Justin Merriman/Bloomberg/Getty Images
The United States Steel Corp. Clairton Coke Works on the banks of the Monongahela River in Clairton, Pennsylvania, U.S., on Monday, August 14, 2023. U.S. Steel surged after rejecting a takeover offer from rival Cleveland-Cliffs Inc., one of the world's largest steel producers, and said it would instead begin examining its strategic options. Photographer: Justin Merriman/Bloomberg
New York CNN –
Bipartisan opposition to Japan's largest steelmaker's proposed $14.1 billion takeover of US Steel is growing, but it likely won't be enough to block the purchase, according to a foreign investment deal expert.
A trio of Republican senators called on Tuesday for a panel of U.S. officials to block Nippon Steel's takeover of U.S. Steel on national security grounds.
Senators JD Vance, Josh Hawley and Marco Rubio wrote a letter to Treasury Secretary Janet Yellen on Tuesday warning that the U.S. steel deal would have “serious impacts on the United States industrial base” and “not with an eye on the national one U.S. security was completed.” ”
Yellen is chairwoman of the Committee on Foreign Investment in the United States (CFIUS), an interagency panel with the authority to review foreign investment transactions in America to determine national security implications. CFIUS members include the heads of the Departments of Defense, State, Homeland Security, and Justice.
CFIUS “can and should block NSC's acquisition of US Steel, a company whose loyalty is clearly to a foreign state and whose record in the United States is deeply flawed,” Vance, Hawley and Rubio said. They argued that CFIUS should unilaterally initiate a review of the deal, particularly because US Steel received competitive offers from American companies.
The lawmakers noted that domestic steel production is “critical to U.S. national security” and pointed to steps by Republican and Democratic administrations to strengthen the steel industry. Vance is the junior senator from Ohio, while Hawley and Rubio represent Missouri and Florida, respectively.
“Allowing foreign companies to purchase American companies and benefit from our trade protections undermines the very purpose for which these protections were put in place,” the Republican lawmakers wrote.
Vance, Hawley and Rubio warned that Nippon Steel “does not share U.S. Steel's famous connection to the United States and that its financial interests are tied to those of Japan.” The lawmakers point out that Nippon has previously been found guilty of flat-rolling Illegally disposing of steel products in the United States.
Ohio's other senator, Democrat Sherrod Brown, also issued a statement Monday opposing the deal.
“A foreign company should not be able to step in, ignore the voices of union workers and buy a major American steelmaker behind closed doors,” said Brown, who is up for re-election in 2024. “Nippon and US Steel have insulted American steelworkers. They refused to give them a seat at the table and expressed serious concerns about their commitment to the future of the American steel industry.”
Brown said if US Steel is to be sold, it should be bought by Ohio-based Cleveland Cliffs, which was backed by the United Steelworkers union in its failed attempt to buy US Steel earlier this year.
Sen. Joe Manchin, the West Virginia Democrat who is not seeking re-election but is still considering an independent campaign for president, also criticized the company's sale to a foreign competitor.
“This is a major blow to the American steel industry, which has played a key role in making us the world’s superpower and a direct threat to our national security,” he said in a statement on Tuesday. “At a time when domestic manufacturing – including in the U.S. steel market – faces increasing competition from unfair trade, we must do everything we can to prevent further deterioration of American ownership
Senator John Fetterman, a Democrat from Pennsylvania, also opposed the proposed sale.
“It is absolutely outrageous that US Steel has agreed to sell itself to a foreign company,” Fetterman said in a statement Monday. “Steel is always about security – both our national security and the economic security of our steel communities. I am committed to doing everything in my power, using my platform and position, to prevent this foreign sale.”
And the United Steelworkers union has also proven to reject the deal.
The proposed deal “reveals the same greedy, short-sighted attitude that has guided US Steel for far too long,” said USW President David McCall. “We remained open throughout the process to working with US Steel to continue to keep this iconic American company domestically owned and operated, but instead it chose to put aside the concerns of its dedicated workforce and sell it to a foreign-owned company for sale.”
Despite growing political opposition to the deal from politicians and the United Steelworkers union, CFIUS is unlikely to be blocked by a close U.S. ally like Japan, said Michael Leiter, head of CFIUS and national security practices at law firm Skadden, Arps.
“This has never happened to a Japanese buyer of a U.S. company – even at the height of U.S.-Japan trade tensions in the 1980s and 1990s – and it seems quite unlikely that it would happen here either,” he said told CNN.
Regardless of the CFIUS recommendation, the final decision rests with the president, Leiter said. Despite political pressure from both parties and the importance of Ohio and Pennsylvania in next year's elections, Leiter does not believe Biden would act to block the deal.
“If President Biden were to reject the agreement, it would immediately create a significant problem with our Japanese allies, given the importance of cooperation on other critical issues such as China and semiconductor production and supply chains,” he said.
When asked about the proposed deal at Tuesday's White House press briefing, White House Press Secretary Karine Jean-Pierre declined to comment specifically on the acquisition, saying the deal is “potentially one official review could act”.
The president supports “protecting America's manufacturing sector, which supports families and protects union jobs,” she said, adding that he is “committed to competition because he knows that competition means lower costs for consumers and higher wages for consumers.” the employees means.”
Representatives for US Steel did not respond to requests for comment about the letter or Brown and Fetterman's objections. The Treasury Department declined to comment.
US Steel officials promoted the deal on Monday, arguing it was in the best interests of all parties, including the United States. And they said they were confident it could get regulatory approval.
Although US Steel was once the most valuable company in the world, it, along with the entire domestic steel industry, has been in decline for decades