President Biden Blocks Nippon Steel’s Takeover of U.S. Steel

What Happened?

Under heavy pressure from the United Steelworkers Union, President Biden has blocked Japanese owned Nippon Steel’s takeover of U.S. Steel (X). He cited national security and American jobs as the reasons for his decision.

The White House issued a statement saying ‘a strong domestically owned and operated steel industry represents an essential national security priority. Without domestic steel production and domestic steel workers, our nation is less strong and less secure.’

Nippon Steel vowed to fight Biden’s decision in court, calling the decision ‘a clear violation of due process and the law. We are left with no choice but to take all appropriate action to protect our legal rights.’

Why it Matters

U.S. Steel has a storied place in American history.

As Dylan Matthews of Vox reported:

‘The company emerged from Andrew Carnegie’s Pittsburg-area steel mills, which produced one of the largest fortunes and were the site of one of the bloodiest and most brutal industrial strikes in U.S. history. Its formation in 1901 was orchestrated by J.P. Morgan, when blended Carnegie Steel Company with several smaller companies in one of the first large-scale corporate mergers the country had ever seen. At its wartime peek in 1943, the firm employed over 340,000 people.’

Large scale steel production enabled the growth of U.S. cities and infrastructure through construction and helped America defeat the Axis Powers in World War II through massive armaments production.

Without the tanks, planes, and ships made from steel produced by U.S. Steel, America would not have been able to achieve victory in the Second World War.

For its part U.S. Steel had signaled support for the Nippon takeover, saying ‘Without the Nippon Steel transaction, U.S. Steel will largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk, negatively impacting numerous communities across the locations where its facilities exist.’

The fate of U.S. Steel is also a political hot topic for Pennsylvania.

Pennsylvania Governor Josh Shapiro warned U.S. Steel against ‘threatening the jobs and livelihoods of the Pennsylvanians who work at the Mon Valley Works and at U.S. Steel HQ and their families.’

U.S. Steel has in turn threatened to move its headquarters out of Pittsburgh.

How it Affects You

After President Biden’s announcement to block Nippon’s takeover, stocks for U.S. Steel fell by 6.5%. According to Paul Wiseman and Marc Levy of the Associated Press:

‘U.S. Steel is profitable and is sitting on $1.8 billion in cash, though that is down from $2.9 billion at the end of 2023. United Steelworkers President David McCall declared Friday that U.S. Steel had the financial resources to go it alone. ‘It can easily remain a strong and resilient company,’ he told reporters.’

Less than 6% of American workers are unionized, meaning Biden’s decision is a win for United Steelworkers and a demonstration of how organized advocacy can still influence American politics.