A Japanese company’s acquisition of U.S. Steel must first be approved by the U.S. president, and leaders worry the incoming Donald Trump administration could impact the pending approval’s likelihood.
But with an interagency body set to render a verdict on any conflicts by the end of the month, the decision to approve the deal might be President Joe Biden’s to make before he leaves office, according to an Indiana University professor.
It’s been nearly a year since Nippon Steel announced it would acquire the American company, according to U.S. Steel’s website. Nippon Steel plans to invest about $300 million into the blast furnace at Gary Works.
Gary Mayor Eddie Melton said in September that the investment should extend the facility’s furnace’s life by up to 20 years. U.S. Steel said the improvements would allow for higher steel production and reduced emissions.
President-elect Trump vowed during his campaign that he would block the deal, which he reiterated in a social media post Monday, according to the Associated Press.
Biden has also previously said that he opposes the deal, which was echoed by Vice President Kamala Harris.
“U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated,” Biden said in a March statement.
After the Biden Administration threatened to block the deal, Nippon Steel and U.S. Steel asked to withdraw and resubmit their deal. With their resubmission, the Committee on Foreign Investment in the United States has until the end of the month to make a determination on the deal, said Sarah Bauerle Danzman, an associate professor of international studies at IU.
If CFIUS finds national security risks with a deal, its members could either negotiate mitigation terms between the two parties or recommend the president block the deal, she said.
Danzman served on CFIUS from August 2019 through August 2020 on behalf of the U.S. State Department as part of fellowship that allows academics to serve one year in government. The CFIUS is chaired by the U.S. Treasury Department along with eight agencies and executive offices.
Unless the deadline is extended, Biden could still be president when CFIUS reaches a determination, Danzman said.
“It’s always hard to know at the end of a term what the president will end up doing, but Biden has also been against this transaction for a while now largely because the union is against it,” Danzman said. “But, from my understanding, the union leadership is against it but actually a lot of the union members are for it because there are concerns that without this deal going forward that U.S. Steel will actually have to downsize.”
The United Steelworkers issued a statement Tuesday welcoming Trump’s opposition to Nippon Steel’s acquisition of U.S. Steel, but various news reports have quoted steelworkers in Western Pennsylvania who are supportive of the deal.
Melton said in a Tuesday statement that he supports the deal because Nippon has committed to modernizing U.S. Steel’s plants, relining blast furnaces and deploying modern technology. Nippon also plans to maintain the current union employment levels and honor the bargaining agreement with the United Steelworkers.
“The CEO of U.S. Steel has stated publicly that there will be plant closures should this deal fail,” Melton said. “This will clearly hurt communities like Gary, who hosts the most productive plant in the U.S. Steel portfolio.”
U.S. Rep. Frank Mrvan, D-Highland, said in a statement that as vice chairman of the Congressional Steel Caucus he has considered national security and workforce implications of the deal.
“I have encouraged the current administration to take into consideration the national security implications of having foreign ownership of U.S. Steel and its long-term impact on American manufacturing and our workforce, particularly members of the United Steelworkers and the building trades. I appreciate that the incoming Trump Administration shares these concerns,” Mrvan said in the statement.
The company employs about 4,500 steelworkers at both Gary Works and its Midwest plant in Portage.
Nippon Steel has committed to preserving U.S. Steel as an American company and keeping it headquartered in Pennsylvania, a company spokesman said. The Japanese company plans to invest nearly $3 billion into its union-represented facilities. The spokesman didn’t address whether Biden would approve the deal before Trump’s Jan. 20 inauguration.
If Biden were to approve the deal, Danzman said the Trump administration wouldn’t be able to stop the deal. But, if Trump tried to reverse the deal after a potential Biden approval, Danzman said a move like that would be unprecedented and likely result in U.S. Steel and Nippon Steel suing the Trump administration.
“This would be very unprecedented. This is not normal. I don’t think that there’s ever been a case where a transaction was given safe harbor and then it was tried to be reversed,” Danzman said.
State Rep. Vernon Smith, D-Gary, said U.S. Steel hasn’t been a good partner to the City of Gary, particularly because the company doesn’t pay its fair share of property taxes, which passed the burden onto Gary residents.
Over the last decade, U.S. Steel has only helped Smith once or twice, he said.
“We always have to put the pressure on them,” Smith said. “They have not been a good community corporate citizen.”
But, Smith said he’d be open to considering the deal if U.S. Steel were to do more to support Gary and answer questions about its property tax payments.
Since 1975, CFIUS recommended eight deals should be blocked by the sitting president, Danzman said. For example, in 2012, former President Barack Obama blocked a deal between U.S.-owned 4 Wind Farms and Chinese-owned Ralls Corp. in the renewables sector because Ralls wanted to own a wind farm in Oregon next to a naval training base, she said.
Rep. Ed Soliday, R-Valparaiso, said the steel industry directly impacts national security so government officials have to review those deals, regardless of whether the deal would be with an ally like Japan.
“We’d like to keep U.S. Steel here if we can. But those deals are so complex,” Soliday said.
The United Steelworkers union opposes the deal, Soliday said, because they would like U.S. Steel to be owned by an American company.
“You have to respect the worker a little bit. They want to know who they are working for and so forth,” Soliday said.
Rep. Michael Aylesworth, R-Hebron, said he supports Trump’s position on blocking the deal from a national security standpoint.
“I think that’s the right thing to do on behalf of the security of our country,” Aylesworth said.
