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The chief executive of Nippon Steel has warned that tariffs alone would not create a stronger American steel industry, as he pursued legal action aimed at persuading Donald Trump’s incoming administration to launch another review of his proposed $15bn deal to buy US Steel.
In his first public appearance since President Joe Biden blocked the takeover last week, Eiji Hashimoto told reporters in Tokyo that the combination would enhance US national security by creating a stronger company.
“We don’t think there is any other route that can strengthen the US steel industry more than this deal,” he said. “We never think that industry can become stronger through tariffs alone.”
The comments came after the Tokyo- and Pittsburgh-based companies filed a pair of legal cases in the US on Monday, alleging Biden’s decision to block the deal amounted to “wrongful interference”.
Hashimoto’s remarks were aimed at Trump, who has argued against a sale of US Steel as he gears up to introduce protectionist measures for the sector.
Trump posted on the Truth Social platform on Monday: “Why would they want to sell US Steel now when Tariffs will make it a much more profitable and valuable company?”
At the heart of the debate is whether an acquisition of US Steel by a company based in Japan, a crucial Washington ally, would weaken the American steel industry and threaten production levels, or whether a capital and technology injection would enhance national security.
Under Biden’s order, the two companies have 30 days to “fully and permanently abandon” the proposed transaction, unless the Committee on Foreign Investment in the US (Cfius), grants an extension.
The two companies may seek injunctive relief to push back that deadline, according to lawyers.
Hashimoto urged Cfius, the inter-agency body that screens overseas investment, to reopen a national security review under the Trump administration, after it had failed to reach consensus on whether the deal posed a security risk.
“This trial is to get them to accept my claims and to gain the right to another Cfius review under a new administration,” he said. “This differs from usual court cases.”
Biden nixing the deal has shaken faith in Washington’s support for “friendshoring” — working with allies and partners to build alternative supply chains to China and Russia within US borders and elsewhere.
“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 first legal case demanded that Biden’s order be set aside due to “unlawful political interference” in the Cfius process. The second legal case was against rival steel producer Cleveland-Cliffs, its chief executive Lourenco Goncalves and the United Steelworkers union’s president David McCall, alleging “illegal and co-ordinated actions” to prevent the deal from going ahead.
David Plotinsky, partner at the Morgan Lewis law firm, said Nippon Steel and US Steel’s litigation challenge to the Cfius process would be an “uphill battle” due to the expansive scope of what can constitute national security.
But “the government is faced with some genuinely bad facts in this case”, he added.
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