U.S. Steel is an iconic example of lost manufacturing power that President Biden says his economic policies will bring back to the United States.
But last month, the famous but vulnerable company announced plans to be acquired by a Japanese competitor. That development has put Mr. Biden in an awkward bind as he tries to balance efforts to revive the country’s industrial sector with his efforts to rebuild international alliances.
Mr Biden’s administration has expressed some discomfort with the deal and is reviewing a $14.1 billion takeover bid proposed by Japan’s Nippon Steel. The company is making an offer heavy premium For US steel, which has struggled to compete against a flood of cheap foreign metal Weighing takeover offers for several months,
The proposal has quickly become a high-profile example of the tough political choices Mr Biden faces in his zeal to revive American industry, which could test to what extent he can act as president. Ready to use the power of position, which is probably their primary goal. Economic goal: Creation and retention of high-paying union manufacturing jobs in the United States.
Mr Biden is under pressure from the United Steelworkers union and populist senators from both parties, including Democrats defending key swing seats in Ohio and Pennsylvania this fall, to cancel the sale on national security grounds. The senators argue that domestically owned steel production is vital to American manufacturing and supply chains. They warn that a foreign owner may be more likely to move U.S. steel jobs and production overseas.
“This really shouldn’t be a simple thing,” Republican Senator Josh Hawley of Missouri said in an interview last week. “I don’t know why it would be difficult to say, oh my God, we have to maintain steel production in this country, and especially at a company like this, where you have thousands of workers in good union jobs.”
US Steel executives say the deal will benefit workers and give the merged companies “world-leading capabilities” in steel production. He announced last month that Nippon Steel had agreed to keep the company’s headquarters in Pittsburgh and a four-year deal. collective bargaining agreement The Steelworkers Union confirmed this in December 2022.
Other supporters of the takeover bid say blocking the sale risks angering a key US ally. Mr Biden has praised Japanese cooperation on a range of issues, including efforts to counter Chinese manufacturing in clean energy and other emerging technologies, and welcomed Japanese investment in new US manufacturing facilities, including advanced batteries.
Wilbur Ross, a former steel company executive who worked for President Donald J. Served as Commerce Secretary under Trump, wrote last week The Wall Street Journal stated that “There is nothing in the deal that the US needs to defend.” Attacks by Washington pols only create unnecessary geopolitical tension, and they, not the takeover, could jeopardize US national security.
Adding mutual pressure on Mr. Biden: It’s not clear what would happen to 123-year-old U.S. Steel if the administration cancels the deal, and whether doing so would actually create more jobs for the company’s roughly 15,000 North American employees. Security will be guaranteed. ,
U.S. steel has faced challenges for decades because of foreign competition, especially from China, which has flooded the global market with cheap, state-subsidized steel. American Presidents spent years Efforts are being made to strengthen and protect domestic steelmakers through a mix of subsidies, import restrictions and so-called Buy America requirements for government purchases.
“No American industry has benefited more from protections than the steel industry,” Scott Lincicome, a trade policy expert at the libertarian Cato Institute think tank, wrote in an article. 2017 research paper,
In recent years, presidents have expanded those protections even further. Mr Trump imposed tariffs on imported steel, including from Japan. Mr Biden has partially rolled back those tariffs in an effort to rebuild the coalition. Mr. Biden also included strict Buy America provisions in sweeping new laws to spur investment in infrastructure, clean energy and other advanced manufacturing.
Those efforts have not come close to restoring the level of domestic steel production that the United States achieved in the 1970s or even in recent decades. crude steel production reached high level Compared to Mr. Biden or Mr. Trump, Presidents Bill Clinton, George W. Under Bush and Barack Obama.
Employment in the industry declined steadily between the mid-1990s and 2000s. In 2022, there were just over 83,000 employees Iron and steel mills in the United StatesWhich was less than half the number from 1992.
Senators including Sherrod Brown of Ohio and Bob Casey of Pennsylvania, both Democrats, and Mr Hawley and JD Vance of Ohio, both Republicans, urged Mr Biden to review proposed US steel sales to protect against the loss of steel production and jobs. Did. Mr. Brown cited Nippon Steel’s failure to inform or consult union leaders before bidding for the company.
“Thousands of Americans, including many in Ohio, rely on this industry for good-paying, middle-class jobs,” he wrote in a letter to Mr. Biden last month. “These employees deserve to work for a company that invests in its employees and not only respects their right to join a union, but respects its workforce and collaborates with them.”
Demands for an administrative review of the deal focused primarily on the Committee on Foreign Investment in the United States, known as CFIUS and chaired by Treasury Secretary Janet L. Yellen. The committee investigates potential sales of American companies to foreign companies for potential national security threats, then issues recommendations to the President, who can suspend or block any deals.
Shortly before Christmas, Mr Biden appeared to acknowledge the request for a review, but stopped short of saying he would stop it.
Lael Brainard, chairman of the White House National Economic Council, said in a news release that Mr. Biden has welcomed foreign investment in American manufacturing, but he believes this iconic American-owned company would be bought by a foreign entity. Even from a close associate. – It appears that this should be seriously investigated in terms of its potential impact on national security and supply chain reliability.
The administration “will stand ready to carefully consider the findings of any such investigation and take action if appropriate,” Ms. Brainard said.
Steelworkers appreciated the move. David McCall, president of United Steelworkers International, said in a statement that Mr. Biden was “once again demonstrating the President’s unwavering commitment to domestic workers and industries.”
Independent experts say it would be wise for the committee to evaluate the sale in line with historical norms. This will likely include a detailed economic analysis of whether the deal could reduce steel production capacity in the United States, said Emily Kilcrease, a CFIUS expert and senior fellow at the Center for a New American Security.
But Ms. Kilcrease said that based on the committee’s past decisions, she expected the review to stop well before a recommendation to end the sale. Instead, he said, CFIUS could require an agreement from Nippon Steel to maintain certain levels of U.S. employment or production as a condition of the sale.
“I would be shocked if this deal stopped,” he said.
Mr Hawley said the election was ultimately Mr Biden’s – and a test of his commitment to the industry.
“If the administration wants to stop the sale, they certainly have the grounds and the legal authority to do so,” he said. “So it’s just a question of whether they want to do it? And will they have the courage to do so?”