On January 3, 2025, President Joe Biden announced he was suspending the purchase of U.S. Steel by Japan’s Nippon Steel, citing the sale as a potential threat to national security. The announcement provoked both positive and negative responses from American steel industry leaders. The United Steelworkers union (USW) put out a press release shortly after Biden’s announcement, commending the soon to be ex-president for blocking the deal and even going as far as to accuse Nippon of being a “serial trade cheater” that has “worked to undermine our domestic industry by dumping its products into our market.” Cleveland-Cliffs, a domestic competitor of U.S. Steel, also delivered a statement applauding the “reported” decision back in September of 2024. It is also worth noting that Cleveland Cliff’s had previously attempted to acquire U.S. steel in 2023, and in September of 2024 expressed interest in purchasing unionized U.S. Steel mills that could face closure should the deal remain blocked.
On the other end of the spectrum, U.S. Steel and Nippon stated in a joint news release that they were filing multiple lawsuits, citing “wrongful interference with the proposed acquisition.” One of the lawsuits challenges the violation of their Constitutional right to due process and unlawful political influence, filed with the U.S. Court of Appeals for the District of Columbia Circuit. The second lawsuit aims at United Steelworkers (USW) President David McCall, as well as Cleveland-Cliffs' CEO Lourenco Goncalves, claiming unlawful actions with the goal of undermining the agreed upon acquisition of U.S. Steel by Nippon Steel. David Burritt, U.S. Steel’s CEO, called Biden’s move to block the deal with Nippon “corrupt” and insinuated that the outgoing president was indebted to the union president David McCall in a post on X. Nippon’s CEO, Eiji Hashimoto, doubled down after it was announced the deal had been blocked by stating they would not give up on the sale and would not accept its rejection.
It is universally acknowledged that the whole of the United States steel industry has been suffering a deep decline since the 1970’s. Would the Nippon deal revitalize American steel production or contribute to its demise? To cast light on this complex and hotly debated question, we lay out a case both for and against blocking the acquisition of U.S. Steel.
A Case For:
Recognizing the popular momentum behind putting Americans first, President Biden killed a deal that had dangerous homeland security and economic implications.
Nippon Steel may not be the kindhearted angel investor that it has been portrayed to be by many. Nippon Steel is one of a host of foreign companies that have taken advantage of U.S. trade policies to decimate the market and enrich themselves. Nippon has consistently been a particularly bad actor in the U.S. Steel market, engaging in a years long pattern of dumping cheap steel to flood the American market, and being the subject of numerous fines, tariffs, and compensatory duties. Just two months ago, while the deal was still under review, the International Trade Administration issued a preliminary ruling that Nippon Steel had dumped hot rolled steel on the American Market below normal value, and issued a 29% dumping tariff. Any deal involving a company that engages in such a flagrant pattern of illegal and duplicitous behavior, should be carefully scrutinized.
The dumping of cheap steel on the American market represents behavior more often associated with an adversarial Chinese company, not a firm from an allied nation to whom we are willing to entrust our industrial base. Coincidentally, Nippon steel has substantial ties to the Chinese steel industry. According to a report by economic advisory group, Hudson Advisors, Nippon Steel has a multitude of joint ventures with Chinese state companies, such as Baowu Steel–the leading nationalized producer of steel products in the PRC. Nippon steel was even included on a CCP “white list” of firms with expedited approvals for access to the Chinese market. Such affiliations give good credence to the national security concerns expressed by Biden and also President-elect Trump.
There is cause to believe that Nippon’s actions of cheap steel dumping have directly led to the deterioration of U.S. Steel’s current financial situation. To allow the merger would be tantamount to rewarding Nippon for its business malpractice and would set a dangerous precedent of encouraging foreign companies to dump their products on American markets, weakening domestic firms, and then sweeping in to buy the scraps. The Department of Defense said it best in a 2017 Memorandum to the Secretary of Commerce: “the systematic use of unfair trade practices to intentionally erode our innovation and manufacturing industrial base poses a risk to our national security.” For reasons of market fairness and national security, the U.S. Government should discourage such tactics by blocking the Nippon deal.
Blocking this deal was not Biden’s first move to protect domestic industries. Over the course of his term, he maintained, and even increased, many of the Tariffs levied by Trump on foreign goods. After a career spent supporting NAFTA and other such policies, Biden’s move signals a respect for the new popular consensus on trade. In electing Trump, Biden, and then Trump again, the American electorate has made its position clear. No more offshoring. To ignore them at the behest of CEOs and “experts” would be a grave disservice to the mandate handed down from the American people.
The decision to block the purchase of U.S. Steel by Nippon, and the bipartisan support this move received, also has supra-economic motivations. These reasonings transcend the bean counting tally of trade deficits and investment books. They reflect the binding will of the American people. U.S. Steel is a historic company, forged by the can-do attitude of industrialists, the sweat of the heartland, and New York’s financial wizardry. U.S. Steel built the Empire State Building and the Bay bridge, the UN building and the Willis tower. It armed American soldiers as they went off to war and protected them in tanks, clad in two-inch American steel. To see such an institution sold off to a foreign company is, for many Americans, a bridge too far. The sale is an overly on-the-nose metaphor for the wholesale parting-out of the industrial base, and the strip mining of the heartland. In stopping it, Biden and Trump have both paid respect to their charged duties of defending the American people.
A Case Against:
President Biden’s decision to block the purchase of U.S. Steel by Japan’s Nippon Steel constitutes a legally questionable use of executive power that degrades our alliance with Japan, weakens the domestic steel industry, and thereby weakens our overall national security.
The White House cites the deal as a potential national security threat but provides no evidence as to what that threat is. The Washington Post stated that the decision “has ignited an imminent legal challenge”, and “alarmed foreign investors”.
In the last few months, several senior administration officials have expressed concern about Biden’s then rumored move to reject the deal, including Secretary of State, Anthony Blinken and Treasury Secretary Janet Yellen. David Burritt, the CEO of U.S. Steel, denounced Biden’s decision as “corrupt” and disclosed that Biden had even refused to meet with U.S. Steel and Nippon leadership to discuss the deal and reach a compromise. U.S. Steel and Nippon released a joint statement announcing multiple lawsuits against the decision, accusing the Biden administration of pandering to David McCall (also named in the lawsuit), president of the United Steel Workers union, who has not been shy about voicing his opposition to the acquisition and had even appeared at a campaign rally for Kamala Harris, alongside President Biden.
Outspoken supporter of Biden’s industrial policies and economic commentator, Noah Smith, slammed the decision as “a purely ideological move,” going on to describe it as an “aggressive poke in the eye to America’s closest and most important ally in the most important region of the world.” Biden’s treatment of Japan, an ally, as an enemy by citing a threat to national security with no evidence, could strain relations with Japan at a time when the two nations should be working jointly to challenge China’s dominance in the manufacturing space rather than fighting amongst themselves.
Concerning the domestic steel industry, it is unclear what the desired outcome is for those who support Biden’s decision to reject the acquisition. Is the goal for a domestic competitor to take over U.S. Steel? Or for the company to continue operations without a buyer? If the goal is for a domestic competitor to buy U.S. Steel, it would raise legitimate antitrust concerns from the Federal Trade Commission (FTC) and from the rest of the Steel industry. Jeremy Flack, the CEO of Flack Global Metal Supply–a midsize steel manufacturer and distributor–, reiterated that concern. He told CBS MoneyWatch that part of the advantage for the Nippon deal is that “we had a new entrant to the market” in contrast to the same domestic companies consolidating market share “in which you eventually get an oligopoly.” These concerns could prevent any other potential sales to domestic competitors, leaving U.S. Steel high and dry, and American taxpayers potentially on the hook for a bailout.
If U.S. Steel were to continue operations, absent of a deal being struck, it would likely face grave financial difficulties. The company has already stated that it would have to pivot their business strategy which would likely lead to mass layoffs to avoid bankruptcy.
The Mayor of West Mifflin, Pennsylvania–where U.S. Steel’s steel mill the Irvin Plant is located–explained that, in business negotiations, Nippon had declared their plan to invest heavily in the plant. Mayor Chris Kelly, even stated that Nippon had “put it in writing” and had made further concessions of investing over a billion dollars into the plant and that there would be no layoffs, or plant closings for a minimum of 10 years. Furthermore, he added that “nobody puts that into a business deal today” and that “it's giving them everything they wanted.” Union leaders at the Irvin Plant were reported saying that “95% of their members are in favor of the Nippon merger.”
It is a sign of health and strength for Americans to seek to fortify our geopolitical standing and our national economy. However, by blocking a deal that would strengthen our alliance with Japan and revive the fading U.S. Steel, Biden has weakened the very national security and domestic industry that he and his supporters ostensibly strive to protect.
U.S. Steel has suffered decades of decline since it peaked in the 1950’s after World War II. At one time, it employed more than 340,000 people, as of December 31, 2023, they have just under 22,000 employees. Steel production in the same time frame has gone from 35.8 million tons of steel to 11.2 million tons. There is a good case to be made for blocking and for passing the acquisition, but the fact remains that action is needed to catalyze the United States steel industry because it is dying. All sides of this debate can agree on one thing. That U.S. Steel, along with the rest of the domestic steel industry, needs a catalyst, or economic production will continue to lose market share to hostile nations, and jobs will further dwindle.
As a new dawn of American politics arises with President Trump back in the oval office, time will tell if Trump doubles down on his stance regarding the U.S. Steel deal, or if good faith discussions can ensue between all parties, and reach a compromise.
