Eiji Hashimoto, the CEO of Nippon Steel, has cautioned that tariffs alone will not strengthen the US steel industry, as he pursues legal action against the Biden administration’s decision to block his company’s proposed $15 billion acquisition of US Steel. Hashimoto made his comments during his first public appearance since President Joe Biden vetoed the deal last week, arguing that the merger would enhance US national security by creating a stronger steel company rather than relying on protectionist tariffs.
“We don’t think there is any other route that can strengthen the US steel industry more than this deal,” Hashimoto stated. “We never think that industry can become stronger through tariffs alone.”
The deal, which aimed to consolidate two key players in the US steel industry, would have brought significant capital and technology infusion into US Steel, something Hashimoto believes is crucial for boosting the industry’s competitiveness and safeguarding national security interests. The merger, he argued, would ensure a more resilient and secure steel supply chain, particularly in the face of growing global competition.
Hashimoto’s remarks were a direct response to criticism from Donald Trump, who has been vocal about his opposition to the sale. Trump posted on Truth Social, “Why would they want to sell US Steel now when Tariffs will make it a much more profitable and valuable company?” His statement reflects his long-standing belief that tariffs, rather than foreign ownership, are the key to reviving American manufacturing, including the steel sector.
Nippon Steel and US Steel have filed two separate legal cases in the United States, challenging Biden’s decision. The companies argue that the US government’s move to block the deal constitutes “wrongful interference” and damages their interests. Under Biden’s order, the two companies have 30 days to “fully and permanently abandon” the transaction unless the Committee on Foreign Investment in the United States (CFIUS) grants an extension.
Hashimoto emphasized the importance of CFIUS reopening the national security review under the incoming Trump administration, after the committee failed to reach a consensus on whether the deal posed a security threat. “This trial is to get them to accept my claims and to gain the right to another Cfius review under a new administration,” Hashimoto said, noting that the legal action differed from typical court cases.
The controversy surrounding the deal highlights the ongoing debate over “friendshoring,” the concept of strengthening supply chains with trusted allies like Japan, rather than relying on competitors such as China or Russia. Biden’s decision to block the acquisition has raised questions about Washington’s commitment to working with allies to enhance security through economic cooperation.
The legal battle could test the limits of executive authority over foreign investments, with the outcome potentially shaping future foreign acquisitions of US companies. “The court case is important because it tests the outer bounds of the Executive Branch’s authority to review foreign investments,” said Anthony Rapa, co-chair of international trade at Blank Rome, a law firm.
Nippon Steel and US Steel’s initial lawsuit argues that Biden’s decision involved unlawful political interference in the CFIUS process, while the second case targets rival Cleveland-Cliffs and its CEO Lourenco Goncalves, as well as the president of the United Steelworkers union, David McCall. The lawsuit claims that these entities engaged in “illegal and coordinated actions” to prevent the deal.
David Plotinsky, a partner at the Morgan Lewis law firm, acknowledged that Nippon Steel and US Steel’s challenge to the CFIUS process would be an uphill battle, given the broad discretion the government holds when it comes to national security matters. However, he also noted that the government faces “genuinely bad facts” in this case, which could influence the court’s stance.
As the legal proceedings unfold, the future of the $15 billion deal and its potential impact on the US steel industry hangs in the balance. Hashimoto’s efforts underscore the ongoing debate over the balance between tariffs, foreign investment, and national security in shaping the future of American manufacturing.
