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 planned state visit.
Shares of U.S. Steel plunged almost 13 percent Wednesday on the reports. Nippon Steel rose 2 percent.
Word of the president’s plans 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 buyer 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 returned to the White House.
Administration officials have informed the Japanese government of the president’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 described the matter on the condition of anonymity to comment on internal deliberations.
Biden won Pennsylvania in 2020, beating Trump by more than 80,000 votes in the key swing state. 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 steelworkers union has returned the affection. This month, USW President David McCall praised the president’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 the American company deserved “serious scrutiny.”
Any presidential statement before CFIUS completes its assessment of the deal’s national security implications would be 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 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 lost money in nine of the last 15 years.
