[Source – investing.com]
U.S. Steel faces delays as security concerns prompt the Committee on Foreign Investment in the United States (CFIUS) to allow Nippon Steel and U.S. Steel to refile their $14.9 billion merger application, pushing the decision timeline beyond the November 5 presidential election, according to sources familiar with the matter. The extension offers both companies a chance to address CFIUS concerns, particularly regarding national security and the steel supply chain for critical U.S. industries.
CFIUS initially raised concerns on August 31, suggesting that Nippon Steel’s acquisition of U.S. Steel could jeopardize the supply of steel necessary for key sectors such as transportation and agriculture. With the new refiling, CFIUS now has an additional 90 days to thoroughly review the potential impact of the merger.
Political and Industry Reactions
The merger has become a politically charged issue, with both presidential candidates weighing in. Vice President Kamala Harris, the Democratic nominee, has publicly expressed her desire for U.S. Steel to remain “American owned and operated,” echoing the position of President Joe Biden. Meanwhile, Donald Trump, Harris’ Republican rival, has pledged to block the deal if elected, citing concerns over U.S. steel production and jobs.
Legal experts, such as CFIUS attorney Nick Klein, note that pushing the decision past the November election reduces immediate political pressures but does not ensure approval. David Boling, a former U.S. trade official, emphasized that the deal still faces obstacles beyond the CFIUS review, including securing an agreement with the United Steelworkers Union, which opposes the merger due to national security concerns.
Union and Global Concerns
U.S. Steel faces delays as security concerns are raised by the United Steelworkers Union, which strongly opposes the deal, citing risks to both the steel supply chain and national security. The union reiterated its stance on Tuesday, stating that Nippon Steel’s acquisition would lead to a reduction in domestic production capacity and make the U.S. more vulnerable to global competition, particularly from China.
Meanwhile, Japan, a key U.S. ally, is closely monitoring the situation. Deputy Chief Cabinet Secretary Hiroshi Moriya underscored the importance of strengthening economic relations between the two countries, including increasing mutual investments like Nippon Steel’s bid.
Steel Supply Chain and Economic Implications
EU clears Nippon steel’s $14.9 billion bid for US Steel
U.S. Steel faces delays as security concerns were highlighted in CFIUS’ initial letter to the companies, noting that Nippon Steel’s acquisition could harm the U.S. steel supply chain and reduce U.S. Steel’s likelihood of pursuing tariffs on foreign steel imports, potentially impacting American industries reliant on steel. Nippon Steel, however, responded with assurances that the merger would bolster U.S. Steel’s domestic operations, pledging billions of dollars in investment and promising not to transfer production or jobs outside the United States.
As the 90-day review continues, the final decision could come in December, with options ranging from CFIUS approving the deal with conditions to mitigate national security risks, to recommending that the president block the transaction altogether.
