President Biden said Thursday that he opposed Nippon Steel’s proposed acquisition of U.S. Steel, an extraordinary move that comes as a federal panel continues its review of the transaction for any potential effect on national security.
“It is important that we maintain strong American steel companies powered by American steel workers,” Biden said in a statement. “I told our steel workers I have their backs, and I meant it. 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.”
The president’s intervention in the transpacific deal, which threatens to upend relations with one of the United States’ closest allies, comes less than a month before Japanese Prime Minister Fumio Kishida is scheduled to arrive in Washington for a state visit. Biden’s statement drew an immediate rebuke from the U.S. Chamber of Commerce, which accused him of politicizing the deal review and said his remarks sent a “chilling signal” to other foreign companies considering investing in the United States.
Shares of U.S. Steel have lost roughly 18 percent of their value since the president’s stance became public on Wednesday. Nippon Steel has dropped about 2 percent.
Biden’s statement follows a meeting last week between Nippon Steel executives and representatives of the United Steelworkers union, which has publicly opposed the $14.9 billion deal. Prominent lawmakers in both parties also have objected to the purchase by a foreign company of a once-iconic U.S. industrial power.
In January, former president Donald Trump, Biden’s likely opponent in November, said of the deal that he would “block it instantaneously” if he returned to the White House.
Administration officials have informed the Japanese government of Biden’s plans, explaining the statement in terms of his need to retain political support in Pennsylvania in the November election, said one industry source, who spoke on the condition of anonymity to comment on internal deliberations. On Thursday, a Fox News poll showed Trump leading Biden in the key swing state 49 percent to 47 percent.
Biden won Pennsylvania in 2020, beating Trump by more than 80,000 votes. Support from organized labor, especially the United Steelworkers, was critical in winning the Keystone state for Biden, who often boasts of being “the most pro-union president in American history.”
The union has returned the affection. This month, USW President David McCall praised Biden’s efforts to promote domestic manufacturing and infrastructure.
“President Biden delivered win after win for working people during his first three years in office, and USW members look forward to working with him as he continues his fight to grow the middle class and an economy for all,” McCall said in a statement.
In December, Lael Brainard, director of the National Economic Council, said Nippon Steel’s bid for U.S. Steel deserved “serious scrutiny.”
A presidential statement before the Committee on Foreign Investment in the United States completes its assessment of the deal’s national security implications is unusual.
“I am unaware of any president preemptively signaling he may oppose an acquisition that is undergoing national security review, much less an acquisition by a company from a treaty partner that we are obligated to defend with U.S. troops,” said Dan Price, managing director at Rock Creek Global Advisors, who was the top White House official on international trade and investment during the George W. Bush administration.
The Treasury-led CFIUS review, which includes representatives of the Defense Department and the intelligence community, is intended to be “apolitical,” said Nancy McLernon, chief executive of the Global Business Alliance, which represents foreign-owned companies in the United States.
“Japan is a strategic ally and the largest foreign investor in the United States, directly employing nearly 1 million American workers. Facts I hope the administration keeps in mind when preparing for next month’s state visit,” she said in an email.
Controversy over the Nippon Steel proposal also illustrates tension at the heart of Biden’s international economic policy. In August, the White House celebrated an increase in foreign investment in U.S. factories. But Nippon Steel’s intention to do the same has stirred presidential unease largely because of domestic political factors.
The steel industry has traditionally been one of the most protected U.S. markets. In 2018, Trump, then president, imposed 25 percent tariffs on imported steel. Biden later agreed with the European Union to allow imports of European steel up to a certain level before the tariffs would apply.
U.S. Steel’s name holds a special place in the nation’s economic history. The company was the nation’s first billion-dollar corporation after its founding in 1901 through a merger of steel companies led by legendary business executives, including John D. Rockefeller.
The output of its blast furnaces formed the tanks, planes and aircraft carriers that helped win World War II, as well as the automobiles and appliances that consumers purchased during the postwar boom.
U.S. Steel today is just the third-largest steelmaker in the nation by revenue, behind Cleveland-Cliffs and Nucor, and it employs fewer than half as many workers as it did 20 years ago. The company has lost money in nine of the past 15 years.
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