Biden blocked the Nippon purchase of U.S. Steel. Trump would have too. It’s union pandering that makes the US less secure.
Biden’s National-Security Aides Wanted to Keep Steel Deal Alive
The Wall Street Journal reports Biden’s National-Security Aides Wanted to Keep Steel Deal Alive
Top officials like Secretary of State Antony Blinken didn’t want to damage the relationship with Japan. Biden sided with his domestic advisers.
President Biden went against top national-security aides when deciding to tank a Japanese takeover of U.S. Steel X -6.53%decrease; red down pointing triangle and instead align with his domestic advisers to bolster his pro-union legacy.
Staff presented Biden two broad options in recent days, administration officials said: block the $14.1 billion deal entirely, or delay an approval until Nippon Steel 5401 1.18%increase; green up pointing triangle could allay concerns that its ownership would harm the American manufacturing supply chain.
During closed-door discussions, national security adviser Jake Sullivan and Secretary of State Antony Blinken were among the foreign policy-minded aides pushing for options that could keep the deal alive, not wanting to damage a crucial relationship with an East Asia ally, according to the officials. Steve Ricchetti, counselor to the president, and other domestically focused staff said it was best to side with leaders of the United Steelworkers’ union, who had been vocal opponents of the deal since it was announced in December 2023, the officials said. Biden has called himself the most pro-union president in American history.
By stopping Japan, a country that has been close to the U.S. since World War II, from acquiring an American firm, Biden undercut his own strategy of making the U.S. an unshakable ally that always stands with its partners.
Biden cited this concern in his statement killing the move: “This acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.”
President-elect Donald Trump on the campaign trail repeatedly vowed to block the deal, a rare point of agreement between Biden and him. With just weeks to go before Trump becomes president, officials said time had effectively run out for the Japanese company to convince the administration it could protect U.S. supply chains.
Four Accurate Comments on Biden’s Decision
- @scottlincicome : We claim that Japan is one of our closest allies. We demand that they sacrifice economic growth by refraining from the export of high tech products to China. They accommodate our wishes. And then when a few union jobs are threatened, we turn around and treat them like an enemy nation.
- @pat_hedger : Japan, the national security threat so severe that they can’t invest in some steel plants in Pennsylvania… but can sail their largest warship to California to pick up some of the super advanced stealth fighters we sold them. Got it.
- @ModeledBehavior : Blocking the purchase of U.S. Steel was not prioritizing national security over efficiency and growth. It was prioritizing pro union politics over all three.
- @RichardHaass : The @potus decision to block Nippon Steel’s buy of US steel is bad economics and foreign policy both. It threatens jobs here, encourages protectionism elsewhere, & undermines what has been a defining alliance-first approach to the world.
No National Security Risk
The Pentagon, US Treasury and state department have all concluded that Nippon Steel’s $15bn acquisition of US Steel poses no national security risks, even though President Joe Biden is expected to block the deal. The conclusions come despite Biden’s insistence that the purchase of the Pittsburgh-based steelmaker poses economic and national security risks.
Several senior officials have told the Financial Times that the deal presents no national security risks and that Biden’s opposition was political. “There is no credible analysis in the inter-agency that supports Biden,” said one former US official familiar with the internal debate.
The above from the Financial Times.
U.S. Steel Workers Rally for Nippon Steel
The Pittsburg Post-Gazette reports U.S. Steel Workers Rally for Nippon Steel
Hundreds of steelworkers braved freezing temperatures to rally Thursday afternoon for the imperiled $15 billion takeover of U.S. Steel by Nippon Steel as President Joe Biden and President-elect Donald Trump continue to oppose the sale.
Speakers described the Japanese investment as crucial to the future of Mon Valley Works facilities and urged federal officials and United Steelworkers President David McCall to visit the plants and speak with impacted workers.
“Without this deal with Nippon Steel, we will be the last generation to work here at this historic steel plant,” said Brian Pavlack, a third-generation steelworker and member of the USW local in Clairton.
“I also want to call out Senator [John] Fetterman for not backing the sale. You go on national television and you say you’re with the steelworkers and live across the street from the [Edgar Thomson] plant. I’m telling you now, Mr. Fetterman, 90% or more of the steelworkers are for the sale.”
Nippon Steel Bid Agreement
- Nippon would invest $2.7 billion in union-represented local steel facilities. This would allow the US to better compete against China.
- The merger would give American manufacturers access to high-quality, domestically produced steel.
- The merger would strengthen ties with key allies
- The merger would increase US competition within the US, while keeping production here.
- As a result of the above, the merger would produce stronger, cleaner, more advanced steel here at home for the benefit of American consumers and at a cheaper price due to investments.
On December 14, I commented Biden and Trump are Both Wrong on US Steel Nippon Merger
President Biden will block the merger of US Steel and Nippon based on alleged national security risks. It’s really the opposite.
Last year, steelmaker Cleveland Cliffs offered $8.3 billion for USS. The union supported that bid, but the company rejected it. Automakers wrote to Congress, complaining that the combined company would control 65-90% of automotive steel. This is not the case with the Nippon bid.
Read that last paragraph again. US automaker unions want the Nippon deal because the Cleveland Cliffs counter offer would create a steel monopoly.
It’s that steel monopoly that is the national security risk, not the Nippon merger.
Merger Would Lower National Security Risks
Cleveland Cliffs merger would have control 100% of blast furnace production in the U.S. and 65% to 90% of domestic steel used in vehicles.
That’s the real security threat.
U.S. Steel workers support the Nippon merger, so does Gary Indiana, and so does anyone with an ounce of common sense including UAW workers who fear higher prices for cars.
The investment by Nippon into more advanced processes would lower prices and increase competition.
My December 14 Comment
What to Expect
Currently, Trump and Biden both say they are against the deal despite the wishes of U.S. steel workers, the UAW, and common sense.
It’s a case of politics over genuine US interests.
The US already has the among the highest prices for steel in the world. The last thing the US needs is higher prices for cars that are already hugely unaffordable.
Even the autoworkers’ unions see that.
Politics and political union pandering triumph over common sense. On union pandering, Trump is as bad a Biden. And the US will be less secure as a result.