The $15 billion sale of US Steel to Japan-based Nippon Steel has become a hot topic of discussion in both the political and economic arenas. President Joe Biden and President-Elect Donald Trump have united on the same point and made it clear that they are against the sale of US Steel, the US steel leader, to a foreign company. As a result of this uncertainty, US Steel shares decreased by 9.7% to close at $35.26. Nippon Steel shares, on the other hand, were flat throughout the day after increasing by 1.2% on Wednesday morning.
Biden administration tends to block the deal
Although important US government institutions such as the Pentagon, the Treasury and the State Department have stated that the agreement does not pose a national security risk, the Biden administration tends to block the agreement. The United Steelworkers, a particularly powerful union, has lobbied heavily against the agreement and its president, David McCall, has called on Biden to formally stop the agreement. “President Biden has promised to stand with workers and he must act to stop this agreement,” McCall said. US Steel, however, said the agreement was a “lifeline” and warned that if it failed, it could move its headquarters out of Pennsylvania and scale back operations.
“We will stop the agreement ‘immediately’”
Biden has said it is critical for the economy and national security that US Steel remains domestically owned. Trump, on the other hand, has said on social media that he will stop the agreement “immediately” and will use incentives and tariffs to revitalize the US steel industry. Biden and Trump's similar stance on this point has turned the Nippon Steel deal into a major political discussion.
Nippon Steel offered US Steel workers a $5,000 bonus if the merger was completed, and promised to invest $1 billion in Mon Valley Works facilities. However, the United Steelworkers union called the offer an “attempted bribe” and said long-term stability was jeopardized.
Biden has not yet formally declined Nippon's offer but remains opposed to the agreement. While the Committee on Foreign Investment in the United States (CFIUS) is expected to finalize the process by the end of this month, the impact of Biden's decision on the steel industry and employees will be closely monitored. The possibility of lawsuits by Nippon Steel and US Steel suggests that the process could become even more complicated.
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