The Rising Influence of Rising Affluence

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Inside the Steel Deal That Has Biden on Edge
Nippon Steel’s bid for U.S. Steel fits the president’s agenda, but rival Cleveland-Cliffs and union have stirred up oppositionL
By Andrew Duehren


When Nippon Steel 5401 -0.58%decrease; red down pointing triangle agreed to buy United States Steel in December, it looked like a victory for the Biden administration’s attempts to revive American manufacturing.

The Japanese giant, whose imports once tormented American steelmakers, would make steel in the U.S. A faded industrial icon, U.S. Steel X -12.77%decrease; red down pointing triangle, would receive an injection of capital and technology. The U.S. and Japan would together take on China’s dominance in the global steel market.

But the $14.1 billion deal has instead become an election-year football. Republican and Democratic lawmakers have called for the Biden administration to use national-security powers to block the deal. Former President Donald Trump has promised to scuttle it if he wins a second term. White House officials are closely scrutinizing it, and President Biden is expected to release a statement soon highlighting his concerns about the deal, according to people familiar with the matter.

Behind the scenes, a company with more bottom-line considerations is helping orchestrate the populist revolt. Ohio-based Cleveland-Cliffs CLF -0.20%decrease; red down pointing triangle had also tried to buy U.S. Steel last year, and now confronts the prospect of a competitor vastly strengthened by Nippon Steel’s deep pockets and close ties to Japanese automakers.

After losing in the boardroom, Lourenco Goncalves, the combative CEO of Cleveland-Cliffs, is trying to kill the deal on Capitol Hill as well as through an unusual alliance with the United Steelworkers union.

In meetings with Republican and Democratic lawmakers, Cleveland-Cliffs staff have amplified union concerns about how Nippon Steel could lay off workers at U.S. Steel plants in Pennsylvania, Indiana and elsewhere, according to people familiar with the matter. During a recent private call with investors, Goncalves appeared to mock the Nippon Steel executives while speaking with what sounded like a Japanese accent, two people who were on the call said. Cleveland-Cliffs didn’t respond to requests for comment.

“A deal is only a done deal when it closes and recent reports make it clear that their announced transaction with Nippon faces a very uncertain path to close,” Goncalves said during a recent earnings call. “So, their saga is not over.”

The guerrilla lobbying campaign is shaping a decision that goes to the heart of Biden’s industrial ambitions. Spiking the deal on national-security grounds could make foreign investors think twice about pouring resources into the U.S. At the same time, steel remains central to the identity, if not the economy, of Pennsylvania—a swing state in November’s election where Biden risks losing support if he greenlights the transaction.

Nippon Steel is fighting back. “We welcome the Administration’s scrutiny of the transaction, as an objective and comprehensive review of this transaction will demonstrate that it strengthens U.S. jobs, competition, and economic and national security,” Nippon and U.S. Steel said in a statement Wednesday.

https://www.wsj.com/business/inside-the-steel-deal-that-has-biden-on-edge-b8dcc44c?mod=hp_lead_pos5