Biden’s Executive Power Extended to Block US Steel-Nippon Merger

In recent news, President Joe Biden made a controversial decision to block Nippon Steel’s acquisition of US Steel, citing national security concerns in his executive action on January 3, 2025. This move has sparked debates about protectionism and its effects on economic stability in our interconnected global economy. The Executive Order requires both companies to submit documents to the Committee on Foreign Investment in the United States (CFIUS) within 30 days to terminate the merger, with Attorney General Merrick Garland tasked with enforcing the order. The stated reason for this action is to protect the national security of the United States.

Looking back at Biden’s promises leading up to the 2024 Presidential Election, it seems clear that this decision was a strategic move to gain support from union workers and industry leaders in the Rust Belt, specifically in swing states like Pennsylvania. This step to block the merger comes after Biden expanded CFIUS’s scope through an Executive Order in 2022, aiming to protect national security by identifying and addressing risks associated with foreign investment.

While Biden’s decision on the US Steel-Nippon Steel merger might seem like a unique challenge of the present, history shows that this kind of protectionism can have unintended consequences. A similar scenario played out in the 1980s under President Reagan, where temporary tariffs and import restrictions were imposed on certain steel products to protect domestic industries. However, these protectionist measures led to job losses and economic harm, costing the US economy billions of dollars.

Even though the steel industry is a strong player globally, with the US ranking fourth in steel production, it seems that both current and past administrations have overlooked the negative impacts of protectionism in the industry. Nippon Steel’s promise of significant investments in the American steel industry, along with commitments to have US citizens on the board of the merged company, were unfortunately not enough to prevent the Biden Administration’s intervention in the merger.

This decision by the Biden Administration reveals a pattern of prioritizing short-term political gains over sustainable economic strategies. It remains to be seen how this move will impact the steel industry and the broader economy in the long run.