Nippon Steel has said that it is determined to complete its $14.1 billion acquisition of United States Steel after U.S. President Joe Biden earlier said the company should stay in U.S. hands.

In the wake of Biden's comments, Japan’s largest steel company repeated its previous offer of an additional $1.4 billion in investment and a promise of no layoffs or plant closures until at least September 2026, according to a statement on Friday.

While Biden stopped short of saying he would block the takeover, his statement on Thursday marked a rare presidential intervention in a transaction that outside an election year would have drawn less political scrutiny. Nippon Steel is doubling down on its bid for its iconic U.S. rival just as opposition from the White House threatens to become insurmountable to getting the deal done.

The U.S. also risks upsetting relations with a key ally. Prime Minister Fumio Kishida is due to hold a summit with Biden in Washington on April 10, where security cooperation will be on the agenda, but the U.S. Steel issue is set to cloud the meeting.

"U.S. domestic politics is defining what should be up to two private companies to decide,” said Shihoko Goto, director of the Asia Program at the Wilson Center in Washington.

"The U.S. Steel/Nippon Steel debate is also driving a harmful wedge between otherwise solid partner nations,” she wrote in a post on X, the social media site formerly known as Twitter.

In the wings is the possibility of another bid for U.S. Steel from Cleveland-Cliffs. Earlier on Thursday, Cleveland-Cliffs CEO Lourenco Goncalves said he’d consider making an offer — with union support — albeit at a significantly lower price than Nippon Steel's offer. U.S. Steel rejected an earlier bid from Cleveland-Cliffs.

Nippon Steel’s shares fell slightly in Tokyo after an initial advance following its statement.

But a plunge in U.S. Steel's shares shows that investors are increasingly concerned about the future of the Japanese deal. The stock slumped as much as 11% on Thursday to $36.38, but pared losses after Goncalves’ comments, closing at $38.26. Its shares have dropped 18% in two days and are trading sharply below Nippon Steel's offer of $55 per share.

Despite its storied history, U.S. Steel’s role in the economy has diminished over several decades, a period during which producers in Asia have risen to dominate the global steel market. And while Nippon Steel’s proposed $14.1 billion acquisition targets a historic business name, a takeover in the U.S. commodities industry by a company based in a friendly country is hardly unusual.

Biden’s comments have also shone a fresh light on the influential position held by the United Steelworkers (USW) union and its leader, David McCall. Biden called McCall Thursday morning, reiterating that "he has the steelworkers’ back,” the White House said in a statement.

For its part, the union said Thursday afternoon in a statement that it welcomed Biden’s call for U.S. Steel to remain domestically owned and operated, saying that the president’s statement should "end the debate,” according to a statement on Thursday.

The political opposition to the deal means it is increasingly likely that U.S. Steel will end up as a standalone company, according to a note from Wolfe Research. Another possibility is that "a deal still goes through but after the election and likely with concessions to the union,” it said.

Finding a compromise with the union could give Nippon Steel a chance of success, said Takeshi Irisawa, analyst at Tachibana Securities. That would help give Biden the cover he would need to walk back his comments on American ownership.

Japan’s top government spokesman, Yoshimasa Hayashi, said during a briefing on Friday that the government is aware of Biden’s statement on U.S. Steel but wouldn’t comment on individual companies.

"In any case the U.S.-Japan alliance is stronger than ever,” Hayashi said. "Japan and the U.S. will continue to work together on the realization of sustainable and inclusive growth and the maintenance and strengthening of a rules-based free and open economic order in the Indo-Pacific.”

Others were less sanguine.

"This throws sand in the wheels of U.S.-Japan economic cooperation,” Mireya Solis, director of the Center for Asia Policy Studies at Brookings Institution, posted on X. "Who will believe us when we appeal to the spirit of ‘friend-shoring’?”