Biden’s opposition to U.S. Steel takeover could test ties with key ally Japan

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Biden’s opposition to U.S. Steel takeover could test ties with key ally Japan

A water tower at the U.S. Steel Corp. Edgar Thomson Works steel mill in Braddock, Pennsylvania, on Sept. 4, 2024.

Justin Merriman | Bloomberg | Getty Images

TOKYO — U.S. opponents of a ********* steelmaker’s 

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 cite concerns about national security and a reluctance to relinquish a storied ********* company. In Japan, the business community sees election-year politics at play.

President 

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 is preparing to 

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 of U.S. Steel by Nippon Steel, two people familiar with the matter confirmed to NBC News last week, over what he says are national security concerns.

That could complicate efforts to 

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 a key U.S. ally, in an effort to counter 

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‘s growing influence in the Asia-Pacific and around the world. Washington has also been pushing Tokyo to align itself with U.S. export controls that limit China’s ability to produce advanced semiconductors.

The deal’s ******** would be an “epic own goal” that could inadvertently help China — which accounts for more than half of the world’s steel production — maintain its dominance of the global market, said Jeff Kingston, a professor of history and ****** studies at Temple University Japan.

The opposition to the deal “also places Japan in the unenviable company of China in terms of Washington’s politicization of economic issues,” Kingston said in an email. “But Japan is used to the twists and turns of presidential campaigns and understands that the Democrats are keen to appeal to Rust Belt voters.”

Former President 

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 and Vice President 

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 have joined Biden in opposing Nippon’s acquisition of U.S. Steel, which is based in the pivotal swing state of Pennsylvania.

The ******* Steelworkers union, whose members are part of an important voting bloc in the state, vehemently opposes the deal, even as Nippon Steel vows it will 

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 and prioritize U.S. domestic production to meet demand in the U.S. market.

Other U.S. Steel employees have rallied in support of the deal, which was announced last December. The company itself says the bid’s collapse would make the ********* steel industry less competitive globally and could cost thousands of union jobs at blast furnace facilities that might otherwise have to shut down.

Executives say the deal’s ******** would also raise “serious questions” about whether the company ******** at its longtime headquarters in Pittsburgh.

In Japan, where the winner of the governing ******** Democratic Party’s leadership race this month will 

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, Biden’s plans to block the acquisition have been portrayed in the media as “insupportable and an insult to a close ally,” Kingston said.

Shigeru Ishiba, a former defense minister who is a front-runner in the LDP leadership race, told Reuters last week that what the U.S. was saying about Nippon Steel was “very unsettling” and “could undermine the trust of its allies.”

Another candidate, digital minister Taro Kono, said that he “never imagined” the takeover would raise national security concerns, and that he would raise the issue with the White House should he become prime minister.

U.S. President Joe Biden reacts as he delivers remarks during a visit to the ******* Association Local 190 Training Center in Ann Arbor, Michigan, U.S., September 6, 2024. 

Craig Hudson | Reuters

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, the U.S. ambassador to Japan, has said that the countries’ relationship is “deeper, richer and stronger than any single commercial transaction.”

A ******** to acquire U.S. Steel would be a harsh ***** to expansion plans at Nippon Steel, Japan’s largest steelmaker, which is focusing on investment in the U.S. and India after withdrawing from a ****** venture in China that lasted almost 50 years.

The Japan Business Federation, the nation’s largest business group, said companies were watching the U.S. review process with keen interest, especially those thinking about investing in the ******* States.

“I strongly hope that this issue is not influenced by the U.S. presidential election, and that it’s handled based on a fair and just due process,” the group’s chairman, Masakazu Tokura, told reporters in Tokyo on Monday.

The ********* government’s top spokesperson declined last week to comment on reports that Biden would block the deal, “as it concerns the management of an individual company.”

But the spokesperson, Yoshimasa Hayashi, added that expanding mutual investment between the U.S. and Japan and cooperating on economic security issues “are indispensable for both sides.”

Long Le, an associate teaching professor at Santa Clara University’s Leavey School of Business, said Biden’s opposition to the deal indicated an important shift in U.S. politics when it comes to international trade, foreign direct investment and the extent to which the U.S. government is involved in industry.

The Committee on Foreign Investment in the ******* States, an arm of the U.S. Treasury that reviews the national security implications of foreign acquisitions of U.S. businesses, has never blocked a ********* acquisition, Le said.

Biden is “still defining what is national security,” he said in a phone interview. “And through this particular case, he is defining clearer than ever before that no foreign acquisition can be bought from a sector that’s considered critical, even if it’s from a country that is an ally of the ******* States.”

Kingston said the hope in Japan was that this was not the last word on the deal.

“Maybe Japan Inc. is hoping that once the dust clears after the election, sense will prevail,” he said. 

Arata Yamamoto reported from Tokyo, and Jennifer Jett reported from Hong Kong.

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