Republican and Democrat opposition is mounting against Nippon, a Japanese firm, from buying U.S. Steel corporation. Biden wants scrutiny. Trump is silent. Why? 
U.S. Steel Bought by a Japanese Company, Thank Tariffs
On December 20, I wrote U.S. Steel Bought by a Japanese Company, Thank Tariffs
On Monday, U.S. Steel agreed to a takeover bid by Japan’s Nippon Steel for $14.1 billion. Ironically, U.S. protectionism played a role.
CNN noted the deal marks the latest step in a gradual decline for the iconic 122-year old company, which was once the largest company on the planet.
Sen. John Fetterman (D-Pa.) vowed to block the sale describing the deal as “outrageous”.
The United Steelworkers union (USW) is also outraged. “To say we’re disappointed in the announced deal between U.S. Steel and Nippon is an understatement, as it demonstrates the same greedy, shortsighted attitude that has guided U.S. Steel for far too long,” said (USW) International President David McCall.
But the big three automakers are happy. The automakers were fearful US Steel would accept a bid from Cleveland-Cliffs, a US company. They are worried “The combined company would have controlled 100% of blast furnace production in the U.S. and 65% to 90% of domestic steel used in vehicles.”
Where Does Biden Stand?
Politico reports Biden Believes Nippon Purchase of U.S. Steel Deserves “Serious Scrutiny”
President Joe Biden believes Japanese company Nippon Steel’s planned purchase of iconic American company U.S. Steel deserves “serious scrutiny” because of potential national security and supply chain concerns, a top White House official said Thursday.
Biden “has been clear that we welcome manufacturers across the world building their futures in America with American jobs and American workers,” White House National Economic Adviser Lael Brainard said in the administration’s most extensive comment yet on the proposed deal. “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.”
Democrat and Republican Rebellion
Newsweek reports Joe Biden Faces Democrat Rebellion Over US Steel Sale to Nippon
Fetterman, a Pennsylvania Democrat, was among them, posting on a video on X (ex-Twitter) next to U.S. Steel’s plant in the town of Braddock, Pennsylvania where he described it as “absolutely outrageous” that the firm has agreed the sale “to a foreign company.”
He has joined a bipartisan group of politicians in calling for a review into the proposed acquisition, which includes fellow Pennsylvania Democratic Senator Bob Casey as well as Republican Senators J.D. Vance of Ohio, Josh Hawley of Missouri, and Marco Rubio of Florida.
Meanwhile, Ohio Democratic Senator Sherrod Brown called the move a “back-room acquisition” that was a “slap in the face to union workers and has signed a letter in which he has called for the Biden administration to conduct a comprehensive review of the deal and its impact.
Sen. Dick Durbin, an Illinois Democrat, told The Hill there was something “fundamentally troubling” about the merger and that he’s been concerned for years about U.S. Steel’s production cuts. “We’ve been troubled by their announcements over the past several years of reducing production,” he said.
Republican senators wrote to Treasury Secretary Janet Yellen to argue the Committee on Foreign Investment in the United States (CFIUS) should block the sale.
Trump is silent. I will explain why in a moment. See if you can figure it out.
The Case for Nippon
- Contrary to widespread fearmongering nonsense, there is no security concern. Nippon is a Japanese company, an ally, attempting the purchase. The company will remain on US soil, with US employees, and Nippon agreed to abide by union rules. In the event of a genuine security concern, a US takeover would be very easy.
- If anything, there is less of a national security issue if Nippon is allowed to go ahead. A buyout by Cleveland-Cliffs would put 100% of blast furnace production in the U.S. and 65% to 90% of domestic steel used in vehicles in a single company.
- A buyout by Nippon will increase competition, not reduce it. This is a huge benefit to everyone in the country except a single company that would rather have a monopoly.
- Japan wants to invest money here in the US. We should all be cheering. Who is more likely to modernize the plant: US steel, Cleveland-Cliffs, or Nippon?
- Who is more likely to go along with Biden’s green energy policies: US steel, Cleveland-Cliffs, or Nippon?
The Case Against Nippon
There is none. But if you insist, it’s 100 percent political.
Biden may very well try to kill the deal, hoping simultaneously avoid blame. Perhaps he can do that by insisting on green energy demands, free daycare, or a huge basket of things that Nippon cannot accept and backs out.
One way or another, Biden is going to upset someone, most likely a lot of people. This is a problem he wishes that he did not have.
Why is Trump Silent?
Trump is silent because he has no position. Rather, his position is to wait to see what Biden does and criticize the hell out of it.
Trump would be wise to not take a position now because no matter what that is, Biden could do the same.
Zugzwang
Zugzwang is a setup in chess in which whoever has to move next, loses something.
The position below is extreme Zugzwang. Whoever’s turn it is now, loses a pawn immediately, then later the game as the remaining pawn gets promoted to a queen.
Political Zugzwang
By not taking a position, if Biden approves the deal Trump will criticize it and so will all the Trumpian lap dogs and protectionists in both parties.
Trump’s standard response in any situation is “I would have gotten a far better deal.” That is the minimal outcome here.
But if Biden rejects the deal, Trump will find a way to support it or at least criticize it for some reason.
The big win for Trump comes if Biden kills the deal by placing a bunch of clean, green, silly mandates on it. Trump will really howl and in that case he will be right.
Biden is in a no-win position assuming Trump stays silent, and perhaps even if Trump isn’t silent. Having to do something first is a huge disadvantage to Biden.
Hello Joe
Hello Joe, it’s your move. What’ll it be?
[…] Sen. Dick Durbin, an Illinois Democrat, told The Hill there was something “fundamentally troubling” about the merger and that he’s been concerned for years about U.S. Steel’s production cuts. “We’ve been troubled by their announcements over the past several years of reducing production,” he said.Read the article. […]
Aren’t many of the same Uniparty politicians who oppose this deal in favor of the Red Chinese buying American companies and farms?
It’s not an issue. The bigger issue are imports from Canada and Mexico making it difficult for US companies. The biggest issue however is the world big picture is using less steel than decades ago. The demand has been steadily retreating.
If Japan or anyone else wants to buy a low demand industry and give it a go let them knock themselves out. We are not going back to thick steel appliances, power tools and absolutely not steel panel body cars.
Years ago I bought a steel painted open fence for part of my yard. Better than wood but it still needed annual touch up due to rust spots. I ended up switching to aluminum posts and stringers with wood stained planks. Perfect. Been up a decade with no rust or maintenance. Same thing with a stainless steel shower caddy. It rusted in a year. I switched to aluminum. It will last many lifetimes. We always will need steel but the industry will never return to the glory days.
nicely stated
Better management. Better technology. Better education. Better supply to build better Toyotas here in the US. What’s not to like?
Toyota Tacoma, the best selling mid-sized truck, is made in Mexico. Sigh.
My take on it is that some lawmakers have seen Jesus, and are new-born Christians. US Steel might be worth only 15B, and Fakebook 500B, but Fakebook produces nothing of value, and if disappeared, nobody would be mourn it for more than a few weeks.
This is true generally about “tech” companies. Other than advertising what is it they actually provide? In fact, they only thing they provide is hated by most people who see it. It seems like a scam.
Mish, are you familiar with the first congressional district in Indiana? If not for the vestiges of unions (who think it’s 1964), then no useless hack like Frank Mrvan would exist.
Road work all over the place. New industrial factories. Along with AI stealthy fighter drones/planes US will have to increase our armor divisions, APC, navy…X is important to our national interest. Biden follows Trump policies.
Real leaders do the right thing and explain the reasons for doing so. Shitty leaders put their fingers up and see which way the political winds are blowing. Biden is the later type. Fetterman is a moron and almost always wrong.
The only bad part of the deal is that Nippon agrees to keep the union. Unions are almost always a refuge for the lazy and incompetent.
Fetterman is a rising star, rising above many other senators and governors.
The invisible hands behind the scene is Josh Shapiro, PA governor, a swing state. All three : Fetterman, Casey and Shapiro will fight this deal.
Fetterman is a brain dead ninny. It’s incomprehensible that the people of PA would elect this moron. He was bad enough pre-stroke.
“Fetterman is a rising star.”
More like a one-termer, assuming he makes it that long due to health issues.
Correct answer: Biden‘s best move would be to remove the steel tariff.
Biden best move is Hari Kari. But he has no honor or sense of shame.
Just make sure Kamala does the same please. It’s going to be really interesting to see who replaces The Big Guy @ the DNC this summer.
The US normally runs a large trade deficit with Japan. That means Japan accumulates US$ and has to do something with them. Its choices are, among others, buying US Treasury bonds, US real estate or US stocks such as, likely heading for bankruptcy, US Steel. The Dollars have to return to USA, one way or another. That we have almost no economically competent politicians is just another negative in these dystopian, Orwellian days of protectionist, nationalist, tariffs, sanctions, quotas and soviet-style rules and regulations, all increasing costs for US corps.
Good luck Nippon, you will need lots of it to avoid our incredibly stupid politicians.
Pity Trump does not support small government …yet ?
Japanese management will be superior. Japanese automation will remove the union goons. Nippon Steel has enough capacity to shut US Steel for an extended strike. US Steel will become competitive again. It’s all good.
Is KGB your initials? How unfortunate you share it with the defunct Soviet agency.
Nippon Steel would also bring in better steelmaking technology allowing US Steel to compete with Nucor and Steel Dynamics who already have mastered electric arc furnace tech.
Mish. CLF’s made their initial offer because they saw $550M in synergy savings in the deal. Lourenco Gonsalves, CLF CEO, has been way out in front of his peers in trying to clean up the US Steel industry. So no, Japan will not produce cleaner product. Trump’s steel tariffs saved the US Steel industry.
US Steel (X) invested billions to modernize their old plants at zero rates. Ukraine
and Israel/Hamas wars depleted our stocks. X is our industrial future. X shouldn’t be sold to Nippon or CLF. The banks should cut their rates.X weekly gap up. X might close the gap.
Selling to Cleveland-Cliffs simply moves US Steel from one part of the balance sheet of Blackrock/Vanguard/State Street to another, increasing both the percentage of the combined firm held by the institutions and the influence of ESG consultants in the new company.
The Japanese might run US Steel as a *business* with the goal of making money. Imagine.
There is no reasonable case. When we send out our paper currency is is supposed to be good for all debts public and private. Selective spending restrictions are more elitism BS.
OK, Let me take a stab at it, and my theme will be obvious ONCE I SPILL THE BEANS on these Politicians – – who we KNOW are not in Politics to “serve us!”
WHO GOT IN ON IT (invested, insider trades, or HAS FRIENDS at Nippon, or at US Steel, or in the Unions): Trump and anyone else who are not AGAINST the deal.
WHO DID NOT GET IN ON IT (see above, & add to the list of insider positioning):
President Joe Biden
Sen. John Fetterman
President David McCall
Senator Bob Casey
Republican Senators J.D. Vance , Josh Hawley
Marco Rubio
Senator Sherrod Brown
Sen. Dick Durbin
This final list are SO PISSED that no one told them to get those shares, or LOBBY for money, or GET A MEETING going first so they could get their trades, their Steel LOBBYISTS in to squeeze them for “Campaign Donations.”
LET’S try not to get into optics of each deal because THOSE ARE NARRATIVE TALKING POINTS. Where the money slaps on the concrete is where the happiest parties are.
Biden and his Group simply missed out of their continuing Money grab piece and thus they are AGAINST IT.
Now, if Nippon can get their Lobbyists revved up, then suddenly the deal will be acceptable and ALL of will have gotten their piece.
Sure, they can also be fishing for votes (Union members) but in the end they simply LOVE the cash flow of ill-gotten gains and are SUPER PISSED to be missing out.
Otherwise, I am a TRUE BELIEVER DEMO-REP-INDEP voter.
NOT!
And, you nincompoops who love voting for an evil, have at it but you appear to be unable to call these pieces of shit: “turds.”
I think you should seek anger management counseling. Just a thought. You don’t have to do it if you don’t want to.
Hey, Cap’n, I have a Paypal Account if you want to donate to my Good Weed Funding. Just a thought. Well, on the other hand, I do not smoke. HMMMM. Let me think: how about my Alcohol funding account at my Local Brewpub. OH, sorry, I do not drink. HMMMM.
That anger is brewing up mightily now because I have no way out of this deep resentment I have for nincompoops who make insincere suggestions. COME ON MAN, you can come up with a ad hominem attack better than giving me advice.
However, I do appreciate great advice, but only if the advice Giver is good at diagnosing problems. This may not be your strong suit, Missy Capn.
The big issue there, Mr/MISSY/MS Cap’n Person (I do not want to assume your Gender, Missy, Sr., LGBTQ++—, whatever, I ran out of letters)…..
But, let me assume that you are a MAN…well, then I have to read your comment in the context of completely missing the point, which leads me to believe that you may want to seek a Cognitive Assessment program with an Old-Folks Doc.
Just sayin’.
It seems to me that you are managing your anger quite well….just sayin’.
What is missing here is why this has to happen. Why has US steel fallen from its competitive perch to the point where it needs to be sold? This should be a case study so it doesn’t keep happening. If you don’t learn from your mistakes you will be bound to repeat them. At least in the business world. Our politicians will keep making the same mistakes as they do the bidding of their money masters. The best govt. money can buy.
A reputable financial news columnist recently wrote that the Japan government is holding over $1.3 Trillion US dollars in currency reserves. This is in large part because of the profligate spending approved by the US Democratic Party. If Japan wished any ill will at all upon the USA, they could simply sell those dollars.
This little dust up is chicken feed in comparison.
disclaimer–I am a long term stockholder in US Steel AND Cleveland Cliffs, also Vale SA
Just about anyone with a 401(k) plan is a long term stockholder in US Steel and Cleveland Cliffs via the institutions administering the plans, which hold about 80% of each company.
Where exactly would they sell 1.3 trillion dollars? In other words, what country could buy that amount. Only China since no other country runs that kind of surplus that it can accumulate 1.3 trillion dollars.
Then there is the matter of what exactly they would be able to buy for 1.3 trillion. Do you think Japan would rather have Yuan or Euros over dollars?