US President Joe Biden has formally blocked the acquisition of US Steel by a larger Japanese company, saying foreign ownership could pose a national security risk.
The controversial decision comes a year after Nippon Steel first announced the $14.9bn (£12bn) deal, describing it as a lifeline for its smaller rival, based in Pennsylvania.
But the transaction soon ran into political trouble after leaders of the United Steelworkers union vociferously opposed the deal, leading to political pressure in a key state during the 2024 presidential election.
Biden decided to scrap the deal despite concerns from some advisers that it could damage Washington's relationship with Tokyo, a key ally.
BBC News contacted Nippon Steel and US Steel for comment.
Nippon Steel has previously denied it plans to cut production or cut jobs, while US Steel has warned it may have to close plants without the investment that would come with a new owner.
These concerns were voiced by some workers and local politicians.
Other business groups said they feared rejecting the deal would chill the climate for international investment in the US.
But Biden has voiced longstanding opposition to the deal. The transaction was also criticized by President-elect Donald Trump and incoming Vice President JD Vance.
A US government panel tasked with reviewing the deal on national security risks failed to reach a consensus by the end of December, leaving the decision to Biden, who had to act within a 15-day deadline.
In his announcement Friday, he said maintaining U.S. ownership is important to keeping the U.S. steel industry and its supply chains strong.
“As I've said many times, steelmaking — and the steelworkers who make it — are the backbone of our nation,” he said.
“That's because steel powers our country: our infrastructure, our automotive industry and our defense industrial base. Without domestic steelmaking and domestic steelworkers, our nation is less strong and less secure.”
Nippon Steel and US Steel have previously suggested they may take legal action against the government if the deal does not go through.
Prof. Stephen Nagy of the Department of Political International Studies at the International Christian University in Tokyo said it was a “political” decision, noting that the Biden administration has promised a “middle-class foreign policy” from the start.
“This was a direct response and extension of Trump's MAGA agenda to make America great again,” he said.
“The Biden administration cannot appear weak on foreign business, whether ally or adversary.”