WASHINGTON -- President Joe Biden is prepared to block [url HREF="/us-steel-news-today-nippon/14197549/" TARGET="" REL=""]Japan's Nippon Steel's proposed acquisition of US Steel[/url], two sources familiar with the matter said, a move that would deal a major blow to the $14 billion merger that has become a lightning rod in an election year as candidates on both sides of the aisle vow to protect American manufacturing.[br /][br /]A White House official would not comment on the president's decision but said the Committee on Foreign Investment in the United States, which is investigating the proposed merger on national security grounds, has not transmitted its recommendations to Biden yet. The president would oppose the deal, one source said, if the CFIUS committee recommended the deal not go through or withheld a recommendation.[br /][br /]"CFIUS hasn't transmitted a recommendation to the president, and that's the next step in this process," the White House official said.[br /][br /]Customarily, a final report from the committee informs a president's view of the potential risks a deal poses. In this case, high-profile public opposition to a deal in advance of the report's submission may end up influencing the recommendation the committee makes. Treasury chairs the committee, which is comprised of high-level officials from the president's Cabinet agencies who are responsible for areas of national security.[br /][br /]One source said the president's announcement could come as early as this week, but cautioned the timing remains fluid.[br /][br /]US Steel and Nippon Steel both indicated in statements that they're open to legal fights to get the deal approved, no matter what actions is announced by Biden.[br /][br /]"We continue to stand by the fact that there are no national security issues associated with this transaction, as Japan is one of our most staunch allies," US Steel said. "We fully expect to pursue all possible options under the law to ensure this transaction closes."[br /][br /]In a statement, a spokesperson for Nippon Steel said the company has not received any updates on the CFIUS process.[br /][br /]"Since the outset of the regulatory review process, we have been clear with the administration that we do not believe this transaction creates any national security concerns," according to the statement. "US Steel and the entire American steel industry will be on much stronger footing because of Nippon Steel's investment in US Steel - an investment that Nippon Steel is the only willing and able party to do so."[br /][br /]And Nippon Steel indicated it was not ready to give up the fight: "Nippon Steel strongly believes that the US government must appropriately handle procedures on this matter in accordance with the law."[br /][br /]The news, first reported earlier Wednesday by the Washington Post, is not a surprise as Biden is on record opposing the deal, even as it was being considered by members of his administration.[br /][br /]Shares of US Steel (X) closed down 17.5% on the news at $29.37, well below the $55 a share that Nippon Steel agreed to pay for the stock back in December when the deal was announced.[br /][br /]The president had previously outlined opposition to the deal in March, saying it is "vital for it to remain an American steel company that is domestically owned and operated."[br /][br /]In addition to Biden's stated opposition, Vice President Kamala Harris, former President Donald Trump and his running mate JD Vance have all voiced [url HREF="/post/harris-set-oppose-sale-us-steel-japanese-firm-during-joint-pennsylvania-event-biden/15259271/" TARGET="" REL=""]opposition to the deal[/url]. Harris is the most recent to come out against the proposed purchase at a rally in Pittsburgh on Labor Day, in which she was introduced by Biden and spoke to members of the United Steelworkers union. The union has been a leading opponent of the agreement.[br /][br /][h2]Threat to close mills if deal is blocked[/h2][br /]But there are risks if Biden undertakes the action. Earlier in the day Wednesday, US Steel issued a statement threatening to close its mills with unionized workers if it doesn't get approval of the unpopular deal, a move that could put pressure on the United Steelworkers union to reach an agreement with the two companies that would clear the way for approval of Nippon's purchase.[br /][br /]The Justice Department is also conducting an antitrust review of the potential merger.[br /][br /]US Steel has said that the multi-billion dollar investment from its Japanese rival would go further in shoring up the company's facilities and finances than it could afford on its own.[br /][br /]"Without the Nippon Steel transaction, US Steel will largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk, negatively impacting numerous communities across the locations where its facilities exist," the company said in a statement Wednesday. It said it might also move its headquarters away from Pittsburgh without the deal.[br /][br /]The company said the $2.7 billion that Nippon Steel has pledged to invest in its unionized mills outside of Pittsburgh and in Gary, Indiana, would support the future of manufacturing at those facilities.[br /][br /]"Those investments are subject to the closing of the transaction with US Steel and receipt of necessary regulatory approvals," US Steel said. "A stand-alone US Steel would not make the same financial commitments."[br /][br /]The USW responded by accusing US Steel of making "baseless and unlawful threats," and "a last gasp and desperate effort to save a merger on life support." It said CEO David Burritt's "reckless statements and mismanagement are the only true obstacle to US Steel remaining a sustainable steel company."[br /][br /]As for the promised investment by Nippon Steel in the union-represented facilities, the union said, "a press release is not a contract, and Nippon has shown that when it puts its promises in writing, it fills its proposals with so many conditions as to make its commitments worthless."[br /][br /]The USW did not immediately responded Wednesday afternoon to requests for comment on Biden's expected action.[br /][br /][b]ALSO SEE: [/b][url HREF="https://6abc.com/senator-john-fetterman-us-steel-news-today/14200936/" TARGET="_blank" REL=""] Pennsylvania Sen. John Fetterman unhappy with US Steel deal[/url][br /][br /]It is also not immediately clear if the action by Biden would kill the deal for good or would simply give the two steel companies and the union a chance to negotiate a deal that would be acceptable to all sides.[br /][br /]If the latter is the case, the political opposition to the deal and Biden's action would give the union some bargaining leverage as well. Without the union changing its position and supporting the deal, it's unlikely that the political opposition to the deal will change.[br /][br /]But there's reason to think that if deal is not completely dead, it could yet win approval not only from regulators but also from the union now firmly opposed to the deal - although experts who believe that could happen say it wouldn't occur until after the election.[br /][br /]The union, for example, is using its current political leverage to get the best possible deal from Nippon and US Steel, including even stronger promises to keep US Steel's mills that employ union members open and financial protections for anyone who does lose a job, said Philip Gibbs, a steel analyst for KeyBanc, in an interview with CNN ahead of word of Biden's plans.[br /][br /]"This might be the best possible deal for US Steel," Gibbs said. "If a change in ownership is perhaps inevitable, if all roads lead to attrition, why not try to maximize the safety nets in writing. They want to make sure their families are taken care of."[br /][br /][h2]'The perception of the state itself'[/h2][br /]The proposed purchase was bound to be unpopular. US Steel was once a symbol of American industrial might. It was the most valuable company in the world and the first to be worth $1 billion soon after its creation in 1901. It was also crucial to the US economy and the cars, appliances, bridges and skyscrapers that tangibly indicated that strength. Decades of decline later, it is no longer even the largest US steelmaker, and a relatively minor employer.[br /][br /]But it is still not a company that politicians who enjoy talking about the American greatness want to see fall into foreign hands.[br /][br /]There are relatively few steelworkers still working for the company in the crucial electoral battleground state of Pennsylvania. US Steel says it has more than 3,000 employees in the state in its remaining steel mills along the Monongahela River just outside of Pittsburgh. But the company has tens of thousands of retirees still in the state, and many more voters whose parents, grandparents or even great-grandparents may have worked in its mills. It makes the idea of a Japanese purchase of the once powerful US company a politically fraught move, said Gibbs.[br /][br /]"You're not just talking about the perception of the steelworkers, it's the perception of the state itself," said Gibbs. "As a politician you have to say you're not going to stand by and let the deal happen."[br /][br /]To try to assure its US critics, Nippon Steel issued a statement Wednesday promising that US Steel would continue to have a board of directors made up mostly of American citizens, and that Americans would also be a majority of management at the company. It also said there would be no transfer of any of US Steel's production capacity or jobs outside the United States.[br /][br /][h2]Why the union doesn't like the deal[/h2][br /]The union is concerned that Nippon is more interested in US Steel's nonunion plants that use electric furnaces to make steel by melting scrap, rather than in the unionized mills, known as integrated steel mills, that still make steel from its raw materials, such as iron ore.[br /][br /]"Nippon has shown through their own actions that they're changing the way they operate in Japan," Gibbs said about the shift from integrated mills to electric furnaces there.[br /][br /]The union says it doesn't believe in the promises made by Nippon Steel so far and that it remains opposed to the purchase. It said it believes that Nippon is interested in using US Steel's finishing mills to finish slabs of steel it would produce in Japan and ship here, rather than producing the steel slab in blast furnaces in America.[br /][br /]"Nippon still has not provided any true guarantees that our jobs, wages or benefits will be protected beyond the expiration of our current agreements in 2026," said a union statement last month. It did not answer a question from CNN asking if it is still talking with Nippon and US Steel about dropping opposition to the deal.[br /][br /]If the union does drop its opposition, it becomes much easier for politicians to allow it go through, Gibbs said, even if they would likely want to wait until after the election.[br /][br /]CFIUS is supposed to look into the national security implications of deals, and many of the politicians who have come out opposed to the deal claim it would be a threat to the nation's long-term economic health. A number of experts argue that doesn't hold up to scrutiny.[br /][br /]"Given the US-Japanese alliance, Nippon Steel's record, and the US steel industry's existing weaknesses, it is difficult if not impossible to identify a national security risk that justifies opposing the merger," said Michael Leiter, head of Skadden's CFIUS and National Security Practices, in an interview with CNN ahead of word of Biden's plans. "It is much, much easier, however, to identify a political risk, and regrettably that calculus is dominating the issue."[br /][br /][i] (The-CNN-Wire & 2024 Cable News Network, Inc., a Time Warner Company. All rights reserved.) [/i]