It may not matter that presidential hopefuls Donald Trump and Kamala Harris both want to stop a Japanese company from acquiring U.S. Steel. That’s because current President Joe Biden is beating them to it.
According to multiple reports, Biden plans to block the $15 billion deal between Japan’s Nippon Steel and U.S. Steel on the grounds of national security. This would be an unprecedented move with such a close U.S. ally.
Presidents have used this path to previously block foreign transactions on national security risks eight times in history. Seven of those were from Chinese companies and an eighth was a Singaporean company with close ties to China and China’s Huawei. Blocking the Nippon Steel-U.S. Steel sale would make the ninth such block in history.
The stock price for U.S. Steel plunged around 20% late Wednesday, Aug. 4, when reports first came out about Biden’s supposed plans. At the same time, the company was wrapping up a rally in downtown Pittsburgh in support of the Nippon deal.
“It is time to put politics aside and do what’s right for you and all of the other steelworkers in Pennsylvania. So let’s make sure that we protect our jobs, we protect our communities and our future. Let’s close this deal,” said Scott Buckiso, a senior vice president at U.S. Steel.
U.S. Steel said without the transaction, the company “will largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk… and depriving the American steel industry of an opportunity to better compete on the global stage.”
However, the United Steelworkers union has pushed back against the transaction, accusing Nippon Steel of sidestepping engagement with union workers.
U.S. Steel is headquartered in Pittsburgh, Pennsylvania, where politicians are courting Pennsylvania voters, a critical battleground state in the upcoming election. United Steelworkers endorsed Kamala Harris for president, just as it did Joe Biden earlier this year, days after he came out against the Nippon Steel purchase.
On Thursday, Aug. 5, Japanese minister and prime ministerial candidate Taro Kono said, “Perhaps it is the presidential election and everyone wants the labor union vote, but I would hope that the market will not be distorted by such a situation.”
He said governments should not intervene in deals arbitrarily.
This past weekend, the Biden administration warned Nippon Steel in a letter that the U.S. Steel acquisition would pose a national security risk, according to exclusive reporting by Reuters. The Committee on Foreign Investments in the United States, which is investigating the deal, said it would “damage American steel production and decrease the likelihood that U.S. Steel would continue to aggressively seek trade remedies,” Reuters reports.
“I personally remain extremely engaged in trade matters today, and Nippon steel plans it to continue just that way, as we always have done,” said Rob Kopf, vice president of sales at U.S. Steel. “[Nippon Steel is] committing massive dollars to this country and to this company, and we cannot afford to let the countries who have utter disregard for fair trade, like China, who try to export their own economic woes and their unemployment problems to the United States, to wipe out U.S. Steel here in the USA.”
The companies at the center of the deal accuse the U.S. of acting not in fact but on the basis of politics.
President Biden first publicly opposed the deal in March, arguing U.S. Steel should remain American-owned, a sentiment shared by Harris and Trump. J.P. Morgan, Andrew Carnegie and Charles Schwab formed the company back in 1901. Under law, the president can only block the transaction after receiving the committee’s final report on national security risks.
