Despite multiple efforts to address the national security concerns, Nippon Steel has failed to gain the approval from the U.S. Committee on the Foreign Investment (CFIUS) for its $14.9 billion acquisition of the U.S. Steel. The deal, which has been under intense scrutiny for potential risks to national security, is now facing a critical deadline, with the CFIUS required to decide by December 23, 2024.

Nippon Steel has made several attempts to alleviate these concerns, including submitting three revised proposals and engaging in numerous meetings and discussions with U.S. officials. However, CFIUS has yet to reach a consensus on whether the proposed mitigation measures are sufficient to address the risks. The committee's concerns primarily focus on the impact of the merger on the U.S. steel supply, particularly the aging production facilities that account for a significant portion of U.S. Steel's output.

CFIUS is particularly concerned about the future viability of U.S. Steel's Mon Valley Works and Gary Works BF 14, which represent 26% of the company's production capacity. Nippon Steel has committed to investing $1.3 billion to upgrade these facilities, but CFIUS is sceptical about the whether the Japanese company will follow through on these investments, especially if the market conditions in the U.S. deteriorate. If the Nippon Steel decides to reallocate its investments, it could further strain the steel industry’s capacity to meet national infrastructure and defence needs.

Although Nippon Steel has emphasized that the transaction would bolster U.S. national security by countering the growing influence of China, the committee remains unconvinced that the merger would not harm the domestic steel industry in the long run. The ongoing deadlock between CFIUS agencies means that the matter is likely to be referred to President Joe Biden, who has opposed the deal from the beginning.

The deal has faced opposition from key political figures, including President Biden and former President Trump, with both seeking to gain the Favor with union voters in Pennsylvania, where U.S. Steel is based. The United Steelworkers Union also opposes the merger, further complicating its prospects.

Nippon Steel's revised proposal, submitted in December, includes further commitments to maintain U.S. Steel’s production capacity unless certain procedural requirements are met. However, CFIUS has yet to be satisfied that these measures will effectively mitigate the risks to national security. If the deal is not approved by the December 23 deadline, it is likely to be blocked by the President Biden.