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Bipartisan Opposition Grows as Japan Seeks to Purchase Iconic U.S. Steel

Published: December 20, 2023
The logo of Nippon Steel Corp. is seen at an office building at the company's head office in Tokyo on Dec. 19, 2023. Shares in Japan's Nippon Steel sank more than six percent on Dec. 19 after it announced a deal to buy US Steel for more than $14 billion that will create the world's number two steelmaker. (Image: KAZUHIRO NOGI/AFP via Getty Images)

On Dec. 19, three Republican senators along with a number of prominent Democrats, urged American authorities to block Japan’s Nippon Steel from acquiring the iconic U.S. Steel for $14.9 billion, citing national security concerns. 

Nippon Steel announced on Monday, Dec. 18, that it will buy the Pittsburgh based steel company in cash, after beating out rivals Cleveland-Cliffs, ArcelorMittal and Nucor in an auction. 

At a news conference in Tokyo, Nippon Steel President Eiji Hashimoto told reporters that with the acquisition, his company hopes to establish “a global network fit for the new era” and to regain Japan’s growth potential as domestic consumption dips.

In an announcement on X, formerly Twitter: U.S. Steel wrote, “#USSteel Board of Directors unanimously approved the acquisition of U.S. Steel by Nippon Steel, a global leader in steelmaking, innovation and decarbonization. We look forward to becoming the ‘Best Steelmaker with World-Leading Capabilities.’”

On Tuesday, Republican senators, JD Vance, Josh Hawley, and Marco Rubio, urged Treasury Secretary Janet Yellen, who chairs the Committee on Foreign Investment in the United States (CFIUS), to block the acquisition.

“Despite the absence of any security-focused deliberation on U.S. Steel’s part, domestic steel production is vital to U.S. national security,” the trio argued. 

CFIUS is responsible for scrutinizing deals that have a potential to impact American national security and is expected to review this transaction; however, Karine Jean-Pierre, White House Press Secretary, told reporters at a regular press briefing that there “may” be a review of the deal, but failed to elaborate further. 

Nippon Steel is currently the fourth-largest steel producer worldwide, while U.S. Steel, which was founded 122 years ago, ranks 27th.

Bipartisan opposition

A number of Democrats have also come out in opposition to the deal, including senators Sherrod Brown, John Fetterman, Bob Casey, and Joe Manchin. In addition, two Democratic members of the House of Representatives from Pennsylvania have voiced their protests. 

On Monday, Fetterman vowed to do everything in his power “to block this foreign sale.” 

In a post on X, formerly Twitter, Fetterman wrote, “The acquisition of @U_S_Steel by a foreign company is wrong for workers and wrong for Pennsylvania. I’m gonna do everything I can to block it.”

Following the announcement of the acquisition, U.S. Steel’s stock price soared over 25 percent.

“Nippon Steel has been looking to expand overseas in recent years, as a shrinking population in Japan, where it generates nearly three-fifths of its revenue, is dimming the demand outlook for high-end steel used for autos and electronic goods,” Reuters reported.

By buying U.S. Steel, Nippon would add 20 million metric tons to its current 66 million tons, making it a bigger supplier for U.S. auto manufacturing.

Union speaks out

The United Steelworkers Union (USW), which supported the Cleveland-Cliffs bid, says they are “disappointed” with how everything is unfolding.

“To say we’re disappointed in the announced deal between U.S. Steel and Nippon is an understatement,” reads the USW’s statement on the matter. 

David McCall, the USW’s International President said, “We remained open throughout this process to working with U.S. Steel to keep this iconic American company domestically owned and operated, but instead it chose to push aside the concerns of its dedicated workforce and sell to a foreign-owned company,” adding that “neither U.S. Steel nor Nippon reached out to our union regarding the deal.”

Nippon Steel says it intends to honor all agreements between U.S. Steel and the union.

Josh Spoores, steel analyst at CRU Group, believes the deal will be a win for steel buyers, telling Yahoo Finance, “I think this is a win for steel buyers,” adding that, “As long as we have a competitive market for steel in the United States, that helps to keep our manufacturing industry incentivized to stay here and produce more in the United States with more U.S. workers.”

Spoores says that industry consolidation in the U.S. has led to higher domestic prices, and has fueled off-shoring manufacturing to places like China.

“If another [U.S.-based] steelmaker would have bought out U.S. Steel, and it was just consolidation within the market, I think it would have led to higher prices and eventually more off-shoring of manufacturing and the import of steel-intensive goods,” Spoores said, adding that, “I do see this as a win for manufacturing in the U.S. and North America as a whole.”