Mar 15, 2024 - Politics & Policy

Scoop: Conservatives urge Biden to give Nippon Steel deal a chance

A steel plant with steam coming out of a chimney

A U.S. Steel plant in Braddock, Penn. Photo: Justin Merriman/Bloomberg via Getty Images

A group of free-market conservatives isn't giving up on Nippon Steel's proposed $14.9 billion acquisition of U.S. Steel — and is urging the Biden administration to consider the deal "without political interference."

Why it matters: Proponents of the sale are fighting back after President Biden said it was "vital" that Pittsburgh-based U.S. Steel remain an "American steel company."

  • The deal's backers argue that the proposed acquisition by Japan-based Nippon ultimately would help American workers and allow Japan and the U.S. to better compete with China.
  • They also are howling that Biden intervened — and potentially short-circuited a review by the Committee on Foreign Investment in the United States (CFIUS) — for political reasons.
  • 'The Biden administration should stop politicizing this process in an obvious attempt to ingratiate themselves to the United Steelworkers union," Ryan Ellis, president of the Center for a Free Economy, told Axios. Ellis is also a consultant and lobbyist for Akin Gump, which has registered to lobby for Nippon Steel.
  • Ellis organized a letter from leaders in the conservative movement to make a free-market case for the deal.

The big picture: Since the deal was announced in December, presidential politics — and the fate of Pennsylvania's 19 electoral votes this November — has charged Nippon's proposed takeover.

  • Former President Trump said in February that he'd kill the deal if he wins the Nov. 5 election.
  • The Steelworkers Union has fought the proposed sale, arguing that thousands of American jobs are at risk. It prefers a rival bid from Cleveland-Cliffs, a steel manufacturer based in Ohio.
  • Now Nippon and its allies in D.C. are preparing for a long battle to try to persuade CFIUS — which reviews big foreign investments in the U.S. to assess the impact on national security — to consider the deal on its merits, with an eye toward approval.
  • After Biden's statement, it's an uphill battle. CFIUS is technically independent, but it ultimately answers to the president.

What they're saying: The conservative group, which includes organizations that are affiliated with former President Trump, is making both a process and ideological argument.

  • "A free market steel industry that comes from democratic republics will give emerging countries a better choice against China than they have today," the letter says.
  • The letter was signed by Grover Norquist, president of Americans for Tax Reform, David McIntosh, president of Club for Growth and Steve Moore of the Unleash Prosperity Network, along with others.
  • Meanwhile, the U.S. Chamber of Commerce called "attempts to politicize" the CFIUS review "inappropriate and counterproductive."

Driving the news: Biden's decision to issue a public statement on a pending deal was both unusual and somewhat expected. He released it ahead of next month's White House visit by Japanese Prime Minister Fumio Kishida.

  • Back in December, Biden's National Economic Council director, Lael Brainard, said that the deal "appears to deserve serious scrutiny" and suggested that it would be a matter for CFIUS.
  • Biden hasn't mentioned the CFIUS review — but it's clear how he wants it to end.
  • "It is important that we maintain strong American steel companies powered by American steelworkers," Biden said in a statement. "I told our steelworkers I have their backs, and I meant it."

Between the lines: The deal's proponents are taking some comfort that Biden didn't come out directly and say he was flatly opposed to the deal. Instead, he couched it in terms of U.S. ownership.

  • "U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated," he said.
  • That could leave space for a U.S. subsidiary — even if it were controlled by Nippon — to be the owner.

Editor's note: This story has been updated to reflect Ryan Ellis' role as a lobbyist for Akin Gump.

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