How Biden’s blockade on Nippon Steel impacts US power
Dr. Anudeep Gujjeti
In early January 2025, the United States (US) President Joe Biden blocked Nippon Steel’s planned acquisition of United States Steel Corporation (US Steel), a steel company headquartered in Pittsburgh, halting a nearly $14-15 billion deal that had been announced in December 2023. The proposed takeover would have seen Japan’s largest steel producer absorb Pittsburgh-based U.S. Steel, the historic “Steeltown USA” icon whose legacy extends over a century. According to Biden’s public statement on January 3, his rationale grounded on national security concerns and preserving America’s independent steelmaking capacity, arguments that American labour unions, especially the powerful United Steelworkers (USW), had championed for months. Yet from Nippon Steel’s perspective, as expressed in a January 7 press conference by CEO Eiji Hashimoto, the true motives were far more political. The company accused Biden of yielding to protectionist lobbying and orchestrating an “illegal political interference” in the Committee on Foreign Investment in the United States (CFIUS) review process.
Japan’s government also voiced its displeasure, calling it a troubling sign that US authorities would block a key ally’s investment on grounds too vague to withstand scrutiny. Nippon Steel, which ranks fourth among global steelmakers in terms of annual output, had pledged to maintain US Steel’s name, keep its headquarters in Pittsburgh, and invest heavily, over 400 billion yen, into aging blast furnace facilities in Pennsylvania and Indiana. The idea was to strengthen US Steel’s competitiveness by harnessing Nippon’s technology and capital. Company officials also promised to retain American executives, honour labour agreements, and avoid mass layoffs. These promises, they argued, would safeguard US workers’ jobs while infusing the American steel sector with a new competitive edge against Chinese and Russian steel. Nevertheless, Biden’s administration, after a split CFIUS review, issued the executive order blocking the sale. Nippon Steel then initiated a lawsuit, joined by US Steel itself, alleging that the White House had misused national security arguments to secure domestic political gains, particularly ahead of an election year, when Biden relied on union support in states central to his electoral prospects.
The timing of this decision is very important. Over his first years in office, Biden placed considerable emphasis on rebuilding alliances and partnerships, especially in the face of Russian aggression in Ukraine and rising tensions with China and North Korea. His team negotiated new trade frameworks, emphasised supply-chain cooperation with allies, and, until recently, appeared open to foreign investment as part of revitalizing American manufacturing. Yet domestic political factors grew too powerful to ignore, especially as union support remains essential in the American Rust Belt. With Donald Trump set to return to the White House on January 20, Biden’s final weeks in office have underscored a swift turn toward economic nationalism, echoing the protectionist impulses that Trump himself has championed.
Trump had already promised to block the Nippon–US Steel deal if Biden did not, signalling a bipartisan alignment on protecting “iconic” American steel companies from foreign takeover. Against the broader landscape of great-power competition, the block on Nippon Steel underscores the complexities of maintaining a nation’s standing in an ever-shifting global order. In “What Makes a Power Great”, Michael J. Mazarr, suggest that a country’s long-term competitive edge derives not simply from winning battles or blocking certain acquisitions but from cultivating deep societal strengths, adaptability, shared opportunity, ambition, diversity, and cohesive institutions, among others. Historically, nations have lost wars or faced setbacks and still managed to remain preeminent if they retained these fundamental qualities that foster innovation and resilience. The US, for instance, outlasted the Soviet Union in the Cold War not merely because it spent more on weapons but because it was more inventive, energetic, and seen as broadly legitimate on the world stage. From this perspective, Biden’s intervention might look like a short-term victory for political gains at the cost of long-term strategic interests. Moreover, there are fears that the allies of the US might also take the route of economic nationalism which was evident from Japan flagging foreign acquisition of 7-Eleven, a retail giant of Japan, as a security issue
At a time when Washington repeatedly underscores the importance of alliances, particularly with key Indo-Pacific partners such as Japan and South Korea, blocking a major Japanese investment in the steel sector could send a negative message. Not only does it spark tensions with Tokyo, a country that remains significant to US posture in the Indo-Pacific and remains a cornerstone ally in countering Chinese influence, but it also raises doubts about the US commitment to open markets and business friendly environments for partners.
Moreover, the blockade comes in the midst of Russia’s ongoing invasion of Ukraine and North Korea’s escalations, which require strong alignment among the US, Europe, and its Indo-Pacific allies such as Japan and South Korea. In this fragile environment, a decision that seems more driven by domestic electoral variables than by strong geostrategic logic risks alienating a critical partner. If the US aims to preserve a dynamic, innovative, and adaptive society its leaders must balance domestic pressures with the realities of interdependence and alliance-building. Otherwise, even symbolic victories at home might undermine the very attributes that have kept the US at the top of the global hierarchy for decades.
Dr. Anudeep Gujjeti is Assistant Professor at the Center of Excellence for Geopolitics and International Studies, REVA University, Bengaluru.
