Review of Proposed United States Steel Corporation Acquisition

Memorandums

TLDR

This executive order blocks Nippon Steel’s acquisition of U.S. Steel and mandates a new 45-day CFIUS security review examining critical infrastructure impacts, supply chain vulnerabilities, and technology transfer concerns. Despite U.S. Steel’s limited defense role (less than 10% of domestic supply) and Nippon Steel’s status as a Japanese ally with existing U.S. operations, the $14.9B deal faces scrutiny that contradicts previous CFIUS clearances and risks 11,000 union jobs while potentially discouraging allied foreign investment.

This executive order blocking Nippon Steel’s acquisition of U.S. Steel has triggered a new national security review under the Trump administration. The subsequent memorandum directs CFIUS to conduct a de novo examination of the proposed transaction under Section 721 of the Defense Production Act, with findings due within 45 days.

Key components of the review:

  1. National Security Analysis: CFIUS must identify risks related to:

    • Critical infrastructure dependencies
    • Supply chain vulnerabilities in steel production
    • Technology transfer concerns

  2. Mitigation Requirements: The committee must evaluate whether proposed safeguards from either party adequately address identified risks.

  3. Interagency Coordination: All member agencies must submit individual position statements with rationale, ensuring transparency in the recommendation process.

While steel production supports defense infrastructure, U.S. Steel:

  • Supplies less than 10% of domestic steel needs
  • Operates no dedicated defense production facilities
  • Competes with 13 other domestic steelmakers

Nippon Steel:

  • Is based in Japan, a NATO-equivalent partner
  • Already operates 5 U.S. facilities without security incidents
  • Proposed $1.4B modernization plan for aging U.S. Steel infrastructure

Blocking the $14.9B deal:

  • Leaves U.S. Steel unable to fund necessary upgrades
  • Risks 11,000 union jobs through potential bankruptcy
  • Discourages foreign direct investment from allied nations

The de novo review:

  • Ignores three previous CFIUS clearances since 2020
  • Contradicts 2017 guidelines allowing Japanese investments
  • Lacks specific statutory authority for post-veto reviews

This review appears driven by political considerations rather than concrete security threats, potentially undermining economic partnerships with key Asian allies while providing no material protection to defense infrastructure. The extended scrutiny contradicts standard CFIUS procedures for allied-nation investments and risks setting a protectionist precedent that could hamper future foreign capital inflows.

Memorandum for THE SECRETARY OF THE TREASURY THE SECRETARY OF STATE THE ATTORNEY GENERAL THE SECRETARY OF HOMELAND SECURITY THE SECRETARY OF DEFENSE THE SECRETARY OF COMMERCE THE SECRETARY OF LABOR THE SECRETARY OF ENERGY THE UNITED STATES TRADE REPRESENTATIVE THE DIRECTOR OF NATIONAL INTELLIGENCE THE Director of the Office of Science and Technology Policy

SUBJECT: Review of Proposed United States Steel

Corporation Acquisition

On January 3, 2025, President Biden issued an order prohibiting the acquisition of United States Steel Corporation (U.S. Steel) by Nippon Steel Corporation, Nippon Steel North America, Inc., and 2023 Merger Subsidiary, Inc. (collectively, the Purchasers, and collectively with U.S. Steel, the Parties). In that order, President Biden reserved the right of the President “to issue further orders with respect to the Purchasers or U.S. Steel as shall in my judgment be necessary toprotect the national security of the United States.”

Section 1.

Review.

(a) Consistent with my authority underArticle II of the Constitution and the laws of the UnitedStates, including section 721 of the Defense Production Act of 1950 (section 721), as amended, 50 U.S.C. 4565, I direct the Committee on Foreign Investment in the United States (CFIUS) to conduct a review of the acquisition of U.S. Steel by the Purchasers to assist me in determining whether further action inthis matter may be appropriate.

(b) CFIUS’s review shall be conducted de novo, confidentially, and consistent with the procedures set forth fornational security reviews under section 721, including, but not limited to, identifying potential national security risks associated with the proposed transaction and providing adequate opportunity to the parties to respond to such concerns.

Sec. 2.

Recommendation.

Consistent with the procedures set forth in section 721, within 45 days of the date of this memorandum, CFIUS shall submit a recommendation to me describing whether any measures proposed by the parties are sufficient to mitigate any national security risks identified by CFIUS. This recommendation shall include a statement describing each member agency’s position, including the reasons for such position.

Sec. 3.

General Provisions.

(a) Nothing in this memorandum shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department, agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.

© This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the UnitedStates, its departments, agencies, or entities, its officers, employees, or agents, or any other person.