US President Joe Biden has formally blocked the takeover of US Steel by a larger Japanese company, saying foreign participation could pose national security risks.
The controversial move comes a year after Nippon Steel first announced the $14.9bn (£12bn) deal, describing it as a lifeline for its smaller Pennsylvania-based rival.
But the transaction quickly ran into political problems, after leaders of the United Steelworkers union strongly opposed the deal, exerting political pressure in a key state in the 2024 presidential election.
Biden decided to abandon the deal despite concerns from some advisers that it could damage Washington’s relations with Tokyo, a key ally.
BBC News has contacted Nippon Steel and US Steel for comment.
Nippon Steel has previously denied plans to cut production or cut jobs, while US Steel has warned it may have to close plants without the investment that new ownership would entail.
These concerns were echoed by some local workers and politicians.
Other business groups said they feared that rejecting the deal would chill the international investment climate in the United States.
But Biden has expressed his long-standing opposition to the deal. The deal was also criticized by President-elect Donald Trump and incoming Vice President JD Vance.
A U.S. government committee reviewing the deal over national security risks failed to reach consensus in late December, leaving the decision to Biden, who was required to act within 15 days.
In his Friday announcement, he said maintaining U.S. ownership was important to keeping the U.S. steel industry and its supply chains strong.
“As I have said repeatedly, steel production – and the steelmakers who produce it – are the backbone of our nation,” he said.
“That’s because steel powers our country: our infrastructure, our auto industry, and our defense industrial base. Without domestic steel production and domestic steel workers, our nation is less strong and less secure.”
Nippon Steel and US Steel have previously suggested they could take legal action against the government if the deal is not reached.
Professor Stephen Nagy, of the Department of International Political Studies at the International Christian University in Tokyo, said it was a “political” decision, noting that the Biden administration had promised from the start a ” foreign policy for the middle class.
“This was a direct response and continuation of the Trump MAGA agenda to make America great again,” he said.
“The Biden administration could not appear weak in the face of foreign companies, whether allies or adversaries.”
