January 6, 2025 - Nippon Steel Corporation and U.S. Steel on Monday filed a federal lawsuit challenging the Biden administration's decision to block Nippon's proposed $15 billion acquisition of the Pittsburgh-based steel giant.

The lawsuit also accuses the United Steelworkers union president and a competing steelmaker of collaborating to derail the deal.

Why It Matters

President Joe Biden blocked the deal between Nippon and U.S. Steel earlier this month due to "national security" concerns.

The decision came at a politically sensitive time as Biden prepares to depart the White House on January 20 to make way for President-elect Donald Trump.

Meanwhile, U.S. Steel is considered a critical component of the country's defense and infrastructure. Biden's last-minute rejection of the deal suggests growing governmental tensions between maintaining domestic control over key industries and fostering international investment.

Nippon Steel president Tadashi Imai.

Credit: Nippon Steel

What To Know

In legal filings submitted Monday to the U.S. Court of Appeals for the District of Columbia and the U.S. District Court for the Western District of Pennsylvania, Nippon Steel and U.S. Steel claimed the Biden administration's move to block the acquisition was politically motivated and lacked any legitimate legal foundation.

Nippon Steel pledged a $2.7 billion investment to modernize U.S. Steel's aging blast furnaces in Gary, Indiana, and Pennsylvania's Mon Valley. The company also committed to maintaining U.S. production capacity for at least the next decade, contingent on prior approval from the federal government for any reductions.

In a statement last week, Biden said he stopped the takeover because "a strong domestically owned and operated steel industry represents an essential national security priority...Without domestic steel production and domestic steel workers, our nation is less strong and less secure."

Administration officials have denied any connection between the decision and U.S.-Japan relations. However, the move marks the first instance of a U.S. president blocking a merger between an American and Japanese company.

Biden's decision to halt the merger followed a deadlock last month by the Committee on Foreign Investment in the United States (CFIUS), which could not agree on potential national security risks posed by the deal. The committee sent its long-awaited report to the president, giving him 15 days to issue a final ruling.

In the lawsuit filed in the U.S. District Court for the Western District of Pennsylvania, Nippon Steel and U.S. Steel accused rival steelmaker Cleveland-Cliffs Inc. and its CEO, Lourenco Goncalves, of conspiring with United Steelworkers union chief David McCall in a "coordinated series of anticompetitive and racketeering activities" aimed at thwarting the merger.

In 2023, Cleveland-Cliffs made a $7 billion bid to acquire U.S. Steel, but the offer was rejected. U.S. Steel later accepted a significantly higher all-cash proposal from Nippon Steel, valued at nearly $15 billion.

The lawsuit claims Cleveland-Cliffs CEO Lourenco Goncalves, working alongside the United Steelworkers union leader, orchestrated efforts to block any bidder other than Cleveland-Cliffs from acquiring U.S. Steel, undermining the Pittsburgh-based company's competitive standing in the process.

What People Are Saying

United Steelworkers President David McCall dismissed the claims on Monday, describing them as unfounded.

"By blocking Nippon Steel's attempt to acquire U.S. Steel, the Biden administration protected vital U.S. interests, safeguarded our national security and helped preserve a domestic steel industry that underpins our country's critical supply chains," McCall said in a statement.

In a statement on Monday, Nippon and U.S. Steel said: "Nippon Steel and U. S. Steel have engaged in good faith with all parties to underscore how the Transaction will enhance, not threaten, United States national security."

Trump's Response

Last month, Trump signaled his intent to block the merger, vowing to bolster the iconic American steelmaker through tax incentives and tariffs.

Soon after the lawsuits were filed, Trump doubled down on his position, reaffirming it in a post on his Truth Social platform.

"Why would they want to sell U.S. Steel now when Tariffs will make it a much more profitable and valuable company?" the post said. "Wouldn't it be nice to have U.S. Steel, once the greatest company in the World, lead the charge toward greatness again? It can all happen very quickly!"

What's Next

It is currently unclear if the White House will respond to the lawsuit. Meanwhile, U.S. Steel shares jumped more than 4 percent in pre-market trading Monday.