Review of Proposed United States Steel Corporation Acquisition

What is the Presidential Action?

On January 3, 2025, President Biden issued an order to prohibit the acquisition of United States Steel Corporation (U.S. Steel) by Nippon Steel Corporation and its affiliates. This action involves directing the Committee on Foreign Investment in the United States (CFIUS) to conduct a thorough review of the proposed transaction. The aim is to assess whether further measures are necessary to safeguard national security interests of the United States.

Background or Context with Statistics and Source References

The steel industry is crucial for the economic and security framework of any nation. United States Steel Corporation, established in 1901, is a leading steel producer in the United States. According to the American Iron and Steel Institute, the U.S. steel industry directly employs about 142,000 people. However, global economic shifts and competition, particularly from Asian steel manufacturers, have posed challenges to U.S. steel companies.

Recent reports by the Economic Policy Institute highlight increases in steel imports, particularly from countries like China and Japan, raising concerns about the impacts on the domestic steel industry and broader national security implications. The proposed acquisition by Nippon Steel, a major player in the global steel industry, has triggered a detailed scrutiny under national security grounds, referenced under Section 721 of the Defense Production Act of 1950.

Why This Action Was Taken

The decision to block this acquisition and review its implications stems primarily from concerns over national security and the strategic importance of maintaining domestic control over critical industries such as steel production. The U.S. government is wary of potential foreign control over vital industrial resources, which could be exploited or disrupted in times of international conflict or economic instability. Additionally, there are apprehensions about the loss of U.S. jobs and potential impacts on the economy.

Short and Long-term Impact on People

The immediate effects of this presidential action include maintaining U.S. control over a significant part of its industrial base, which could reassure the job market in related sectors. In the short term, this might also prevent potential job losses that could have resulted from the merger. In the long-term, preserving U.S. ownership and control over key industries like steel could help ensure economic stability and security.

However, there could be downsides, such as retaliation from foreign countries affected by this decision, potentially leading to a trade war that could affect prices and availability of goods. Additionally, limiting foreign investment could deter international economic collaboration and innovation in the steel industry.

Performance/Impact Parameters to Measure Success

The success of this presidential action can be evaluated through several metrics:

• Stability in the national steel production capacity and job levels in the industry.
• Effectiveness of CFIUS in mitigating any national security risks posed by foreign acquisitions.
• Maintenance of balanced international trade relations without significant retaliatory measures from other nations.
• Long-term growth and competitiveness of the U.S. steel industry in the global market.

These indicators will help gauge whether the decision to block the acquisition has achieved its intended outcomes of protecting national security and promoting economic stability.