STORY: Washington is warning against Nippon Steel’s takeover of U.S. Steel, saying it would create national security risks.
That’s according to a letter sent to the companies, and seen by Reuters.
In the letter, the Committee on Foreign Investment in the U.S. says decisions taken by the Japanese firm could lead to a reduction in domestic steel capacity.
It says that could hurt the supply of metals needed for critical transportation, construction and agriculture projects.
The Committee said Nippon might also oppose U.S. tariffs on Chinese steel imports.
One expert said it all marked a major expansion of the usual definition of a national security risk.
Some also asked why a takeover by a firm from Japan – one of Washington’s closest allies – should pose any danger.
Even so, the letter provides a glimpse of the grounds the Biden administration is expected to use to block the deal, which has run into rising bipartisan opposition.
Both Democrat presidential candidate Kamala Harris and Republican rival Donald Trump have said they are opposed.
In a 100-page response seen by Reuters, Nippon pledged to invest billions of dollars into U.S. Steel facilities – which it says would otherwise be idled.
The company also promised not to transfer any jobs or capacity outside the country.
U.S. Steel has previously said it would pursue all legal avenues to ensure that the takeover proceeds.
