WASHINGTON - US Steel Corp, which has agreed to be bought by Japan’s Nippon Steel for US$14.9 billion (S$20 billion), must remain a domestically owned and operated American company, President Joe Biden said on March 14, expressing explicit opposition to the deal for the first time.

“US Steel has been an iconic American steel company for more than a century and it is vital for it to remain an American steel company that is domestically owned and operated,” the President added.

It was, however, not immediately clear whether Mr Biden would use any US regulatory authorities to scuttle the deal. The Committee on Foreign Investment in the United States (CFIUS), a powerful panel that reviews foreign investments in US companies, has the power to recommend the deal be blocked on national security grounds.

The White House said in December that the proposed acquisition deserved “serious scrutiny” given US Steel’s core role in steel production that is critical to national security.

Nippon Steel said in a March 14 statement the acquisition would deliver “clear benefits to US Steel, union workers, the broader American steel industry and American national security”.

“We are progressing through the regulatory review, including CFIUS, while trusting the rule-of-law, objectivity and due process we expect from the US Government. We are determined to see this through and complete the transaction,” it said.

The Japanese firm said in an initial statement that there would be no layoffs and no plant closures until September 2026 under certain conditions, but later re-issued its statement to say there would be no layoffs or plant closures as a result of the transaction.

Shares of US Steel sank again on March 14 and have tumbled 18 per cent over two days to US$38.26 on concerns that Mr Biden would express his opposition. That is far below the proposed deal price of US$55 per share. The company was not immediately available for comment.

Separately, Cleveland-Cliffs chief executive Lourenco Gonsalves said on March 14 he would consider another bid for US Steel likely worth no more than US$30 per share if the deal with Nippon Steel falls apart.

Cleveland-Cliffs was among the bidders for US Steel.

US opposition to the deal has the potential to overshadow an April 10 summit between Mr Biden and Japanese Prime Minister Fumio Kishida aimed at boosting the long-standing security alliance between their countries in the face of growing Chinese influence.

Mr Biden, who is running for re-election this year and has courted unions as a key constituent of political support, called United Steelworkers International president David McCall on March 14. He reiterated that he has the “steelworkers’ back”, the White House said.

Mr McCall said Mr Biden’s statements should end debate about the deal. “Allowing one of our nation’s largest steel manufacturers to be purchased by a foreign-owned corporation leaves us vulnerable when it comes to meeting both our defence and critical infrastructure needs,” he said in a statement.

CFIUS has met the parties to discuss the deal, said a person familiar with the matter.

The Treasury Department, which leads CFIUS, did not immediately respond to a request for comment, and the White House declined to comment on whether Mr Biden planned to use its powers to block the deal.

According to a January filing, Nippon Steel has committed to undertaking “all actions required” to obtain CFIUS clearance and to pay US Steel a US$565 million break-up fee if it fails to do so.

Mr Art Hogan, chief market strategist at B. Riley Wealth in New York, said: “There are always complications when foreign companies look to buy US-based corporations and this deal is no different.”

He added: “In an election year, it will be a heavy lift to get all the stakeholders comfortable with the acquisition of a US manufacturing icon.” REUTERS