President Joe Biden’s decision to quash Japan-based Nippon Steel Corp.’s $14.9 billion bid to acquire Pittsburgh-based US Steel Corp. has sparked concerns about the potential economic fallout for Pennsylvania, home to US Steel’s headquarters and critical production facilities.
“This matter is far from over — we must find a long-term solution that protects the future of steelmaking in western Pennsylvania and the workers who built US Steel and built this country,” Pennsylvania Gov. Josh Shapiro said in a statement issued on Friday.
US Steel and Nippon Steel, Japan’s largest steelmaker and the third-largest producer of crude steel in the world, both said Friday they will pursue legal action against the United States government for lack of due process during its review of the proposed purchase, which was first announced in December 2023.
They also said that Biden’s order does not present any credible evidence of a national security issue, making clear that his decision was a political decision.
“It is shocking — and deeply troubling — that the U.S. government would reject a procompetitive transaction that advances U.S. interests and treat an ally like Japan in this way,” the companies said in a joint statement. “Unfortunately, it sends a chilling message to any company based in a U.S. allied country contemplating significant investment in the United States.”
In his announcement, Biden cited national security and supply chain resilience as reasons for halting the deal, emphasizing the importance of maintaining a strong, domestically owned steel industry.
“As I have made clear since day one: I will never hesitate to act to protect the security of this nation and its infrastructure as well as the resilience of its supply chains,” Biden said in his presidential order. “So, that is why I am taking action to block this deal.”
However, US Steel and Nippon Steel think the president’s move could exacerbate challenges facing Pennsylvania’s steel industry and jeopardize jobs in a state historically tied to steel production.
For instance, US Steel’s Mon Valley Works — a steel processing plant that includes the Edgar Thomson Plant in Braddock, Pa.; the Irvin Plant in West Mifflin, Pa., the Clairton Plant in Clairton, Pa.; and the Fairless Hills plant — employs thousands of workers and plays a vital role in the regional economy.
According to US Steel President and CEO David Burritt, the facilities require significant investment to modernize aging equipment, and he’s repeatedly said that without the infusion of cash promised by Nippon Steel, the company may be unable to upgrade these plants, potentially impacting operations.
Last fall, Burritt also defended US Steel’s sale to Nippon Steel, claiming it had benefits for national security, economic security, and job growth in the U.S., and warned that if the acquisition fell through, then US Steel would have to close plants and might move its headquarters out of Pittsburgh, where it’s been based since 1901.
In their statement Friday, Nippon Steel and US Steel said they are confident that their transaction would revitalize communities that rely on American steel, including in Pennsylvania and Indiana, provide job security for American steelworkers, enhance the American steel supply chain, help America’s domestic steel industry compete more effectively with China, and bolster national security.
“Nippon Steel is the only partner both willing and able to make the necessary investments — including at least $1 billion to Mon Valley Works and approximately $300 million to Gary Works as a part of $2.7 billion in investment that it has already committed — to protect and grow U. S. Steel as an iconic American company for the benefit of the communities in which it operates and the entire American steel industry,” said the companies.
Blocking this transaction, they added, means denying billions of committed investment to extend the life of US Steel’s aging facilities and putting thousands of good-paying, family-sustaining union jobs at risk.
“In short, we believe that President Biden has sacrificed the future of American steelworkers for his own political agenda,” they said. “We are committed to taking all appropriate action to protect our legal rights to allow us to deliver the agreed upon value of $55 per share for US Steel’s stockholders upon closing.”
With the Nippon Steel deal now blocked, it’s unclear what the path forward is for US Steel, which might reach out to other buyers, like Cleveland-Cliffs Inc., a domestic steel giant that previously offered $7.3 billion for US Steel in 2023. The offer was rejected by US Steel’s board.
As the path gets clearer, though, Shapiro has put US Steel on notice.
“As I have expressed directly to US Steel leadership, I expect US Steel to uphold their commitments to western Pennsylvania, refrain from threatening the jobs and livelihoods of the Pennsylvanians who work at the Mon Valley Works and at US Steel [headquarters] and their families, and work collaboratively to ensure the future of American steel making takes place right here in our commonwealth,” said the governor.
“I also expect any other potential buyers to demonstrate the strong commitments to capital investment and protecting and growing Pennsylvania jobs that Nippon Steel placed on the table during my continued dialogue with their leadership,” Shapiro added, “and I will continue to engage with all interested parties directly as I continue to fight for Pennsylvania.”
State Lt. Gov. Austin Davis agreed that a long-term plan is needed to keep steel production in the Mon Valley and to protect Pennsylvania workers’ livelihoods.
“No more statements and fired-off social media posts — the workers and their families need to hear a plan,” said Davis. “Gov. Shapiro and I will continue to work 24-7 to bring all parties together to protect Pennsylvania jobs and ensure western Pennsylvania remains central to the future of American steelmaking.”
Despite the enormous impact the merger decision will have on Pennsylvania’s economic future, David N. Taylor, President & CEO of the Pennsylvania Manufacturers’ Association, said it was disappointing that the governor did not publicly support the rescue plan and failed to convince Biden to relent.
“President Biden’s deeply misguided decision to kill Nippon Steel’s rescue plan for U.S. Steel will have catastrophic consequences for workers, families, and taxpayers across western Pennsylvania,” Taylor said.
The national security review process under the Committee on Foreign Investment in the United States (CFIUS) is intended to prevent sensitive technologies or assets from being acquired by hostile powers, Taylor noted. But the proposed investment by Nippon Steel is a company from a close ally that is bringing cutting-edge technology into the United States to upgrade American facilities.
“Biden’s corruption of CFIUS will have serious consequences for the U.S. economy and our relationships with our allies,” Taylor added. “If Nippon Steel’s investment constitutes a ‘national security threat,’ then so does every Toyota, Nissan, and BMW plant in America. Our leaders are undermining the trust of our closest allies and largest foreign investors, which can only lead to crisis later on.”
Meantime, U.S. Rep. Dan Meuser (R-PA), who represents Pennsylvania’s 9th District, said the hope and expectation is that President-elect Donald Trump will step in and review the proposed investment “in a business-minded way.”
“Revitalizing industries, securing jobs, and protecting American workers is his specialty, and much of Pennsylvania’s steel manufacturing future is at stake,” he said. “We hope President Trump can save US Steel for the second time and have Japan pay for it.”
To date, however, Trump has opposed Nippon Steel’s proposed purchase of US Steel.