US President Joe Biden is preparing to block Nippon Steel’s $14.1 billion ($22.2 billion) takeover of United States Steel, according to people familiar with the matter.

The proposed deal has been subject to a review by the Committee on Foreign Investment in the United States, and Biden plans to kill it as soon as the CFIUS decision lands on his desk, said the people, who asked not to be identified because the move hasn’t yet been announced. A decision could be made as soon as this week, they said.

The deal would have created the third-largest global steelmaker in a bid to compete with Chinese rivals on the global stage. Shares of US Steel plunged 24 per cent in New York trading.

The proposed deal has sparked an election-year firestorm in the crucial swing state of Pennsylvania, where US Steel is based. CFIUS hasn’t yet communicated its recommendation to the president, a White House official said.

Any move to block the deal could potentially be subject to litigation.

Loading

Biden has long pledged that US Steel, an iconic American company headquartered in Pittsburgh, should remain domestically owned and run, a stance with which Vice President Kamala Harris, the Democratic presidential nominee, also aligned. Harris announced her position at a Labor Day event in Pittsburgh on Monday.

Republican Donald Trump, her opponent in November’s election, had outright pledged to block the deal if elected to the White House.

There’s little precedent for the move. Proponents of Nippon Steel’s bid say the US shouldn’t reject a bid from a company based in an allied country such as Japan, particularly one that could create a joint entity with scale to compete with China.