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Joe Biden declared his opposition to Nippon Steel’s proposed $14.9 billion purchase of US Steel, saying it was “vital” for the American steel company to remain “nationally owned and operated.”
In a statement released on Thursday, the US president called his decision an attempt to stand with American workers, at a time when he is under pressure in his re-election campaign to retain the workers’ vote despite aggressive courting by part of his Republican rival Donald Trump.
But the statement risks damaging Washington’s relations with Japan, one of its closest allies, at a time when the United States is trying to rally allies and partners in the region to contain an often belligerent regime in Beijing.
“It’s important to maintain strong American steel companies powered by American steel workers,” Biden said. The White House said Biden called David McCall, international president of the United Steelworkers union, on Thursday to “reiterate that he has the steelworkers’ back.”
Biden has described himself as the most pro-union president in US history and is counting on support from organized labor in November. US Steel shares fell nearly 2.5% in late morning trading Thursday, after falling more than 12% on Wednesday.
Biden’s intervention comes a day after the Financial Times first reported that he was preparing to voice concerns about the Japanese group’s proposed takeover of the Pennsylvania-based steelmaker.
Nippon Steel last week formally submitted the deal to the Committee on Foreign Investment in the United States, the interagency panel that reviews inbound deals for national security threats. Biden’s intervention raises questions about how CFIUS will proceed with its investigation.
“Based on past practice, it is likely that CFIUS would have been on track to close the deal, likely with some conditions tied to protecting domestic steel production and related jobs,” said Emily Kilcrease, an expert on the Cfius at the Center for a New American Security Think tank. “But, with the president’s statement opposing the deal, Cfius is potentially in the awkward position of having to reverse engineer its risk assessment to fit a politically determined outcome.”
The move comes less than a month before Japanese Prime Minister Fumio Kishida arrives in Washington for a high-profile visit designed to highlight the importance of the U.S.-Japan alliance.
Heino Klinck, a former senior Pentagon Asia official, said the timing of Biden’s statement was “inopportune to say the least” given Kishida’s visit. He said it also came as Congress debated legislation to ban TikTok and could fuel a Chinese government narrative about xenophobia in the United States.
The move caps months of debate within the White House over how to respond to a deal that has triggered a political backlash in Washington and Pennsylvania, a critical swing state.
Trump, who has also courted union workers in Pennsylvania and other major industrial states, vowed last month to “absolutely” block the deal with Nippon Steel if elected to another term in the White House.
“I would block him in an instant. Absolutely,” he told reporters after meeting last month with the International Brotherhood of Teamsters, one of the largest U.S. unions. Trump said it was a “horrible thing” that US Steel could be sold to a foreign entity.
“We saved the steel industry, now US steel is bought by Japan,” Trump added. “It’s so terrible.”
The United Steelworkers, which is based in Pittsburgh, has long opposed the takeover.
“Allowing one of our nation’s largest steel producers to be purchased by a foreign-owned company leaves us vulnerable when it comes to meeting both our defense and critical infrastructure needs,” the United Steelworkers said Thursday. “The President’s Statements Should End the Debate: US Steel Must Remain ‘Nationally Owned and Operated’.”
Bob Casey, the Democratic U.S. senator from Pennsylvania, also facing a tough re-election bid in November, immediately welcomed Biden’s statement, saying: “Pennsylvania workers are industry’s greatest asset American steel industry”.
Casey said he had “long feared that this sale would be a bad deal for our workers.”
Casey, who is likely to run against Republican candidate and former Bridgewater executive David McCormick in November, added that his “number one priority” is “protecting union jobs,” adding: “I will work like crazy against any deal that leaves our steelworkers behind.”