Biden Gears Up to Halt U.S. Steel’s Takeover by Japanese Firm

President Joe Biden’s administration is currently preparing a series of actions to thwart a potential sale of U.S.-based steel producer to a Japanese counterpart, coming in the wake of ongoing concerns over national security and industrial dominance. The move reflects a broader push by the White House to preserve American industrial capabilities, especially in strategically significant sectors such as steel, in response to growing international competition. U.S. Steel, one of the nation’s oldest and most notable sector players, is reportedly in talks for a possible sale to a Japanese steel giant. The speculated deal forms part of broader global consolidation trends in the industry, driven by a wide array of factors including economic vulnerabilities, post-Covid-19 recovery challenges, and accelerating international competition. However, the Biden administration is expected to step in to alter the course of the deal, viewing the steel industry as a nexus of economic and national security interests. It is not only a critical driver of the national economy, but also an indispensable asset to national defense, military capabilities, and infrastructure. Hence, the control of the industry represents a decisive factor in terms of national security, a perspective that has become even more implicit amid the ongoing geopolitical tensions. At the heart of Biden’s impending intervention lays a muscular view of national security that extends beyond traditional military concerns to involve key industries, supply chains, and economic sectors. This position is deeply rooted in the administration’s broader industrial policy aimed at buttressing American manufacturing against international corporations and foreign governments, notably those involved in strategic competition with the U.S. The specifics of the Biden administration’s strategy to block the sale are still under wraps, but could involve an array of financial, legal, and diplomatic instruments. The Committee on Foreign Investments in the United States (CFIUS), which can recommend that the president block or unwind foreign investments on national security grounds, is likely to play a fundamental role. The use of defense production norms under the Defense Production Act, which empowers the executive to prioritize national defense-related contracts and allocate scarce resources, could also be leveraged by the administration. The White House has the power to intervene in such matters and has done so numerous times over the years when national security concerns have been flagged. Moreover, the Biden administration is also likely to coordinate with Congress to utilize the legislative route to oppose the deal. With national security and economic interests at stake, one can expect substantial bipartisan support on Capitol Hill against the sale. The move also aligns with Biden’s economy-wide strategy aiming to address potential vulnerabilities across industrial supply chains, as highlighted in the recent executive order on supply chain resilience. The steel industry, in this context, gains added importance due to its interlinks with a wide range of sectors including energy, transportation, construction, and defense. In conclusion, Biden’s move to block the U.S. Steel sale is an important illustration of the administration’s broader strategy to secure American industrial capabilities. It underscores a recognition of the vital role of the domestic steel industry in national security and infrastructure, a lesson that has been drawn from the country’s experiences with geopolitical competitions and systemic vulnerabilities. As such, it offers a critical precedent for understanding Biden’s stance on industrial policy, as well as his approach to safeguarding American industries amidst the complex dynamics of globalization and competition.