Backing the deal could alienate voters in crucial states, but rejecting it could ruffle feathers in Tokyo.

What is Biden's stance?

According to Lael Brainard, Biden’s national economic adviser,  Biden believes that "the purchase of this iconic American-owned company by a foreign entity — even one from a close ally — appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability”. She noted that Cfius (Committee on Foreign Investment in the United States) exists for situations like this: examining the impact of foreign takeovers on America's security and supply chains.

The United Steelworkers, a powerful union that backed Biden in 2020, applauded the decision. “Our union shares many of the concerns expressed in today’s White House statement, including how this deal may impact the future of domestic steel production,” the union said in a statement, as per a report from the Financial Times. 

A look at Nippon's stance

Nippon Steel, meanwhile, assures everyone that it plans to honor existing agreements with the union and remains committed to its employees. They believe the deal will benefit all parties involved.

Japan meanwhile, has remained mum. When questioned about the investigation, Japan's government remained diplomatic, calling it a private enterprise matter. Japan’s chief cabinet secretary Yoshimasa Hayashi said that “the Japan-US alliance is stronger than ever”. 

What now?

The Cfius investigation will now take center stage. If it raises red flags, Biden might have to take action, potentially jeopardizing the deal and relations with Japan. But if it deems the takeover safe, the green light for Nippon Steel might flicker back on. This saga is far from over, but one thing's clear: when it comes to American steel and national security, even old friends like Japan will face a close inspection.