The White House stated on Thursday that, considering the company’s fundamental role in American steel manufacturing that is essential to national security, Nippon Steel Corp.’s $14.9 billion proposed acquisition of U.S. Steel Corp. merits “serious scrutiny.”
The White House saw a robust domestic steel sector as essential to the U.S. economy and national security in its first substantive remark on the agreement. It also stated that it supported the Committee on Foreign Investment in the United States (CFIUS) carefully reviewing the transaction.
President Joe Biden, according to National Economic Council Director Lael Brainard, applauded foreign businesses investing in American employment and labour.
“However, he also believes the purchase of this iconic American-owned company by a foreign entity – even one from a close ally – appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability,” she stated in a press release.
According to Brainard, the Biden administration will “be ready to look carefully at the findings of any such investigation and to act if appropriate.” CFIUS was specifically established to assess transactions of this nature.
The United Steelworkers (USW), the dominant union at the third-largest U.S. steel business, and Democratic and Republican senators have been criticising the planned agreement, and the White House has responded with a forceful statement.
Representatives from Nippon Steel in Tokyo and the United States did not immediately reply to a request for comment. According to U.S. Steel, the two businesses informed the Treasury Department on Monday that they would voluntarily submit their files for consideration by the CFIUS.
In response to a Reuters inquiry, the business stated, “We respect the CFIUS process and will work with the appropriate parties for a thorough and successful review.”
It stated, “Japan is an important ally of the United States, and NSC currently operates multiple steel facilities across the USA,” adding that Nippon Steel had promised to back both union and non-union workers at U.S. Steel with great pledges.
“This will strengthen the American steel industry, American jobs, America’s national security, and America’s supply chain security,” it said.
The fact that U.S. Steel’s shares are trading much below the $55 per share transaction value suggests that investors believe the political turbulence surrounding the acquisition may cause delays.
President David McCall of the USW stated that the union agreed with Brainard’s worries on the deal’s potential impact on American steel production, among other issues.
“U.S. Steel has made it clear, time and again, that its first and only priority is short-term financial gain for shareholders, even if this comes at the expense of workers, their communities and the nation’s lasting capacity to continue meeting its manufacturing needs,” he stated.
Nippon said on Monday that it will acquire Pittsburgh-based U.S. Steel for a cash price of $14.9 billion, defeating competitors like Cleveland-Cliffs, ArcelorMittal, and Nucor in the bidding process for the 122-year-old steel manufacturer.
According to Brainard, during World War II, Biden saw U.S. Steel as a crucial element of the country’s “arsenal of democracy” and maintained that it is “a core component of the overall domestic steel production that is critical to our national security.”
As we enter an election year, Biden has made it a priority to revive American manufacturing, and he frequently highlights the 800,000 manufacturing jobs that have been created during his administration.
In addition to boosting union employment throughout the economy, Brainard said Biden has taken steps to shield American steel producers from unjust and market-distorting trade practices in China and other nations.
She added that by opposing unfair trade practices, the government was making every effort to guarantee that steelworkers could compete on an even playing field.
Recalling the agreement for national security reasons, according to retired U.S. Army colonel Heino Klinck, might be detrimental to the U.S.-Japan relationship. Klinck formerly held the position of deputy assistant secretary of defence for East Asia under former President Donald Trump.