US Steel is an iconic example of the lost manufacturing power that President Biden will bring back to the United States with his economic policies.
But last month, the venerable but declining company announced plans to be acquired by a Japanese competitor. That development has put Mr. Biden in a difficult position as he tries to balance attempts to revitalize the country's industrial sector with his efforts to rebuild international alliances.
Mr. Biden's administration has expressed discomfort with the deal and is reviewing Japan's Nippon Steel's planned $14.1 billion takeover offer. The company is offering a hefty premium for US Steel, which has struggled to compete against the flood of cheap foreign metal and has been weighing takeover offers for several months.
The proposal has quickly become a high-profile example of the difficult policy choices Mr. Biden faces in his eagerness to revitalize American industry, and could test the extent to which he is willing to use presidential power to to pursue what is arguably its most important economic goal: the creation and preservation of good-paying union jobs in manufacturing in the United States.
Mr. Biden is under pressure from the United Steelworkers union and populist senators from both parties, including Democrats defending crucial swing seats in Ohio and Pennsylvania this fall, to reject the sale on national security grounds. The senators argue that domestic steel production is critical to U.S. manufacturing and supply chains. They have warned that a foreign owner could be more likely to move U.S. Steel jobs and production overseas.
“This really should be a given,” Sen. Josh Hawley, Republican of Missouri, said in an interview last week. “I don’t know why it should be difficult to say, my God, we have to keep steel production going in this country, and especially in a company like this where there are thousands of workers in good union jobs.”
US Steel executives say the deal would benefit workers and give the combined companies “world-leading capabilities” in steel production. They announced last month that Nippon Steel had agreed to keep the company's headquarters in Pittsburgh and honor the four-year collective bargaining agreement that the steelworkers union ratified in December 2022.
Other supporters of the takeover bid say blocking the sale risks angering a key American ally. Mr. Biden has praised Japanese cooperation on a wide range of issues, including efforts to counter Chinese production in clean energy and other emerging technologies, and welcomed Japanese investment in new American production facilities, including for advanced batteries.
Wilbur Ross, a former steel company executive who served as commerce secretary under President Donald J. Trump, wrote in the Wall Street Journal last week that there is “nothing in the agreement that the U.S. needs to defend against.” Attacks by Washington politicians only create unnecessary geopolitical tensions, and these, not the takeover itself, could threaten America’s national security.”
Adding to the reciprocal pressure on Mr. Biden, it is unclear what would happen to the 123-year-old company US Steel if the government scuttles the deal, and whether that would actually ensure greater job security for the company's nearly 15,000 North American employees .
US Steel has faced challenges for decades due to increasing foreign competition, particularly from China, which has flooded the global market with cheap, government-subsidized steel. American presidents have sought for years to strengthen and protect domestic steelmakers through a mix of subsidies, import restrictions and so-called “Buy America” requirements for government purchases.
“No U.S. industry has benefited more from protection than the steel industry,” wrote Scott Lincicome, a trade policy expert at the libertarian think tank Cato Institute, in a 2017 research report.
In recent years, presidents have further strengthened these protections. Mr. Trump imposed tariffs on imported steel, including from Japan. Mr. Biden partially rolled back those levies to restore alliances. Mr. Biden also included strong Buy America provisions in sweeping new laws for investments in infrastructure, clean energy and other advanced manufacturing.
These efforts have not come close to restoring the level of domestic steel production that the United States enjoyed in the 1970s — or even in recent decades. Under Presidents Bill Clinton, George W. Bush and Barack Obama, crude steel production reached higher levels than under Mr. Biden or Mr. Trump.
Employment in the industry declined steadily throughout the 1990s and mid-2000s. In 2022, there were just over 83,000 iron and steel mill workers in the United States, less than half the 1992 number.
Senators including Sherrod Brown of Ohio and Bob Casey of Pennsylvania, both Democrats, and Mr Hawley and JD Vance of Ohio, both Republicans, called on Mr Biden to review the planned US steel sale to prevent the loss of steel production and jobs . Mr. Brown pointed out that Nippon Steel failed to notify or consult union leaders before making its bid for the company.
“Tens of thousands of Americans, including many Ohioans, rely on this industry for good-paying, middle-class jobs,” he wrote in a letter to Mr. Biden last month. “These workers deserve to work for a company that invests in its employees and not only respects their right to join a union, but also respects and works with its workforce.”
Calls for an administrative review of the deal have largely focused on the Committee on Foreign Investment in the United States, known as CFIUS and led by Treasury Secretary Janet L. Yellen. The committee examines possible sales by American companies to foreign companies for possible threats to national security and then makes recommendations to the president, who can suspend or block a deal.
Just before Christmas, Mr. Biden appeared to grant the request for review but did not say he would block it.
Lael Brainard, chairwoman of the White House National Economic Council, said in a news release that Mr. Biden welcomes foreign investment in American manufacturing but “believes in the purchase of this iconic American company by a foreign company — even one from a close ally. “—seems to merit serious consideration given its potential impact on national security and supply chain reliability.”
The government, Ms. Brainard said, “will be prepared to carefully consider the results of such an investigation and take action if necessary.”
The steelworkers applauded the move. David McCall, president of United Steelworkers International, said in a statement that Mr. Biden “once again demonstrates the president's unwavering commitment to domestic workers and industries.”
Independent experts say it would be consistent with historical norms for the committee to evaluate the sale. That will likely include a detailed economic analysis of whether the agreement could lead to a reduction in steel production capacity in the United States, said Emily Kilcrease, a CFIUS expert and senior fellow at the Center for a New American Security.
But Ms Kilcrease said that based on the committee's previous decisions, she expected the review to end well short of a recommendation to cancel the sale. Instead, she said, CFIUS could require an agreement from Nippon Steel to maintain a certain level of employment or production in the U.S. as a condition of completing the sale.
“I would be shocked if this deal was blocked,” she said.
Mr Hawley said the election was ultimately Mr Biden's decision – and a test of his commitment to the industry.
“If the administration wants to block the sale, they absolutely have a reason to do so and the legal authority to do so,” he said. “So it’s just a question: Do they want to? And will they have the courage to do it?”