U.S. Steel deal faces changing politics
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Illustration: Shoshana Gordon/Axios
The political sands are shifting beneath U.S. Steel's proposed sale to Japan's Nippon Steel, but perhaps too late for President Biden to change his mind about stopping the deal.
Why it matters: Pennsylvania could determine the presidential election and U.S. Senate control.
- U.S. Steel has around 4,000 employees in Pennsylvania, each of whom presumably has voting-age friends and family, plus is a cornerstone of the state's economic identity.
Catch up quick: When the merger was announced at the end of 2023, the political reaction was predictable: Don't let a foreign company buy an American icon, even if it's no longer the country's largest steelmaker.
- Particularly when the steelworkers union supported a rival takeover offer from Cleveland-Cliffs, which is based just over the border in Ohio.
- Former President Trump quickly came out in opposition, while Biden in March expressed more cautious criticism.
- Vice President Harris last week said she's against the deal, and word leaked that Biden could soon block it on national security grounds (i.e., steel gets used in military hardware).
State of play: While national politicians have toed the conventional wisdom, second thoughts are emerging inside of Pennsylvania — where memories remain of steel mill closures in the 1980s.
- U.S. Steel reiterated last week that a deal failure would cause it to close some operations in Pennsylvania, and maybe even relocate its Pittsburgh headquarters. It may be bluffing, but the better bet is that it's not.
- Nippon, meanwhile, pledged over $2.7 billion in new investments for U.S. Steel facilities — including the Mon Valley Works in Pennsylvania that's most threatened.
- Union leadership remains opposed to the deal. But the language seems to have softened a bit, perhaps after hearing from rank-and-file who are increasingly scared for their jobs.
Zoom in: All eyes right now are on Pennsylvania Gov. Josh Shapiro, who in July said he was "not happy" with the Nippon deal because the steelworkers weren't happy.
- Now, however, there's widespread speculation that he's recognizing a revised reality, including how the outcome could impact November, his reelection and a future White House run.
- Shapiro has been in touch with the White House over the past week, although Biden's position is highly unlikely to change, a source close to the issue tells Axios.
The bottom line: Despite the national security pretense, this is almost all about politics. And if Shapiro has enough conviction and capital to convince Biden that the politics have changed.
