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US Steel Deal With Nippon Riles Biden Allies in States Hit by Factory Losses
(Bloomberg) -- A Japanese company’s agreement to purchase United States Steel Corp has thrust a political dilemma into President Joe Biden’s lap during a reelection bid that runs through America’s manufacturing heartland.
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Pittsburgh-based US Steel announced Monday that it would be taken over by Nippon Steel Corp. after an offer of $14.1 billion that exceeded analysts’ expectations. The company had not been considered a frontrunner for the sale.
In another era, a lucrative offer from a company in a friendly country might be viewed as benign — even one for US Steel, an icon of American manufacturing in its heyday.
But the political overlays are heavy and could prompt the president to try to slow, amend or even kill the deal, which has quickly garnered opposition from vulnerable swing-state Democrats and other Biden allies ahead of next year’s election.
White House Press Secretary Karine Jean-Pierre said Tuesday that Biden is aware of the deal and that it could face regulatory review, without elaborating. She emphasized the president supports steel workers and believes in competition.
“Given this could potentially be a regulatory review, I’m not going to speak to any specifics of this transaction,” Jean-Pierre said.
Shares of US Steel fell as much as 3% to a session low of $48.10 after the White House’s comments — signaling a potential regulatory headwind for the transaction — before nudging back up. Nippon agreed to buy US Steel at $55 a share.
A Bloomberg News / Morning Consult poll published this month showed Biden trailing Donald Trump, the Republican front-runner, on questions of managing the economy as well as in key swing-states like Pennsylvania and Michigan, with strong manufacturing presences.
Read More: Trump Pulls Ahead in Michigan as Union, Women Voters Sour on Biden
Trump has long leveraged the steel industry politically and economically, and imposed tariffs to prop up domestic production. Biden has continued that approach, generally keeping steel tariffs in place and going toe-to-toe with Trump in appeals to blue collar workers and pledges to rebuild American manufacturing.
“Where is it written that America will not lead the world in manufacturing?” Biden said in a Labor Day speech earlier this year.
The American steel industry produced 89 million tons in 2022, according to data from the American Iron and Steel Institute. US Steel represents almost 17% of that, with mills scattered across crucial political battlegrounds. Steelworkers also are emblematic of the blue collar union worker, whose backing Biden regularly credits for his 2020 victory.
Biden signaled his support for steelworkers in 2020 by riding a train from Ohio to Pittsburgh with then-United Steelworkers President Tom Conway. Now, USW is among the opponents to the deal, calling it “greedy” and “short-sighted.”
Read more: USW Opposes US Steel-Nippon Deal, Urges Regulatory Scrutiny (2)
Capitol Hill Opponents
Retiring West Virginia Senator Joe Manchin — who is considering a third-party White House run that would likely pull support from Biden’s voting base — also spoke out strongly against the deal.
“I am committed to doing anything I can to protect what remains of America’s steel industry and prevent any loss of good-paying American jobs,” Manchin said in a statement.
Both of Pennsylvania’s Democratic senators — including Bob Casey, who is up for reelection next year in a state Biden narrowly won in 2020 — have raised concerns.
“It’s absolutely outrageous that they have sold themselves to a foreign nation and a company,” the state’s other senator, John Fetterman, said in a video recorded Monday from the roof of his home with a US Steel plant in the background.
Fetterman pledged to do anything in his power to block the project.
Another vulnerable Democrat up for reelection in 2024, Ohio Senator Sherrod Brown, also opposed it, citing “grave concerns,” as did the state’s Republican senator, JD Vance. In Michigan, Democratic Representative Elissa Slotkin, who is running for the Senate, also spoke out against the deal.
The Ohio, Pennsylvania and Michigan senate races will be among the country’s most hotly contested, and the latter two are pivotal for Biden, who won both states in 2020 after Trump won them in 2016. US Steel has operations in both states.
Biden’s Roots
Biden hails from Pennsylvania. He was born in Scranton before his family moved to the steel town of Claymont, Delaware, in search of work, an odyssey that forged Biden’s outrage about American manufacturing jobs being shipped overseas.
Steel has increasingly become a sector treated as a national security priority. It’s heavy, and therefore expensive to ship across oceans. It’s also ubiquitous — used in housing, cars, toasters and skyscrapers — which drives calls to ensure protections for domestic production.
Should the president opt to intervene, he could seek to block the deal through a Committee on Foreign Investment in the United States review. But that would risk angering ally Japan and further pushing the limits of what industries can be considered strategic priorities. Another option is a review that somehow amends the deal and moves to assuage outcry from unions who were blindsided by the announcement.
The White House declined to comment.
“We expect a CFIUS review but [with] limited risk since Japan is a strategic ally,” Timna Tanners, an analyst at Wolfe Research, wrote in a note. “The union already expressed displeasure with the deal, but we aren’t convinced this is an impediment.”
(Adds White House comment starting in 5th paragraph, market reaction in 7th paragraph)
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