Biden Backing Up Steelworkers Amid Nippon Steel’s Scrutiny, Raises Worries Over Regulatory Bureaucracy
By Moon Harper | Apr 12, 2024 07:09 AM EDT
President Biden reiterated his disapproval of Nippon-U.S. Steel's acquisition bid during a press conference in the Rose Garden on Wednesday. The bid poses challenges that might be difficult to fulfill.
Biden's Support to Steelworkers
Based in Pittsburgh, U.S. Steel chose Nippon over local competitor Cleveland-Cliffs in regulatory arbitrage, preferring a national security antitrust review.
Despite union preference for Cleveland-Cliffs, Biden backed the steelworkers, reaffirming his commitment, remarking, "I'm a man of my word, and I'm going to keep it." He even invited union leader David McCall to a state dinner. Kishida emphasized adherence to U.S. laws and highlighted economic ties between the two countries, saying that it was not intended as a threat but was a jab.
READ ALSO: United Steelworkers' Pro-Worker Stance: Pledges "Labor Support" in Biden's Presidential Candidacy
Steelworker's Heightened Scrutiny on The Acquisition
The United Steelworkers restated its disapproval of Japan-based Nippon Steel's $14.9 billion bid to acquire U.S. Steel the same day President Biden met with Japanese Prime Minister Fumio Kishida at the White House.
The Biden administration's alignment with the union against the Nippon deal is straining the typically amicable relations between the U.S. and Japan.
In their statement titled "Nippon Steel Shows its True Colors," released on Wednesday, the Steelworkers asserted that if Nippon were to acquire U.S. Steel, it would prioritize the Japanese market over the U.S. market, potentially harming American workers.
U.S. and Japan's Alliance
Administration officials informed the New York Times that the deal is unlikely to be discussed during talks between Biden and Kishida, as both parties are already aware of each other's positions on the matter.
When asked about the U.S. Steel deal at a press conference earlier in the day, Kishida stated that discussions are ongoing between the parties and expressed hope that they would lead to positive outcomes for both sides.
Wednesday afternoon, the leaders issued a joint statement reaffirming their alliance and unveiling new defense, technology, and climate initiatives. Strengthening their relationship is crucial to counterbalancing China's influence in the Asia Pacific region.
Blocking The Deal Might Be Tough
Biden could follow a recommendation from the Committee on Foreign Investment in the U.S. (CFIUS) to block the deal. However, CFIUS seldom suggests blocking deals, especially those involving a geopolitical ally like Japan, which leaves antitrust as the remaining option, with the DOJ reportedly launching an in-depth investigation.
The DOJ's focus is reportedly limited to competition concerns regarding a specific Alabama factory, potentially resolvable through divestiture. However, Biden is expected to refrain from intervening in such matters.
Biden's optimal outcome relies on the steelworkers and Nippon reaching a resolution, which would allow him to support labor without navigating complex regulatory hurdles. However, achieving this may require behind-the-scenes negotiation.
Yesterday, the union reiterated its objection to the Nippon deal. It previously rejected a preliminary proposal from the Japanese company, which aimed to prevent employee layoffs until at least September 2026. However, the union still favors a Cleveland-Cliffs merger despite the potential antitrust issues it could pose, which might present separate challenges for Biden in swing states like Pennsylvania.
RELATED ARTICLE: Nippon Steel Under Serious Scrutiny, Declares No Layoffs, Plant Closures Amid $14.9B Acquisition Deal
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