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Joe Biden has thrown his support behind an investigation of Nippon Steel’s purchase of US Steel on national security grounds, despite Japan’s status as one of Washington’s closest allies.
Nippon’s proposed $14.9bn acquisition of the Pittsburgh-headquartered steel producer has sparked a bipartisan backlash in Washington and raised a political dilemma for Biden, who has cast himself as a champion of American jobs and the most pro-union US president in decades.
Lael Brainard, Biden’s national economic adviser, said on Thursday that the US president believed that “the purchase of this iconic American-owned company by a foreign entity — even one from a close ally — appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability”.
US Steel has plants in Pennsylvania and Michigan, two states Biden is likely to need to win to clinch re-election in November. White House support of the investigation comes as Biden has been touting sweeping efforts to rejuvenate rust-belt communities stricken by decades of deindustrialisation.
Brainard added that the deal was the “type of transaction” that the Committee on Foreign Investment in the United States, the inter-agency panel that vets deals for national security threats, was set up to investigate. The administration would look carefully at the findings of any Cfius investigation and “act if appropriate”, she said.
The United Steelworkers, a labour union that endorsed Biden in 2020, was “an example of why union leadership is critical in building the economy from the middle out and bottom up”, Brainard said in her statement.
The union welcomed Brainard’s intervention. “Our union shares many of the concerns expressed in today’s White House statement, including how this deal may impact the future of domestic steel production,” said David McCall, its international president.
Nippon Steel has already pledged to honour collective bargaining agreements and other employee commitments with the union, which represents 850,000 US manufacturing workers. In a statement to the FT, the company said that it believed the acquisition “will be beneficial to all stakeholders.”
“We look forward to engaging in dialogue with and seeking the understanding of relevant stakeholders throughout the process, including government authorities,” it added on Friday.
When asked about the US calls for an investigation, Japan’s chief cabinet secretary Yoshimasa Hayashi declined to comment on what he described as a “an individual company’s management issue”.
“The Japan-US alliance is stronger than ever,” Hayashi said at a news conference, adding that the two countries will continue to co-operate in various areas including economic security.
The Biden administration said on Tuesday that more than 200,000 jobs had been created amid an industrial investment boom triggered by the passage of the Inflation Reduction Act last year.
Nippon Steel’s bid has drawn cross-party concern in Washington, despite some local support in Pittsburgh. This week, three Republican senators sent a letter to Treasury secretary Janet Yellen asking for Cfius to launch a review of the deal. Jon Fetterman, a Democratic senator from Pennsylvania, has also vowed to stop a sale.
The Japanese company has agreed to pay $55 a share for US Steel. The stock, which had been trading below $40 before the bid was announced, closed on Thursday at $48.16.
Additional reporting by James Politi in Washington
