STEEL DILEMMAWhy Biden Wants to Block the Nippon-U.S. Steel Deal
A proposed Japanese takeover of U.S. Steel, a century-old icon of American industry, is facing domestic political pushback that could challenge the Biden administration’s foreign policy aims. Biden’s opposition to the deal risks undercutting his administration’s efforts to strengthen U.S. alliances and supply chains, experts say.
The pending sale of U.S. Steel, a century-old icon of American industry, to its Japanese rival Nippon Steel has presented a challenge to President Joe Biden’s “friendshoring” foreign policy. Biden’s opposition to the deal risks undercutting his administration’s efforts to strengthen U.S. alliances and supply chains, experts say.
What are the merits of the deal?
At the end of 2023, Nippon Steel agreed to buy Pittsburgh-based U.S. Steel for $14.1 billion, a 40 percent premium on its December stock price. U.S. Steel’s shareholders approved the sale in April 2024, but the transaction’s closing has been delayed amid regulatory scrutiny and opposition from lawmakers and the United Steelworkers Union (USW).
Analysts say the deal could revitalize U.S. Steel, once the world’s largest steel producer—and corporation. The company began to decline along with the broader American steel industry in the 1970s as foreign firms, including Nippon, began to produce the material at a far lower cost. Between 1970 and 1987, American steel production declined 35 percent, while global steel production grew 21 percent.
If the Nippon acquisition proceeds, the combined firm would become the third-largest steel-producing company in the world, giving it more control over the crucial input in industries that Washington is seeking to bolster, such as electric vehicle manufacturing. (Nippon is currently fourth; U.S. Steel is twenty-seventh.)
The deal could result in lower prices for U.S. buyers, and serve as an example of friendshoring, a strategy that involves building supply chains with allies. Nippon executives argue that the deal would create a firm more equipped to compete with Chinese companies, which dominate steel production.
What’s the opposition?
The deal faces resistance from the politically influential steelworkers union, as well as Biden, former President Donald Trump, and a bevy of other lawmakers.
USW President David McCall, whose union represents half of U.S. Steel employees, opposes the deal because he says Nippon could enact significant layoffs for union workers. “They haven’t indicated in any way that they’re interested in working with us to assure us that our members and our members’ futures, their employment security, their economic security, and their retirement security is guaranteed,” he told Bloomberg in March. In a factsheet released in December, U.S. Steel said Nippon “has the financial wherewithal and desire to honor all existing agreements with the USW.”
