Fears that the U.S. auto industry could face monopolistic pricing and dwindling investment into its preferred steel production are mounting after President Joe Biden on Friday blocked a Japanese company from acquiring U.S. Steel Corp.

Although automakers didn't explicitly endorse Nippon Steel Corp.'s $14.9 billion cash-and-debt deal to acquire the Pittsburgh-based metal manufacturer, their lobbying groups indicated support under the belief it would have increased supply and offered price competition for the steel used to manufacture vehicles.

With that partnership unlikely to come to fruition, concerns abound around future investment into blast furnaces that produce steel with better surface finish quality, which automakers prefer for exposed steel vehicle parts. U.S. Steel and Cleveland-Cliffs Inc., whose attempts to acquire U.S. Steel have been rejected by the company, are the only two U.S. companies that still have significant blast furnace operations. A tie-up or sale involving both companies, the auto industry fears, would create a monopoly with enormous pricing power and increase their costs to build vehicles.

A few Michigan lawmakers also voiced support for Biden's decision to block the acquisition on the grounds of putting control of an American steel company into the hands of a foreign-owned corporation, a decision also in line with opposition from the United Steelworkers union. Approving the transaction could raise national security concerns, the outgoing president said in an order Friday, even though Japan is one of the United States' strongest allies in Asia. President-elect Donald Trump also has voiced opposition to the deal.

Newly sworn-in Sen. Elissa Slotkin, D-Michigan, called the decision a "positive thing" while acknowledging its controversy.

"I've got real concerns about such a critical, foundational part of our economy ... being controlled by a foreign country, even a friendly foreign country like Japan," she said during a virtual press conference from Washington.

"(It's) all part of a much bigger story post-COVID of bringing some critical supply chains back home to the United States," Slotkin added. As a member of the U.S. House, she co-signed a letter to Biden in January 2024 raising concerns about the deal.

Slotkin continued: "I wanted to bring certain critical supply chains home — not everything, we're never going to make Rubix cubes and ladies' razors in the United States ever again, and that's fine — but certain critical items like steel, like microchips that are foundational to every car we make and every big appliance out there."

The deal, notably, would not necessarily have boosted reliance on steel imports. Rather, it would have placed more domestic production power in the hands of a foreign company that promised to invest billions in U.S. facilities, including blast furnaces whose operators are unionized.

“The United States must keep American steel manufacturing capacity owned and operated in this country," U.S. Rep. Debbie Dingell, D-Michigan, said in a statement. "It is critical to our economic security and national security that we keep our steel manufacturing ability and jobs strong here in America. The backbone of our economy cannot be dependent on foreign countries and manufacturers."

A representative for Ford Motor Co. declined to comment on Biden's decision to block the transaction. A spokesperson for General Motors Co. referred comment to the Alliance for Automotive Innovation, the leading trade group for major U.S. automakers except for Tesla Inc.

The alliance didn't immediately have comment on Friday. Instead, it pointed to a letter from its CEO, John Bozzella, that was sent to the director of the National Economic Council in March, urging the Biden administration to "seriously consider alternative outcomes" if it had concerns about the Nippon acquisition and emphasized the potential negative impacts of a combination of U.S. Steel and Cleveland-Cliffs.

"A consolidation of the two companies would also place 65 to 90 percent of steel used in vehicles under the control of a single company. This includes 100 percent of the domestic electrical steel (e-steel) needed for electric vehicle (EV) motors and EV production," Bozzella wrote. "That result could lead to anti-competitive pricing of materials used by steel-reliant manufacturers like the auto industry, drive up the cost of both steel and e-steel, and ultimately increase the cost of finished vehicles (including EVs) for American consumers."

Biden will leave office in 17 days. The Committee on Foreign Investment in the United States, which failed to reach consensus on the possible national security risks of the deal last month, has 30 days to extend the deadline Biden set for abandoning the deal. But Trump also has said he is against the tie-up and posted in December on the Truth Social platform that he'd block the acquisition and use tax incentives and tariffs to support U.S. Steel.

"There is credible evidence that leads me to believe that Nippon Steel Corporation," Biden said in Friday's order, "through the proposed acquisition by the Purchasers of United States Steel Corporation ... might take action that threatens to impair the national security of the United States."

But Sean Higgins, a labor policy expert at pro-free market think tank Competitive Enterprise Institute, said in a statement the only thing the administration is protecting is the United Steelworkers' leverage over the domestic steel industry.

"The union feared it would not have leverage over the Japanese company going forward and so it lobbied the administration hard to reject the purchase," he said. "The losers are everyone else who relies on a free market in steel, such as U.S. manufacturers.”

U.S. Steel CEO David Burritt, speaking in September before the Detroit Economic Club, conveyed confidence the deal would be successful. Merging Nippon's expertise with U.S. Steel's domestic footprint gives "us an opportunity to really compete with China and actually increase competitiveness," he said during the visit. "That's why our customers love it, the auto guys love this transaction very much." China has more than 50% of global steel-producing capacity.

In a joint statement on Friday, Nippon and U.S. Steel criticized Biden's decision as being "corrupted by politics" and "a clear violation of due process and the law governing CFIUS." It said CFIUS found no "credible" evidence of national security issues.

"Blocking this transaction means denying billions of committed investment to extend the life of U.S. Steel’s aging facilities and putting thousands of good-paying, family-sustaining union jobs at risk," the companies said. "In short, we believe that President Biden has sacrificed the future of American steelworkers for his own political agenda. We are committed to taking all appropriate action to protect our legal rights to allow us to deliver the agreed upon value of $55.00 per share for U. S. Steel’s stockholders upon closing."

Nippon had committed to keep the U.S. Steel name and Pittsburgh headquarters. It said it would invest $2.7 billion in U.S. Steel operations mostly in Indiana and Pennsylvania. Additionally, it made accommodations that a majority of U.S. Steel's board members, its CEO and its chief financial officer would be U.S. citizens and said it wouldn't reduce production capacity at facilities in five states for a decade without CFIUS approval. It also offered $5,000 in closing bonuses to U.S. Steel employees at a cost of nearly $100 million.

Still, United Steelworkers President David McCall has questioned Nippon's status as an honest broker for U.S. national trade interests.

“Nippon has proven itself to be a serial trade cheater that for decades worked to undermine our domestic industry by dumping its products into our market," he said in a statement. "Allowing it to purchase U.S. Steel would have offered it the opportunity to further destabilize our trade system from within and in the process, compromise our ability to meet our own national security and critical infrastructure needs.

“It’s clear from U.S. Steel’s recent financial performance that it can easily remain a strong and resilient company. We now call on U.S. Steel’s board of directors to take the necessary steps to allow it to further flourish and remain profitable."

U.S. Steel reported through September, its net earnings in 2024 were $473 million, down 51% year-over-year, as sales declined 13% to $12.131 billion. Executives have suggested if the deal weren't to go through, it could idle assets and move its headquarters. Cleveland-Cliffs last year said it would buy Steelworkers-represented mills the company was threatening to close.

In a research note to investors after Biden's decision, Wolfe Research analyst Timna Tanners predicted U.S. Steel will close one of its two blast furnaces at its Mon Valley site in Pennsylvania and possibly shut it down completely in 2026 once it can transfer production for appliance customers to its Gary Works site in Indiana.

"We also don't expect anyone to make a new bid for (U.S. Steel), as it has no reason to divvy up its assets," Tanners added. "Its balance sheet is much healthier than (Cleveland-Cliffs)."

The News left an inquiry seeking comment from Cleveland-Cliffs about whether it would seek to acquire U.S. Steel or its facilities. It initially offered $7.3 billion for the company in 2023.

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