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Closing the tabs …

U.S. President Joe Biden officially blocked Nippon Steel’s proposed $14.9 billion purchase of U.S. Steel on Friday, citing national security concerns, dealing a potentially fatal blow to the contentious plan after a year of review. 

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Nippon paid a hefty premium to clinch the deal and made several concessions, including a last-ditch gambit to give the U.S. government veto power over changes to output, but to no avail. In a statement, Nippon and U.S. Steel blasted Biden’s decision, calling it a “clear violation of due process” and a political move, and saying they would “take all appropriate action” to protect their legal rights.

Ed: I’ve never been quite sure what to think of this proposed acquisition. It’s a rare moment when both Joe Biden and Donald Trump take the same general position, especially when it comes to foreign and/or economic policy. US Steel is fading fast and needs a partner with a strong balance sheet, but is this the right deal? I’m curious to read your thoughts in the comments later. 

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Ed: Here’s the link to the original. Mistakes like this doesn’t help in instilling trust that this is the right policy. Moreover, it highlights a key difference between these two transactions, which is that Japan is an ally. To that point …

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“Instead of just looking at national security risks, of course there’s none – it’s an ally, Japan, that’s going to invest in America, make steel here in America, build in America,” Pompeo said.

Pompeo added that while he hoped Biden would allow the deal to go forward, if the White House were to block the deal that he hoped that the incoming Trump administration, which has also expressed opposition to the deal, would “reconsider for the workers of Pennsylvania, who nearly all favor this transaction moving forward, everybody but the senior union liberal leadership… It’s good for the community and the Mon Valley.”

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Ed: Go figure that Biden and his team speak out of both sides of their mouths when dealing with strategic allies and economic partners. At least Trump makes his protectionist instincts clear.

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The decision hands a victory to the United Steelworkers union, whose leaders vociferously opposed the deal since it was announced in December 2023. Union leaders argued that Nippon Steel’s ownership of U.S. Steel would be bad for steelworkers and harm the American steel industry’s ability to produce steel. The union’s pushback kept other Democratic elected officials from endorsing the sale for fear of crossing a major political ally in organized labor.

“We’re grateful for President Biden’s willingness to take bold action,” said Dave McCall, the union’s president. “We have no doubt that it’s the right move for our members and our national security.”

Ed: True, but the election’s over now, and Democrats probably had some room to maneuver here if they so chose. 

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Nippon Steel in Japan said that it has extended the deadline for completing its acquisition of U.S. Steel, a deal worth $14.9 billion that has faced significant opposition since its announcement, Reuters reported.

The expected completion date was revised from the third or fourth quarter of 2024 to the first quarter of 2025.

Ed: This came out yesterday in anticipation of Biden’s decision. Will Nippon Steel keep its options open for negotiations with Trump? Stay tuned. 

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As Biden put it in a statement Friday morning, “It is my solemn responsibility as president to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry.” He added, “And it is a fulfillment of that responsibility to block foreign ownership of this vital American company.”

If only. Blocking the deal is just going to hurt the U.S. steel industry, and everyone in the industry, including the workers themselves, knows it. The real reason Biden stopped Nippon Steel from buying U.S. Steel was politics—a combination of placating his union allies and a misguided belief that U.S. Steel must remain in American hands at all costs. The irony is that this economic nationalism and union nostalgia could kill 3,000 union jobs and push U.S. Steel out of Pittsburgh.