The leading contenders for the White House all favor blocking the U.S. Steel sale to Nippon Steel of Japan, a sale that might yet reward its senior executive, David Burritt, with a $72 million pay package once it closes. Globalist-thinking institutions are all in favor of the deal. It is unclear who will come out on top as Biden extended the foreign investment review process (CFIUS) in mid-September. That gives CFIUS about 90 days to decide, meaning after the presidential election and possibly before the end of the year.
Presidential candidate Kamala Harrissaid on September 2 that “U.S. Steel should remain American-owned and American-operated.” But Biden could agree to the deal if CFIUS clears it before he leaves office, even allowing Harris to say – should she win – that she would not have agreed to the sale regardless if she had the final word.
Vice Presidential candidate JD Vance was first in the Senate to send a letter to U.S. Steel’s CEO Burritt and Chairman David Sutherland critical of the sale in August. “I worry about the implications of an acquisition by a foreign entity that may not share your business’s storied connection to the United States. As you evaluate offers to acquire U.S. Steel or any of its assets, I urge you to balance properly your duty to your shareholders and the interests of your country,” he wrote.
In January, less than a month after the December 18 announcement of Nippon’s $55 per share offering to buy U.S. Steel, candidate Donald Trump said he would oppose the deal. “I would block it. Absolutely,” he said.
The Trump administration imposed Section 232 tariffs on all imports of steel and aluminum on March 8, 2018, with the exception of steel and aluminum sourced from Mexico and Canada.
U.S. Steel is an iconic American steel producer. It was created by household names J.P. Morgan (the man the bank is named after), William Henry Moore (co-founder of Oreo-cookie maker Nabisco), Andrew Carnegie and Charles Schwab. The logo on the helmet of the Pittsburgh Steelers football team was first created by U.S. Steel, before becoming the steelmark logo of the American Steel and Iron Institute.
Influential Institutions Suggest Odds In Favor of Nippon Purchase
Fellows from The Atlantic Council and the Council on Foreign Relations (CFR) weighed in last month. They support the sale. Both cite the prospects of hurting relations with key allies as the U.S. tries to decouple supply chains from China.
“Friendshoring onlyworks when the friendly behavior is reciprocated. Perhaps friends will be tolerant of occasional protectionism around especially politically sensitive transactions, but only if such actions are aberrations rather than standard operating procedure. And once a regulatory body is politicized, it can be exceedingly difficult to return to normal, technocratic operations. A word of warning—proceed with extreme caution,” said Sarah Bauerle Danzman, resident senior fellow for economic statecraft at the Geo-Economics Center of The Atlantic Council in an article published on the Council’s website on September 5.
The Atlantic Council is widely known as the think tank of NATO. That a NATO think tank is urging caution in rejecting the offer suggests a transatlantic pressure point in favor of Nippon Steel due to geopolitical risks to Washington in Asia.
Matthew Goodman, Director of the Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations wrote on September 11 that, “Japan has been a close partner not only on critical national security issues, from limiting North Korea’s weapons development to pushing back against China and Russia, but also on the very elements of economic security that the Nippon Steel transaction could advance, such as friendshoring and de-risking from China. If Japan’s Prime Minister Kishida Fumio were not stepping down this fall, the decision would be seen in Tokyo as a slap in the face to one of Biden’s closest partners. The move would make it more difficult politically for any Japanese government to follow the U.S. lead.”
Shortly after The Atlantic Council and CFR made their geopolitical case for a sale, Burritt said partnering with Japan “strengthens national security, economic security and job security. This deal will close on its merits,” the New York Times reported on September 17.
In a letter dated October 2 from Senators Elizabeth Warren (D-MA) and Sherrod Brown (D-MA), the Senators said Burritt was “in line to (possibly) receive $72 million in additional cash and benefits if the deal is completed.”
This so-called "Change-in-Control Bonus" was rejected by an investor advisory service, which got a small majority of shareholders to vote against the golden parachute that Burritt and the board voted for themselves to get. These shareholders also voted against the $156 million in payouts to top executives, including Burritt’s $72 million, in their April meeting (80,339,678 for, 81,804,084 against with 1,818,670 abstentions). However, this vote was only an advisory vote, so it carries less weight. “If these reports are accurate, they demonstrate a repulsive conflict of interest in which U.S. Steel executives can enrich themselves at the expense of U.S. Steel workers,” Warren and Brown wrote in the October letter to Burritt.
Warren and Brown asked for clarification about the financial incentives post-sale by October 16.
Securities and Exchange Commission filings show that Burritt sold more than 252,000 shares of U.S. Steel stock on December 18, 2023 (the day the merger was announced), netting him nearly $13 million as the stock price increased significantly.
With this pushback underway, Nippon and U.S. Steel are spending on lobbying efforts to win over Capitol Hill. On July 20, Nippon hired former CIA chief and Trump’s ex-Secretary of State Mike Pompeo to help them close the deal.
Nippon Spending Big to Win
BothU.S. Steel and the Japanese-ownedNippon Steel have poured record sums into lobbying as the deal faces political and regulatory hurdles, according to lobby money tracker Open Secrets
According to OpenSecrets.org, Nippon Steel hadno registered U.S. lobbyists until the final quarter of 2023 but quickly built a bipartisan roster of several high-profile advocates in Washington. The Japanese steel company’s team features multiple “revolving door” officials including former Reps.Illeana Ros-Lehtinen (R-Fla.) andFilemon Vela (D-Texas) as well as former aides to Senate Majority Leader Chuck Schumer (D-NY.) and Senate Minority LeaderMitch McConnell (R-KY). After spending $30,000 in the fourth quarter of 2023, Nippon Steel quickly ramped up its spending to nearly $1.1 million over the first half of this year with $830,000 of that in the most recent quarter. Disclosuresindicate that the merger is the major focus of Nippon Steel’s lobbying efforts.
U.S. Steel spent around $1.7 million on lobbying during the first half of 2024, more than triple the $545,000 it spent during the same period last year, according to disclosure forms filed with the U.S. Senate.
The deal has thesupport ofAutos Drive America, a trade association that represents the U.S. operations of international automakers. TheNational Taxpayers Union, a taxpayer advocacy organization, also reported spending on lobbying in support of the deal.
Nippon Steel’s Anti-Dumping Past, and Mexican Future
Nippon is already in the U.S. with 9 joint ventures. However, they are not a primary steel producer and with the U.S. Steel acquisition they would have a blast furnace (BOF) steel maker and electric arc furnace (EAF) steel facilities (or “mini-mills”) in Alabama and Arkansas, which are different as they rely on melted recycled material to make steel rather than iron ore and coke. The steel products made by Nippon in the U.S. today require it to import steel sheets or buy domestically. This acquisition would allow them to own a bigger part of the supply chain here, so why not let them in, some say.
Indian owned global steel giant ArcelorMittal makes steel here. No one complained about them being a foreign entity.
The key difference between Nippon and ArcelorMittal was that Arcelor was never charged with dumping product into the U.S.Nippon Steel has been charged with dumping and has had at least 10 anti-dumping cases ruled against themsince 2014.
Nippon has a 50/50 joint venture with ArcelorMittal at their AM/NS Calvert plant in Alabama where they are investing in a new EAF mill.
Nippon also has a presence in Mexico. In 2010, Nippon signed a joint venture with Latin American steel company Ternium to make steel sheets for sale to the automotive industry. That factory became operational in 2013. In March, Nippon announced plans to invest $66 million in a plant to make another type of steel – electrical steel sheets – also for the automotive industry.
Nippon does not have any primary steel making abilities in Mexico. Its BOF and EAFs are all in Japan, with global mills in India, Thailand, Sweden and Finland. If they get the U.S. Steel properties, they would own three BOF mills and two EAF mills. One BOF mill in Illinois is completely idled. Another one in Michigan is partially idled, but no longer doing melted and poured steel from iron ore.
Decarbonization and Japanese Exports
U.S. Steel has said it will follow the West’s desire to decarbonize the steel industry. Their BOF mills are where most of the union labor works. U.S. Steel has said it wants to invest in EAFs and decarbonize.
Nippon is closing some of its roughly 11 BOFs in Japan, causing some on Capitol Hill to worry they would do the same with U.S. Steel’s mills. Nippon said in August that it would invest $1.3 billion in two blast furnace mills – one in the Mon Valley region of Pennsylvania and the other in Gary, Indiana. Nippon’s commitments to those mills are not written in stone. Nippon can change course if market conditions warrant them to do so.
Nippon’s investment sounds like what U.S. Steel had promised for their Mon Valley Works facilities near Pittsburgh. U.S. Steel’s proposed $1.2 billion investment never happened. And they are in the process of closing three additional coke facilities at one of the Mon Valley mills located in Clairton, PA, suggesting a move away from the feedstocks needed to make steel in a blast furnace. In recent years, there have also been a string of other closures at union run plants.
Should U.S. Steel under Nippon turn away from BOF mills and eventually import excess Japanese steel slabs to use in U.S. mills for making rolls of steel sheet, the U.S. would lose local steel making capacity critical under the Buy America infrastructure law requirements and for national defense purposes. The next step would be for Nippon to then import hot rolled steel, further crowding out existing U.S. Steel BOF mills, even if subject to Section 232 tariffs. These are potential worse case scenarios.
Nippon’s global footprint is such that this sort of scenario is not only possible but likely given its closing of BOF mills in Japan. This makes its commitment to U.S. Steel’s BOF mills suspect and concerns some on Capitol Hill who are worried about job losses at a time when U.S. lawmakers under both Trump and Biden have been trying to preserve and expand local steel making capacity and labor through tariffs, quotas, and domestic content requirements in laws like the Inflation Reduction Act.
The promises Nippon’s made to workers runs through the expiration of the current union contract in 2026. Lastly, there is nothing stopping Nippon from directing capital elsewhere instead of the U.S. It could go to their JV with Arcelor, or a future EAF partnership with Ternium in Mexico. Nippon could, in the future, also turn to imports from overcapacity in Japan, something Nippon already has a history of doing considering its dumping violations.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
All White House Contenders Against U.S. Steel Sale; But Influential Global Institutions In Favor
The leading contenders for the White House all favor blocking the U.S. Steel sale to Nippon Steel of Japan, a sale that might yet reward its senior executive, David Burritt, with a $72 million pay package once it closes. Globalist-thinking institutions are all in favor of the deal. It is unclear who will come out on top as Biden extended the foreign investment review process (CFIUS) in mid-September. That gives CFIUS about 90 days to decide, meaning after the presidential election and possibly before the end of the year.
Presidential candidate Kamala Harris said on September 2 that “U.S. Steel should remain American-owned and American-operated.” But Biden could agree to the deal if CFIUS clears it before he leaves office, even allowing Harris to say – should she win – that she would not have agreed to the sale regardless if she had the final word.
Vice Presidential candidate JD Vance was first in the Senate to send a letter to U.S. Steel’s CEO Burritt and Chairman David Sutherland critical of the sale in August. “I worry about the implications of an acquisition by a foreign entity that may not share your business’s storied connection to the United States. As you evaluate offers to acquire U.S. Steel or any of its assets, I urge you to balance properly your duty to your shareholders and the interests of your country,” he wrote.
In January, less than a month after the December 18 announcement of Nippon’s $55 per share offering to buy U.S. Steel, candidate Donald Trump said he would oppose the deal. “I would block it. Absolutely,” he said.
The Trump administration imposed Section 232 tariffs on all imports of steel and aluminum on March 8, 2018, with the exception of steel and aluminum sourced from Mexico and Canada.
U.S. Steel is an iconic American steel producer. It was created by household names J.P. Morgan (the man the bank is named after), William Henry Moore (co-founder of Oreo-cookie maker Nabisco), Andrew Carnegie and Charles Schwab. The logo on the helmet of the Pittsburgh Steelers football team was first created by U.S. Steel, before becoming the steelmark logo of the American Steel and Iron Institute.
Influential Institutions Suggest Odds In Favor of Nippon Purchase
Fellows from The Atlantic Council and the Council on Foreign Relations (CFR) weighed in last month. They support the sale. Both cite the prospects of hurting relations with key allies as the U.S. tries to decouple supply chains from China.
“Friendshoring only works when the friendly behavior is reciprocated. Perhaps friends will be tolerant of occasional protectionism around especially politically sensitive transactions, but only if such actions are aberrations rather than standard operating procedure. And once a regulatory body is politicized, it can be exceedingly difficult to return to normal, technocratic operations. A word of warning—proceed with extreme caution,” said Sarah Bauerle Danzman, resident senior fellow for economic statecraft at the Geo-Economics Center of The Atlantic Council in an article published on the Council’s website on September 5.
The Atlantic Council is widely known as the think tank of NATO. That a NATO think tank is urging caution in rejecting the offer suggests a transatlantic pressure point in favor of Nippon Steel due to geopolitical risks to Washington in Asia.
Matthew Goodman, Director of the Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations wrote on September 11 that, “Japan has been a close partner not only on critical national security issues, from limiting North Korea’s weapons development to pushing back against China and Russia, but also on the very elements of economic security that the Nippon Steel transaction could advance, such as friendshoring and de-risking from China. If Japan’s Prime Minister Kishida Fumio were not stepping down this fall, the decision would be seen in Tokyo as a slap in the face to one of Biden’s closest partners. The move would make it more difficult politically for any Japanese government to follow the U.S. lead.”
Shortly after The Atlantic Council and CFR made their geopolitical case for a sale, Burritt said partnering with Japan “strengthens national security, economic security and job security. This deal will close on its merits,” the New York Times reported on September 17.
In a letter dated October 2 from Senators Elizabeth Warren (D-MA) and Sherrod Brown (D-MA), the Senators said Burritt was “in line to (possibly) receive $72 million in additional cash and benefits if the deal is completed.”
Warren and Brown asked for clarification about the financial incentives post-sale by October 16.
Securities and Exchange Commission filings show that Burritt sold more than 252,000 shares of U.S. Steel stock on December 18, 2023 (the day the merger was announced), netting him nearly $13 million as the stock price increased significantly.
With this pushback underway, Nippon and U.S. Steel are spending on lobbying efforts to win over Capitol Hill. On July 20, Nippon hired former CIA chief and Trump’s ex-Secretary of State Mike Pompeo to help them close the deal.
Nippon Spending Big to Win
Both U.S. Steel and the Japanese-owned Nippon Steel have poured record sums into lobbying as the deal faces political and regulatory hurdles, according to lobby money tracker Open Secrets
According to OpenSecrets.org, Nippon Steel had no registered U.S. lobbyists until the final quarter of 2023 but quickly built a bipartisan roster of several high-profile advocates in Washington. The Japanese steel company’s team features multiple “revolving door” officials including former Reps. Illeana Ros-Lehtinen (R-Fla.) and Filemon Vela (D-Texas) as well as former aides to Senate Majority Leader Chuck Schumer (D-NY.) and Senate Minority Leader Mitch McConnell (R-KY). After spending $30,000 in the fourth quarter of 2023, Nippon Steel quickly ramped up its spending to nearly $1.1 million over the first half of this year with $830,000 of that in the most recent quarter. Disclosures indicate that the merger is the major focus of Nippon Steel’s lobbying efforts.
U.S. Steel spent around $1.7 million on lobbying during the first half of 2024, more than triple the $545,000 it spent during the same period last year, according to disclosure forms filed with the U.S. Senate.
The deal has the support of Autos Drive America, a trade association that represents the U.S. operations of international automakers. The National Taxpayers Union, a taxpayer advocacy organization, also reported spending on lobbying in support of the deal.
Nippon Steel’s Anti-Dumping Past, and Mexican Future
Nippon is already in the U.S. with 9 joint ventures. However, they are not a primary steel producer and with the U.S. Steel acquisition they would have a blast furnace (BOF) steel maker and electric arc furnace (EAF) steel facilities (or “mini-mills”) in Alabama and Arkansas, which are different as they rely on melted recycled material to make steel rather than iron ore and coke. The steel products made by Nippon in the U.S. today require it to import steel sheets or buy domestically. This acquisition would allow them to own a bigger part of the supply chain here, so why not let them in, some say.
Indian owned global steel giant ArcelorMittal makes steel here. No one complained about them being a foreign entity.
The key difference between Nippon and ArcelorMittal was that Arcelor was never charged with dumping product into the U.S. Nippon Steel has been charged with dumping and has had at least 10 anti-dumping cases ruled against them since 2014.
Nippon has a 50/50 joint venture with ArcelorMittal at their AM/NS Calvert plant in Alabama where they are investing in a new EAF mill.
Nippon also has a presence in Mexico. In 2010, Nippon signed a joint venture with Latin American steel company Ternium to make steel sheets for sale to the automotive industry. That factory became operational in 2013. In March, Nippon announced plans to invest $66 million in a plant to make another type of steel – electrical steel sheets – also for the automotive industry.
Nippon does not have any primary steel making abilities in Mexico. Its BOF and EAFs are all in Japan, with global mills in India, Thailand, Sweden and Finland. If they get the U.S. Steel properties, they would own three BOF mills and two EAF mills. One BOF mill in Illinois is completely idled. Another one in Michigan is partially idled, but no longer doing melted and poured steel from iron ore.
Decarbonization and Japanese Exports
U.S. Steel has said it will follow the West’s desire to decarbonize the steel industry. Their BOF mills are where most of the union labor works. U.S. Steel has said it wants to invest in EAFs and decarbonize.
Nippon is closing some of its roughly 11 BOFs in Japan, causing some on Capitol Hill to worry they would do the same with U.S. Steel’s mills. Nippon said in August that it would invest $1.3 billion in two blast furnace mills – one in the Mon Valley region of Pennsylvania and the other in Gary, Indiana. Nippon’s commitments to those mills are not written in stone. Nippon can change course if market conditions warrant them to do so.
Nippon’s investment sounds like what U.S. Steel had promised for their Mon Valley Works facilities near Pittsburgh. U.S. Steel’s proposed $1.2 billion investment never happened. And they are in the process of closing three additional coke facilities at one of the Mon Valley mills located in Clairton, PA, suggesting a move away from the feedstocks needed to make steel in a blast furnace. In recent years, there have also been a string of other closures at union run plants.
Nippon is closing BOF mills in Japan. But they are investing in two new EAF mills there.
Should U.S. Steel under Nippon turn away from BOF mills and eventually import excess Japanese steel slabs to use in U.S. mills for making rolls of steel sheet, the U.S. would lose local steel making capacity critical under the Buy America infrastructure law requirements and for national defense purposes. The next step would be for Nippon to then import hot rolled steel, further crowding out existing U.S. Steel BOF mills, even if subject to Section 232 tariffs. These are potential worse case scenarios.
Nippon’s global footprint is such that this sort of scenario is not only possible but likely given its closing of BOF mills in Japan. This makes its commitment to U.S. Steel’s BOF mills suspect and concerns some on Capitol Hill who are worried about job losses at a time when U.S. lawmakers under both Trump and Biden have been trying to preserve and expand local steel making capacity and labor through tariffs, quotas, and domestic content requirements in laws like the Inflation Reduction Act.
The promises Nippon’s made to workers runs through the expiration of the current union contract in 2026. Lastly, there is nothing stopping Nippon from directing capital elsewhere instead of the U.S. It could go to their JV with Arcelor, or a future EAF partnership with Ternium in Mexico. Nippon could, in the future, also turn to imports from overcapacity in Japan, something Nippon already has a history of doing considering its dumping violations.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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