US Steel is an iconic example of the lost manufacturing muscle that President Biden believes his economic policies will bring back to the United States.
But last month, the storied but dwindling company announced plans to be acquired by a Japanese competitor. That development has put Biden in an awkward position as he tries to balance attempts to revitalize the country’s industrial sector with his efforts to rebuild international alliances.
The Biden administration has expressed some discomfort with the deal and is reviewing the proposed $14.1 billion takeover bid by Japan’s Nippon Steel. The company is offering a hefty premium for US Steel, which has struggled to compete against an avalanche of cheap foreign metal and has been weighing takeover offers for several months.
The proposal has quickly become a high-profile example of the difficult policy decisions Biden faces as he seeks to revive American industry, one that could test how far he is willing to wield presidential power in pursuit of what he wants. It could be said that it is its main objective. economic objective: the creation and retention of well-paying, unionized manufacturing jobs in the United States.
Biden is under pressure from the United Steelworkers union and populist senators from both parties, including Democrats defending crucial seats in Ohio and Pennsylvania this fall, to reject the sale on national security grounds. The senators maintain that domestically owned steel production is critical to America’s manufacturing and supply chains. They have warned that a foreign owner is more likely to move US Steel jobs and production overseas.
“This really should be a no-brainer,” Sen. Josh Hawley, R-Mo., said in an interview last week. “I don’t know why it would be difficult to say, Oh my God, we have to keep steel production going in this country, and particularly in a company like this, where there are thousands of workers in good union jobs.”
US Steel executives say the deal would benefit workers and give the merged companies “world-leading capabilities” in steel production. They announced last month that Nippon Steel had agreed to keep the company’s headquarters in Pittsburgh and honor the four-year collective bargaining agreement that the steelworkers union ratified in December 2022.
Other supporters of the takeover bid say blocking the sale risks angering a key U.S. ally. Biden has sought Japanese collaboration on a wide range of issues, including efforts to counter Chinese manufacturing in clean energy and other emerging technologies, and welcomed Japanese investment in new American manufacturing facilities, including those for advanced batteries.
Wilbur Ross, a former steel company executive who was Commerce Secretary under President Donald J. Trump, wrote last week in The Wall Street Journal that there is “nothing in the deal that should defend the United States. Attacks by Washington politicians only create unnecessary geopolitical tensions, and these, not the acquisition itself, could endanger American national security.”
Adding to the cross-pressure on Biden: It’s unclear what would happen to 123-year-old US Steel if the administration scuttles the deal and whether doing so would actually ensure greater job security for the company’s nearly 15,000 North American employees. .
US Steel has faced challenges for decades due to intensifying foreign competition, particularly from China, which has flooded the global market with cheap, state-subsidized steel. American presidents have spent years trying to bolster and protect domestic steelmakers through a combination of subsidies, import restrictions and so-called Buy America requirements for government purchases.
“No American industry has benefited more from protection than the steel industry,” Scott Lincicome, a trade policy expert at the libertarian think tank Cato Institute, wrote in a 2017 research paper.
In recent years, presidents have further increased those protections. Trump imposed tariffs on imported steel, including that from Japan. Biden has partially rolled back those taxes in an attempt to rebuild alliances. Biden also included tough Buy America provisions in sweeping new laws to invest in infrastructure, clean energy and other advanced manufacturing.
Those efforts have not come close to recovering the levels of domestic steel production that the United States enjoyed in the 1970s, or even in recent decades. Crude steel production reached higher levels under Presidents Bill Clinton, George W. Bush and Barack Obama than under Biden or Trump.
Employment in the industry fell steadily in the 1990s and mid-2000s. In 2022, there were just over 83,000 workers in U.S. steel mills, less than half the number in 1992.
The senators, including Sherrod Brown of Ohio and Bob Casey of Pennsylvania, both Democrats, and Hawley and JD Vance of Ohio, both Republicans, urged Biden to review the proposed US Steel sale to protect against the loss of steel production and jobs. Mr. Brown cited Nippon Steel’s failure to notify or consult union leaders before submitting its bid for the company.
“Tens of thousands of Americans, including many Ohioans, depend on this industry for good-paying, middle-class jobs,” he wrote in a letter to Biden last month. “These workers deserve to work for a company that invests in its employees and not only honors their right to join a union, but respects and collaborates with its workforce.”
Calls for an administrative review of the deal focused largely on the Committee on Foreign Investment in the United States, known as CFIUS and headed by Janet L. Yellen, the Treasury secretary. The committee examines potential sales by U.S. companies to foreign companies for possible threats to national security and then issues recommendations to the president, who can suspend or block a deal.
Shortly before Christmas, Biden appeared to agree to the review request, although he stopped short of saying he would block it.
Lael Brainard, who chairs the White House National Economic Council, said in a news release that Biden welcomed foreign investment in the American manufacturing industry, but “believes that the purchase of this iconic American-owned company by from a foreign entity, even one from a close ally – appears to merit serious analysis in terms of its potential impact on national security and supply chain reliability.”
The administration, Brainard said, “will stand ready to carefully examine the results of any such investigation and act if appropriate.”
Steelworkers applauded the move. David McCall, president of United Steelworkers International, said in a statement that Biden was “once again demonstrating the president’s unwavering commitment to workers and domestic industries.”
Independent experts say it would be within historical norms for the committee to evaluate the sale. That will likely include a detailed economic analysis of whether the deal could lead to a decline in U.S. steel production capacity, said Emily Kilcrease, a CFIUS expert and senior fellow at the Center for a New American Security.
But Kilcrease said that based on the committee’s past decisions, he hoped the review would not reach a recommendation to cancel the sale. Instead, he said, CFIUS could require an agreement from Nippon Steel to maintain certain levels of employment or production in the United States as a condition for the sale to go ahead.
“I would be surprised if this deal was blocked,” he said.
Hawley said the choice was ultimately Biden’s and a test of his commitment to the industry.
“If the administration wants to block the sale, it absolutely has reason to do so and legal authority,” he said. “So it’s just a question of: do they want to do it? And will they have the guts to do it?
