US President Joe Biden decided on Friday to block Japanese company Nippon Steel Corporation’s bid to purchase US Steel, citing national security concerns. The president emphasized the necessity of maintaining American ownership of companies to ensure the industry’s growth and protect national economic interests.

President Biden stated that the proposed acquisition contained provisions that could jeopardize national security and noted the importance of the steel industry’s role in the economy, including the defense industry and infrastructure. Under the provisions of Section 721 of the Defense Production Act of 1950 and the International Emergency Economic Powers Act (IEEPA), he prohibited the purchase of the American steel company by the Japanese company as well as any similar transaction between the mentioned parties.

Biden stated:

[T]his acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains. So, that is why I am taking action to block this deal. It is my solemn responsibility as President to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad, and it is a fulfillment of that responsibility to block foreign ownership of this vital American company.

The steel workers’ union welcomed the president’s decision, which they described as a “bold action” that would help maintain a strong domestic steel industry and ultimately benefit the national economy and security.

Section 721 of the Defence Production Act gives the president the authority to review certain mergers and acquisitions after considering certain factors, such as the capability of domestic industries to meet national defense requirements. Similarly, the IEEPA is a federal law that allows the president to block and investigate transactions that present an unusual and extraordinary threat to national security, foreign policy, or the economy from outside the US.

The proposed acquisition was announced in December 2023 when Nippon Steel Corporation presented a bid to buy US Steel for $14.9 billion, promising to preserve all jobs. Under the terms of the proposal, the American company would become a subsidiary of Nippon Steel while retaining its name and headquarters in Pittsburgh, Pennsylvania.

However, the proposed bid sparked controversy in the US. While the steel workers’ union strongly opposed foreign ownership of a national company, the company’s chief executive officer defended the merger. He argued that it would benefit investors, customers, and employees as well as enhance US Steel’s position as a leading steel manufacturer both nationally and internationally.

President Biden’s announcement comes just a few weeks before he departs from office on January 20. His decision also follows an investigation by the Committee on Foreign Investment in the US ( CFIUS), which failed to reach a consensus on the bill and led to its referral to the president for a final decision. According to the president’s order, the purchaser and US Steel have 30 days to complete all the necessary measures to terminate the prohibited transaction.