Labor groups cheer Biden dismissal of US Steel sale as businesses bristle

Labor groups applauded as businesses leveled sharp criticism Friday at the decision by the Biden administration to block the acquisition of steelmaker U.S. Steel by Japanese rival Nippon Steel over national security concerns.

Nippon and U.S. Steel said they were “dismayed” by the decision and said the administration didn’t present any evidence that the deal would have harmed national security.

“Instead of abiding by the law, the process was manipulated to advance President Biden’s political agenda. The President’s statement and order do not present any credible evidence of a national security issue, making clear that this was a political decision,” the companies said in a joint release.

The Biden administration said that trade and national security experts in the executive branch found that the proposed sale “would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.”

The United Steelworkers (USW) labor union called the decision the “right move” for its members and national security.

“With responsible management, U.S. Steel will continue to support good jobs, healthy communities and robust national and economic security well into the future,” the group said in a statement.

USW Local 2911 President Mark Glyptis told The Hill his membership believed the incentives for the proposed sale were unfairly weighted toward management and that it was better for national security to keep the company American-owned.

“The amount of money that [would have gone] to the people at the top was enormous — millions and millions of dollars if this transaction had occurred, going into the pocket of the top management people,” he said. “They had an incentive at the top to make this transaction happen.”

Meanwhile, business trade groups said blocking the deal sends a negative message to American allies, whose economies are intertwined with the U.S.

“Japan is one of America’s strongest allies and Japanese companies have reinvested more into the U.S. economy and workforce than any other nation,” Jonathan Samford, president of the Global Business Alliance, a trade group that represents dozens of multinational national corporations, said in a statement.

“I am concerned that today's decision sends a powerful and negative signal to the rest of the world,” he added.

Western Pennsylvania Rep. Chris Deluzio (D), who represents a traditional stronghold of the U.S. steel industry, gave a thumbs up to the decision, arguing on social media Friday morning that steelworkers should have been included in the negotiating process.

“From the beginning, the workers who power this company should have had a seat at the negotiating table—their livelihoods hung in the balance,” he said.

Sen. Rand Paul (R-Ky.) blasted the decision, calling U.S. Steel a “struggling company.” 

“Blocking the sale of a struggling company to a stronger company simply steals value from what’s left of US Steel and hurts its remaining workers by blocking the billion dollar infusion of cash Nippon Steel promises,” he wrote on social media.

U.S. Steel reported net earnings of $895 million or $3.56 per diluted share in 2023. The company authorized a stock buyback program for the repurchase of up to $500 million shares in 2022. It repurchased $175 million worth of stock throughout 2023.

The Biden administration blocked the sale on national security grounds, citing economic practices as well.

“The purchasers and U.S. Steel shall take all steps necessary to fully and permanently abandon the proposed transaction no later than 30 days after the date of this order,” the White House said in a statement.

U.S. Steel stock dropped more than 5 percent on the news in Friday morning trading, falling to $30.65 a share as of 11:00 AM.

The Committee on Foreign Investment in the U.S. (CFIUS), an inter-department agency which analyzes the national security implications of foreign investments in the U.S. economy, kicked the decision about whether to allow the sale up to the White House in December.

“This is a transaction that should be approved on its merits, and one that should be a model for ‘friendshoring’ investment,” U.S. Steel said in a December statement.

On Thursday, the State Department approved a $3.64 billion sale of air-to-air missiles to Japan.

The Defense Department said the sale would “[improve] the security of a major ally that is a force for political stability and economic progress in the Indo-Pacific region.”