Amid rising tensions over foreign investments in key industries, a U.S. Senator has urged the Biden administration to scrutinize a major steel industry deal.
What Happened: The chair of the U.S. Senate Banking Committee has prompted the White House to investigate Nippon Steel‘s potential acquisition of U.S. Steel Corp X, highlighting national security worries, Reuters reported on Wednesday.
Sen. Sherrod Brown (D-Ohio) expressed his apprehensions in a letter to President Joe Biden, referencing a report by Horizon Advisory that scrutinizes Nippon Steel’s connections with the Chinese steel industry. Brown emphasized the risks the merger could pose to American national and economic security.
Nippon Steel countered the allegations, stating Horizon’s report contained errors and misrepresentations. The company asserted that its operations in China are minimal, making up less than 5% of its total production capacity. The White House has yet to issue a response, and Horizon Advisory has not commented on the matter.
The report by Horizon Advisory outlines Nippon Steel’s historical support for China’s steel industry, mentioning its involvement in several facilities and joint ventures with Chinese state-backed entities. Brown, who is seeking re-election, raised concerns about Nippon’s ties to China’s military-civil fusion strategy and its implications for global economic dominance.
Nippon Steel has assured that its Chinese investments do not influence its international operations or business decisions and that its Chinese partners lack access to sensitive information about its operations outside China. Amidst the controversy, President Biden has previously stated the importance of keeping U.S. Steel under domestic control, while his political rival, former President Donald Trump, has vowed to block the deal if elected.
Why It Matters: The potential acquisition of U.S. Steel by Nippon Steel has been a subject of intense scrutiny, with implications that extend beyond the steel industry. Experts have warned that former President Donald Trump‘s promise to obstruct the deal could strain U.S.-Japan relations, suggesting that Japanese companies might become more hesitant in pursuing acquisitions in strategic American sectors.
Moreover, Nippon Steel’s commitment to the Steelworkers Union and its broader role in the mining sector underscore the company’s influence in global commodity markets. The controversy over its ties to China adds another layer of complexity to the situation, potentially impacting the iron ore market and other related industries.
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