Semafor Signals
Behind Biden’s opposition to US Steel-Nippon deal
The News
U.S. President Joe Biden on Thursday opposed Japanese company Nippon Steel’s $14.1 billion bid to buy U.S. Steel, a controversial deal that is already under a national security review.
“U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated,” Biden said in a statement.
Reports that Biden was set to come out against the deal sent U.S. Steel’s stock tumbling on Wednesday. The president didn’t say whether he would block the merger.
SIGNALS
Nippon deal has become an election year issue
The deal could have ordinarily been billed as a chance for a company from Japan — a U.S. ally — to revitalize U.S. Steel and jointly take on China’s industrial might. Instead, the election-year timing has made it controversial, with Donald Trump pledging to kill the deal if he wins back the White House. The sale “would have drawn less public scrutiny” outside of an election year in which Biden and Trump are both promoting American manufacturing, Bloomberg wrote. The merger is facing “a much more difficult chance of going through now. … It’s an alarming precedent that the US government is setting,” an analyst at Wolfe Research said.
US Steel competitor trying to kill deal
Cleveland-Cliffs, a U.S. Steel competitor that tried to buy the company last year, is working behind the scenes to kill the Nippon deal, primarily by making it an election issue, The Wall Street Journal reported. Cleveland-Cliffs also formed an unlikely alliance with the United Steelworkers union, which opposed the sale to a “foreign-owned company.”
While Nippon has said it won’t lay off hourly workers through at least 2026, Cleveland-Cliffs and its lobbyists have warned lawmakers that plants in Pennsylvania, Indiana, and other states could see cuts. During one private call with investors, Cleveland-Cliffs’ CEO “appeared to mock the Nippon Steel executives while speaking with what sounded to two people on the call like a Japanese accent,” The Journal reported.
