U.S. Steel Faces Stark Choices as Nippon Steel Merger Founders

For more than a year, U.S. Steel pursued an ambitious solution to its mounting challenges. Once a symbol of American industrial might, it had agreed to a takeover by Nippon Steel, a Japanese rival, in a bid to ward off obsolescence.

Citing the need to finance a costly modernization of its mills, U.S. Steel warned that if the deal was foiled, it would need to shut down plants and lay off workers.

Now, with the $14 billion acquisition blocked by President Biden on national security grounds — and President-elect Donald J. Trump outspoken in opposing it — the company has few easy alternatives.

Without a merger partner, the company may be forced to shutter its traditional steel plants, threatening the livelihoods of the workers and regions that rely on them. An effort to combine with a different competitor could encounter antitrust concerns. And it lags behind in the technological transition from blast furnaces to electric furnaces.

U.S. Steel is not conceding defeat on a takeover by Nippon Steel. The two companies are suing the federal government, contending that politics corrupted its review process.

“Nippon Steel and U.S. Steel remain confident that the transaction is the best path forward to secure the future of U.S. Steel, and we will vigorously defend our rights to achieve this objective,” Amanda Malikowski, a spokeswoman for U.S. Steel, said in a statement.