Biden cites need to ‘level playing field’ in long anticipated blocking of $14.6bn sale likely to roil ties with Tokyo.

United States President Joe Biden has blocked the $14.9bn sale of the Pittsburgh, Pennsylvania-based US Steel to Japan’s Nippon Steel.

The move on Friday deals a potentially fatal blow to the merger plan, which had been under review by the US government for a year.

Top Republicans and Democrats had been broadly opposed to the merger throughout the 2024 presidential election campaign season. But while Biden had criticised the plan, he had withheld a final decision amid concerns over roiling ties with ally Japan.

In his statement announcing the move, Biden cited a strategic need to protect domestic industry. “This acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains,” he said.

“That is why I am taking action to block this deal.”

For their part, Nippon Steel and US Steel had characterised the merger as a lifeline for the flagging US company, which is the second largest steel producer in the US. Nippon had paid a hefty premium to make the purchase and faces a $565m penalty payment to US Steel following the deal’s collapse.

Opponents, including the powerful United Steelworkers (USW) union, warned that the Japanese owners would slash jobs following the acquisition. Despite those warnings, there had been movements among some rank-and-file members of the national union in support of the merger.

Nippon Steel’s attempts to calm concerns by pledging a pause on any layoffs or closures of unionised facilities through the current union contract expiring in September 2026 failed to attract wider acceptance of the deal. The company had also pledged to move its US headquarters to Pittsburgh.

On Friday, USW international president David McCall called the decision “the right move for our members and our national security”.

“We’re grateful for President Biden’s willingness to take bold action to maintain a strong domestic steel industry and for his lifelong commitment to American workers,” McCall said.

Meanwhile, the Nikkei business daily reported that Nippon Steel would file a lawsuit against the US government challenging the procedures by which Biden issued the order.

The office of Japanese Prime Minister Shigeru Ishiba and the country’s Ministry of Economy, Trade and Industry did not immediately respond to Biden’s announcement.

However, in a November letter, Ishiba had urged Biden to approve the merger to avoid marring recent efforts to strengthen ties between the two countries, according to Reuters news agency.

Japan is a key US ally in the Asia-Pacific region, and Tokyo and Washington have bolstered relations in recent years over shared concerns about China’s economic and military rise, as well as threats from North Korea.

‘Backbone of our nation’

The Committee on Foreign Investment in the US (CFIUS) previously spent months reviewing the deal for national security risks but failed to reach a consensus.

The decision was then deferred to Biden, who was legally required to act before a 15-day deadline expired.

In his statement, Biden said he was taking action to level the playing field, blaming the decline of US Steel on unfair trade practices. He said a mixture of protectionism and subsidies had brought the industry back to health.

“Steel production – and the steelworkers who produce it – are the backbone of our nation,” Biden said.

“A strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains.”

President-elect Donald Trump, who takes office on January 20, had also opposed the deal, previously describing the proposed sale as “a horrible thing”.

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Al Jazeera and news agencies