President Donald Trump travels to Pittsburgh Friday to celebrate a deal he once vowed to oppose – Japanese steelmaker Nippon Steel’s long-announced plans to buy iconic American steelmaker US Steel.
The deal to have a Japanese company purchase US Steel has drawn bipartisan opposition. President Joe Biden blocked the deal on national security grounds shortly before he left office. But a week ago, Trump announced he would approve the deal, although he described it as a “partnership” between the two companies, not a purchase. When asked Sunday about the deal, he told reporters “It’s an investment, and it’ll be a partial ownership (by Nippon.)”
“It will be controlled by the United States, otherwise I wouldn’t make the deal,” he said.
Trump is set to appear at a US Steel plant just outside of Pittsburgh Friday evening. The appearance, and his latest announcement, appears to clear the way for the controversial deal at a time that long-time allies Japan and the United States find themselves in the middle of a trade war.
Trump is threatening increased tariffs on US imports from Japan and has already imposed tariffs on all steel imports. It also introduces foreign ownership to a company that was once a symbol of American industrial might that has become a struggling afterthought in the modern US economy.
Terms of deal unclear
US Steel CEO David Burritt and Nippon vice chairman Takahiro Mori both praised Trump at a rally at a US Steel mill ahead of the president’s arrival Friday. Mori called the deal a “game changer for the next generation of steelmaking.”
“Because of President Trump, US Steel will remain… made in America by Americans,” Mori said. “Thank you, Mr. President. You are saving American steel. And now we will start to make the massive investments that will transform US Steel on the world stage.”
But neither executive addressed the key issue of the deal – how much of US Steel Nippon will own once the deal closes.
The United Steelworkers, which represents US Steel’s hourly workers in Pennsylvania and Indiana, said it is not dropping its opposition, because it believes the deal still represents a complete purchase by Nippon.
“The latest ‘partnership’ announcement continues to raise more questions than answers,” said the union’s statement. “Nippon still maintains it would only invest in US Steel facilities if it owned the company outright. We’ve seen nothing in the reporting to indicate that position has changed. We also have no confirmation if or how much of the stated $14 billion would go to our union-represented sites, or how much would be for new capital improvements versus routine repair & maintenance.”
Even if Nippon does own all the shares, it apparently will be with restrictions. The “control” Trump is referring to will likely come from the federal government holding so-called “golden shares” in US Steel as a condition of approval. That allows the government to approve a majority of the company’s board members, who will all be American, Pennsylvania Senator David McCormick told CNBC.
“That will allow the United States to ensure that production levels aren’t cut,” McCormick, the Republican Senator from Pennsylvania, said Tuesday.
A week after the announcement, neither company has yet said how much of US Steel Nippon will own.
“US Steel will remain American, and we will grow bigger and stronger through a partnership with Nippon Steel that brings massive investment, new technologies and thousands of jobs over the next four years,” the company said in a statement last Friday following Trump’s announcement.
Prior vows to block the deal
While Trump repeatedly vowed to block the deal while on the campaign trail, he has signaled since taking office that he might be open to the deal after all. In March, the administration filed a motion to extend two deadlines in a lawsuit U.S. Steel and Nippon Steel filed against the Committee on Foreign Investment in the United States, which scrutinizes foreign investments for national security risks. Trump then ordered a new review of the acquisition in April.
Trump said Sunday that members of Congress had been pushing for approval of the deal as had local unions that represent hourly workers at US Steel. But the national union officials continue to urge Trump to block the deal, calling it a “disaster for American Steelworkers, our national security and the future of American manufacturing.”
US Steel has threatened that it would be forced to close some of its older, unionized mills unless the deal is completed and it gets the investment dollars needed to modernize.
But the USW has said its worried Nippon’s long-term goal is to shift production to its non-union operations in Texas or import steel from Japan to be finished in the United States, ending integrated steel production at the company.
Nippon Steel has promised, however, to honor the union’s contract with US Steel and to invest billions in integrated mills in Pennsylvania and Indiana.
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US Steel was once a symbol of American industrial dominance. It was the most valuable company in the world and the first to be worth $1 billion, soon after its creation in 1901. It was also crucial to the US economy throughout much of the 20th century providing the steel needed to build cars, appliances, bridges and skyscrapers, as well as weapons that helped win War War II.
But it has suffered through decades of decline since its post-World War II height. It is no longer even the largest US steelmaker, and a relatively minor employer, with 14,000 US employees — 11,000 of whom are members of the USW.
But it is still not a company that politicians who enjoy talking about American greatness want to see fall into foreign hands — particularly in the politically significant state of Pennsylvania. So those who support the deal have gone out of their way to suggest that it will stay American, with an American CEO and headquarters in Pittsburgh, even if it becomes a wholly-owned subsidiary of a foreign rival.
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