Nippon Steel Proposes Biden Government Veto Over US Steel's Production Output In Bid To Secure Acquisition

Zinger Key Points

Biden, who has until Jan. 7 to make a decision, opposes the deal, aligning with United Steelworkers union president David McCall.
The move seeks to address concerns raised by the Committee on Foreign Investment in the United States about potential risks to U.S.
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Nippon Steel NPSCY proposed granting the U.S. government veto power over reductions in U.S. Steel Corp’s X production capacity in a bid to secure approval from President Joe Biden for its $14.9 billion acquisition of the American steelmaker.

The Washington Post, which first reported this story, noted the proposal is aimed at mollifying the Committee on Foreign Investment in the United States, which warned last week that Japan-based Nippon Steel's takeover of U.S. Steel could lead to a decline in domestic steel output that would pose "risks to the national security of the United States."

Biden, who faces a Jan. 7 deadline to make a decision, opposed the deal, aligning with United Steelworkers Union President David McCall, who criticized Nippon Steel's bid as harmful to workers and questioned its commitment to unionized operations. Despite internal White House debates, Biden's stance diverges from advisers who favor the acquisition.

Nippon Steel's latest offer includes a 10-year commitment to maintaining production capacity at mills in six states, requiring significant investment beyond its $2.7 billion pledge for operations in Pennsylvania and Indiana. It also includes a two-year guarantee for a mostly idle steel mill in Granite City, Illinois. The company also has promised no layoffs or closures of unionized facilities until at least September 2026.

Nevertheless, union opposition remains strong. McCall accused Nippon Steel of planning to shift work to nonunionized facilities. He has also raised concerns about the company's history of undercutting U.S. markets by selling steel below cost. Nippon Steel rebutted these claims, alleging McCall has leveraged political ties with Biden to oppose the transaction.

Divide Among Workers

The sale has created a divide within the steelworkers' union. While leadership opposes the deal, rank-and-file members at aging mills slated for modernization have expressed support. The company's revised "national security agreement" includes legally binding commitments aimed at easing concerns. But that has not swayed McCall, who dismissed the proposal as unenforceable.