White House officials are signaling that President Joe Biden will not imminently move to block Nippon Steel’s bid to acquire U.S. Steel amid mounting concerns over the political and economic consequences of nixing the deal, according to three people with knowledge of the matter.
The White House last week had been preparing to announce that the president would formally block the Japanese company’s proposed $14.9 billion acquisition of U.S. Steel on national security grounds. But after vocal opposition to the idea, White House officials have now indicated that such a decision is unlikely in the short term and may not be made until after the 2024 presidential election, according to the people, who spoke on the condition of anonymity to describe confidential conversations.
The president remains opposed to the deal, officials said. No announcement was ever scheduled. But the pace of internal deliberations has slowed.
White House spokeswoman Saloni Sharma disputed that there had been a change of plans, saying an announcement was never imminent and that the president remains committed to waiting for a recommendation from an interagency review board, as the law requires.
The delay of any announcement, however, comes as investors, Pennsylvania Democrats and some members of the steelworkers’ union warned that the deal’s collapse could spark an economic calamity for Pennsylvania’s beleaguered steel belt.
Shares of U.S. Steel have risen by more than 12 percent over the past two days of trading, as investors grew more optimistic that the deal would survive.
“People certainly don’t think we’re where we were Tuesday of last week. Everybody was like: ‘We’re dead. It’s over. We’re done.’ There’s definitely a sense we’ll probably get a chance to fight til November 5th. What happens Nov. 6 is still up in the air,” said one U.S. Steel shareholder, who supports the merger and who spoke on the condition of anonymity to discuss a politically controversial subject.
The United Steelworkers union, which endorsed Biden for reelection and endorsed Vice President Kamala Harris in her presidential bid, has opposed the transaction from the outset.
White House officials have said they are waiting for a recommendation from the Committee on Foreign Investment in the United States (CFIUS), the interagency board that reviews foreign transactions for national security implications. The panel is chaired by Treasury Secretary Janet L. Yellen and includes six other Biden cabinet secretaries as well as other political appointees who take direction from the president.
Since March, Biden has publicly opposed U.S. Steel being owned by a foreign firm.
“The president’s position is that it is vital for US Steel to remain an American steel company that is domestically owned and operated. The President told our steelworkers he has their backs, and he meant it,” Sharma said in a written reply. “As we made clear last week, we have not received any recommendation from CFIUS.”
The proposed corporate acquisition has assumed outsize importance given its potential political impact on the 2024 election.
Biden’s opposition to Nippon Steel’s acquisition of the once-iconic U.S. Steel aligned with the position of the United Steelworkers union. David McCall, president of the labor organization, has described the deal as a threat to his members’ long-term job prospects and pension security.
But a move that the White House may have hoped would bolster its chances of winning Pennsylvania’s 19 electoral votes has instead triggered significant opposition among Democrats in western Pennsylvania’s steel belt.
“The White House was prepared to act precipitously and I think they were surprised by the pushback they got from all quarters,” said one person close to the process, who spoke on the condition of anonymity because they were not authorized to speak to the media.
On Thursday, USW leadership told its members that Nippon Steel would favor U.S. Steel’s nonunion operations in Arkansas rather than its unionized workforce that operates Pennsylvania’s traditional blast furnaces.
But in towns near Pittsburgh, many steelworkers and their neighbors were upset by word of the president’s apparent plan to kill the deal, which they see as the best chance for U.S. Steel’s outdated mills to survive.
“Nobody from his administration, or any of the administrations, have bothered to come to talk to the workers, the ones that are going to be affected by this,” said Democrat Chris Kelly, mayor of West Mifflin, Pa., home to one of the U.S. Steel facilities that Nippon Steel has pledged to modernize.
Without Nippon Steel’s cash, U.S. Steel has warned that it might close some of its aging facilities in the Mon Valley. The loss of such an important corporate employer and taxpayer would result in tax increases on other businesses or a reduction in public services, he said.
“Everybody in the country is not one issue. But when you’re at a swing state, right now the biggest issue in this state is U.S. Steel. It could cost the election in Pennsylvania,” Kelly said.
The company’s share price plummeted Sept. 4 in the wake of news reports that Biden had decided to kill the Nippon Steel takeover. U.S. Steel stock lost roughly a quarter of its value that day in 30 minutes of trading as investors absorbed the news.
Over the past week, the White House heard from business community representatives and the Japanese government about the likely negative fallout from the president’s decision to quash the deal. Pennsylvania Gov. Josh Shapiro (D) and his team have also been in communication with the administration, and “his top priority has been protecting Pennsylvania workers,” said Manuel Bonder, a spokesman for the governor.
In the Mon Valley, a few miles southeast of Pittsburgh, the company’s steelmaking heritage dates to 1901. Nippon Steel has promised to spend $1 billion updating the facilities there, including by replacing a mill that produces steel to make automobiles and appliances.
“This deal is very important to the community. There’s a big disconnect between local elected officials here and what seems to be our federal representatives,” said Republican Sam DeMarco, an at-large councilman in Allegheny County, home to the steelmaker’s Mon Valley Works.
About 11,500 local residents either work for U.S. Steel or for local businesses that depend on its plants, he said.
“It would be devastating to see them leave,” DeMarco said.
U.S. Steel CEO David Burritt warned on Sept. 4 that there would be “unavoidable consequences” if Nippon Steel’s $14.9 billion bid collapsed. “Thousands of good-paying union jobs” would be in danger, according to a company statement.
Also at stake are $2.7 billion that the Japanese company has pledged to invest in U.S. Steel’s aging facilities as well as the company’s commitment to keeping its headquarters in Pittsburgh.
The business community also raised concerns this week about the president’s handling of the deal. In a Sept. 11 letter to Yellen, the CFIUS chair, seven business groups — six from the United States and one from Japan — complained that “political pressure” was corrupting the government’s review of the Nippon Steel deal.
If the U.S. routinely approved or rejected proposed investments by foreign companies on the basis of domestic political concerns, other countries would do the same to American businesses, said the letter from groups including the U.S. Chamber of Commerce and the Global Business Alliance.