Biden's ticking clock on U.S. Steel
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Illustration: Shoshana Gordon/Axios
President Biden is on the clock, needing to decide by Tuesday whether or not to stop Nippon Steel from buying U.S. Steel.
Why it matters: This could have ramifications for economic relations between the two longtime allies, including how U.S. acquirers are received in Japan.
Catch up quick: Pittsburgh-based U.S. Steel agreed to be acquired by Nippon last December, believing the regulatory hurdles would be lower than if it went with a rival bid from Ohio's Cleveland-Cliffs.
- CFIUS, the U.S. government body that investigates foreign acquisitions, had never before blocked a Japanese acquirer.
- But this deal quickly turned political, given U.S. Steel's importance to the battleground state of Pennsylvania, and both Biden and Donald Trump came out in rhetorical opposition.
- CFIUS proved unable to reach consensus, and instead sent a referral to Biden that requires him to make the final call by Jan. 7.
Behind the scenes: Nippon has spent the past week trying the placate Biden, pushing back the merger's closing date and reportedly offering to give the U.S. government "veto power over any potential cuts to U.S. Steel's production capacity."
- Biden has yet to block a deal submitted to CFIUS for review, although in May did unwind a Chinese investor's purchase of real estate near a U.S. military base (which CFIUS learned about after the fact, via a tip).
The bottom line: U.S. presidents have only blocked deals eight times on national security grounds since CFIUS was formed in 1975.
- Half of those came during President Trump's first term, and he could inherit this situation were Biden to act and Nippon to respond with litigation.
