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Joe Biden announced his opposition to Nippon Steel's proposed $14.9 billion purchase of US Steel, saying it was “essential” for the US steel company to remain “domestically owned and operated.”
In a statement issued Thursday, the US President described his decision as an attempt to stand by American workers, at a time when he is under pressure in his re-election campaign to retain workers’ votes in the face of aggressive courtship by him. His Republican rival, Donald Trump.
But the announcement risks damaging Washington's relationship with Japan, one of its closest allies, at a time when the United States is trying to rally its allies and partners in the region to contain an often hostile regime in Beijing.
“It is important that we maintain strong American steel companies supported by American steel workers,” Biden said. The White House said Biden called David McCaul, international president of the United Steelworkers union, on Thursday to “reiterate that he stands with steelworkers.”
Biden described himself as the most pro-union president in US history and is counting on the support of organized workers in November. US Steel shares were down about 2.5 percent in late morning trading Thursday, after falling more than 12 percent on Wednesday.
Biden's intervention comes one day after the Financial Times first reported that he was preparing to express concerns about the Japanese group's proposed acquisition of the Pennsylvania-based steelmaker.
Nippon Steel last week formally submitted the deal to the Committee on Foreign Investment in the United States, an interagency panel that screens incoming deals for threats to national security. Biden's intervention raises questions about how to proceed with the Cfius investigation.
“Based on past practice, CFIUS will likely be on track to close the deal, likely with some conditions related to protecting domestic steel production and related jobs,” said Emily Kilcrease, a CFIUS expert at the Center for New Development. American Security Research Center. “But with the President’s statement opposing the deal, CFIUS will likely be in the uncomfortable position of having to reverse engineer its risk assessment to fit a politically determined outcome.”
This intervention comes less than a month before Japanese Prime Minister Fumio Kishida arrives in Washington on a high-level visit aimed at emphasizing the importance of the US-Japan alliance.
Hino Klink, a former senior Pentagon official in Asia, said the timing of Biden's statement was “inappropriate to say the least” given Kishida's visit. It also comes as Congress is debating legislation to ban TikTok and could feed into the Chinese government's narrative of xenophobia in the United States, he said.
The move culminates months of debate within the White House over how to respond to the deal, which sparked a political backlash in Washington and Pennsylvania, a critical swing state.
Trump, who has also courted unionized workers in Pennsylvania and other major industrial states, pledged last month to “absolutely” block the Nippon Steel deal if he is elected to another term in the White House.
“I will ban him immediately,” he told reporters after his meeting last month with the International Brotherhood of Truckers, one of the largest American labor unions. Trump said it was “horrible” that US Steel would be sold to a foreign entity.
Trump added: “We saved the steel industry, and now Japan is buying American steel.” “It's absolutely terrible.”
United Steelworkers, based in Pittsburgh, has long opposed the takeover.
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“Allowing one of our nation’s largest steelmakers to be acquired by a foreign-owned company leaves us vulnerable when it comes to meeting our defense and critical infrastructure needs,” United Steelworkers said Thursday. “The President’s statements should end the debate: US Steel must remain ‘domestically owned and operated.’”
Pennsylvania Democratic Senator Bob Casey, who also faces a tough re-election bid in November, immediately welcomed Biden's statement, saying: “Pennsylvania's workers are the greatest asset of the American steel industry.”
Casey said he had “long-held concerns that this sale would be a bad deal for our workers.”
Casey, who is likely to go head-to-head in November against Republican candidate and former Bridgewater CEO David McCormick, added that his “number one priority” is “protecting union jobs,” adding: “I will work hard against any deal.” This leaves our steelworkers behind.
