US Steel deal with Nippon riles Biden allies

Troubled times: A statue of Joe Magarac in front of the US Steel’s Edgar Thomson mill in Braddock, Pennsylvania. The United Steelworkers is urging US regulators to scrutinise Nippon’s takeover of the iconic American company. — Bloomberg

WASHINGTON: A Japanese company’s agreement to purchase United States Steel Corp has thrust a political dilemma into President Joe Biden’s lap during a re-election bid that runs through America’s manufacturing heartland.

Pittsburgh-based US Steel announced Monday that it would be taken over by Nippon Steel Corp after an offer of US$14.1bil that exceeded analysts’ expectations. The company had not been considered a frontrunner for the sale.

In another era, a lucrative offer from a company in a friendly country might be viewed as benign, even one for US Steel, an icon of American manufacturing in its heyday.

But the political overlays are heavy and could prompt the President to try to slow, amend or even kill the deal, which has quickly garnered opposition from vulnerable swing-state Democrats and other Biden allies ahead of next year’s election.

White House Press Secretary Karine Jean-Pierre said on Tuesday that Biden is aware of the deal and that it could face regulatory review, without elaborating. She emphasised the president supports steel workers and believes in competition.

“Given this could potentially be a regulatory review, I’m not going to speak to any specifics of this transaction,” Jean-Pierre said.

Shares of US Steel fell as much as 3% to a session low of US$48.10 after the White House’s comments, signalling a potential regulatory headwind for the transaction, before nudging back up. Nippon agreed to buy US Steel at US$55 a share.

A Bloomberg News-Morning Consult poll published this month showed Biden trailing Donald Trump, the Republican front-runner, on questions of managing the economy as well as in key swing states like Pennsylvania and Michigan, with strong manufacturing presences.

Trump has long leveraged the steel industry politically and economically and imposed tariffs to prop up domestic production.

Biden has continued that approach, generally keeping steel tariffs in place and going toe-to-toe with Trump in appeals to blue-collar workers and pledges to rebuild American manufacturing.

“Where is it written that America will not lead the world in manufacturing?” Biden said this in a Labour Day speech earlier this year.

The American steel industry produced 89 million tonnes in 2022, according to data from the American Iron and Steel Institute.

US Steel represents almost 17% of that, with mills scattered across crucial political battlegrounds. Steelworkers are also emblematic of the blue-collar union worker, whose backing Biden regularly credits for his 2020 victory.

Biden signalled his support for steelworkers in 2020 by riding a train from Ohio to Pittsburgh with then-United Steelworkers (USW) president Tom Conway.

Now, USW is among the opponents of the deal, calling it “greedy” and “shortsighted”.

Retiring West Virginia Senator Joe Manchin, who is considering a third-party White House run that would likely pull support from Biden’s voting base, also spoke out strongly against the deal.

“I am committed to doing anything I can to protect what remains of America’s steel industry and prevent any loss of good-paying American jobs,” Manchin said in a statement.

Both of Pennsylvania’s Democratic senators, including Bob Casey, who is up for re-election next year in a state Biden narrowly won in 2020, have raised concerns.

“It’s absolutely outrageous that they have sold themselves to a foreign nation and a company,” the state’s other senator, John Fetterman, said in a video recorded on Monday.

Fetterman pledged to do anything in his power to block the project.

Another vulnerable Democrat up for re-election in 2024, Ohio Senator Sherrod Brown, also opposed it, citing “grave concerns,” as did the state’s Republican senator, JD Vance.

In Michigan, Democratic Representative Elissa Slotkin, who is running for the Senate, also spoke out against the deal.

The Ohio, Pennsylvania and Michigan Senate races will be among the country’s most hotly contested, and the latter two are pivotal for Biden, who won both states in 2020 after Trump won them in 2016. US Steel has operations in both states.

Biden hails from Pennsylvania. He was born in Scranton before his family moved to the steel town of Claymont, Delaware, in search of work, an odyssey that forged Biden’s outrage about American manufacturing jobs being shipped overseas.

Steel has increasingly become a sector treated as a national security priority. It’s heavy and therefore expensive to ship across oceans. — Bloomberg

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