Nippon Steel previously indicated it could take legal action if the deal was blocked. U.S. Steel had also said it hoped Biden would approve the transaction.
The move has been lauded by labor groups, while businesses have sharply criticized the dismissal of the sale.
The Committee on Foreign Investment in the United States, which reviews certain transactions involving foreign investments, spent roughly a year examining the potential deal.
While Biden publicly opposed it, the White House did not make an official announcement on whether he would block the transaction or allow it to proceed amid complicated election-year politics as he, and later Vice President Harris, courted union voters and sought to project strength on economic issues.
President-elect Trump had also said he would block Nippon Steel’s efforts to buy U.S. Steel.
United Steelworkers International President David McCall said on Friday that there's "no doubt that it’s the right move for our members and our national security."
But Jonathan Samford, president of the Global Business Alliance, expressed concern.
"Japan is one of America’s strongest allies and Japanese companies have reinvested more into the U.S. economy and workforce than any other nation," Samford said.
The Hill's Brett Samuels has more here.
