Nippon Steel said it’s determined to complete its US$14.1 billion acquisition of United States Steel after President Joe Biden stated the company should stay in US hands.

In the wake of Biden’s comments, Japan’s largest steelmaker repeated its previous offer of an additional US$1.4 billion in investment and a promise of no layoffs or plant closures until at least September 2026, according to a statement on Friday (Mar 15).

While Biden stopped short of saying he would block the takeover, his statement on Thursday marked a rare presidential intervention in a transaction that outside an election year would have drawn less political scrutiny. Nippon Steel is doubling down on its bid for its iconic US rival just as opposition from the White House threatens to become insurmountable to getting the deal done.

The US also risks upsetting relations with a key ally. Japanese Prime Minister Fumio Kishida is due to hold a summit with Biden in Washington on April 10, where security cooperation will be on the agenda, but the US Steel issue is set to cloud the meeting.

“US domestic politics is defining what should be up to two private companies to decide,” said Shihoko Goto, director of the Asia Program at the Wilson Center in Washington DC. “The US Steel/Nippon Steel debate is also driving a harmful wedge between otherwise solid partner nations,” she wrote in a post on X, the social media site formerly known as Twitter.

In the wings is the possibility of another bid for US Steel from Cleveland-Cliffs. Earlier on Thursday, chief executive officer Lourenco Goncalves said he’d consider making an offer – with union support – albeit at a significantly lower price than Nippon Steel’s offer. US Steel rejected an earlier bid from Cleveland-Cliffs.

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Nippon Steel’s shares rose slightly in Tokyo after its statement.

But a plunge in US Steel’s shares shows that investors are increasingly concerned about the future of the Japanese deal. The stock slumped as much as 11 per cent on Thursday to US$36.38, but pared losses after Goncalves’ comments, closing at US$38.26. Its shares have dropped 18 per cent in two days and are trading sharply below Nippon Steel’s offer of US$55 per share. 

Despite its storied history, US Steel’s role in the economy has diminished over several decades, a period during which producers in Asia have risen to dominate the global steel market. And while Nippon Steel’s proposed acquisition targets a historic business name, a takeover in the US commodities industry by a company based in a friendly country is hardly unusual.

Biden’s comments have also shone a fresh light on the influential position held by the United Steelworkers union and its leader, David McCall. Biden called McCall on Thursday morning, reiterating that “he has the steelworkers’ back,” the White House said in a statement. For its part, the union welcomed Biden’s call for US Steel to remain domestically owned and operated, saying that the president’s comments should “end the debate,” according to a statement on Thursday.

Japan’s top government spokesman, Yoshimasa Hayashi, said at a briefing on Friday that the government is aware of Biden’s statement on US Steel but wouldn’t comment on individual companies.

“In any case, the US-Japan alliance is stronger than ever,” said Hayashi. “Japan and the US will continue to work together on the realisation of sustainable and inclusive growth and the maintenance and strengthening of a rules-based free and open economic order in the Indo-Pacific.”

Others were less sanguine.

“This throws sand in the wheels of US-Japan economic cooperation,” Mireya Solis, director of the Center for Asia Policy Studies at Brookings Institution, posted on X. “Who will believe us when we appeal to the spirit of ‘friend-shoring’?” BLOOMBERG