Back in April, when President Joe Biden was still running for reelection, he told a gathering of steelworkers in Pittsburgh that “I have your back.” On Friday morning, just three weeks before leaving office, he stuck a knife in their backs.
He did so by blocking Japan’s Nippon Steel’s proposed $14.9 billion purchase of the once-iconic, now-declining U.S. Steel. The ostensible rationale was “national security.” As Biden put it in a statement Friday morning, “It is my solemn responsibility as president to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry.” He added, “And it is a fulfillment of that responsibility to block foreign ownership of this vital American company.”
If only. Blocking the deal is just going to hurt the U.S. steel industry, and everyone in the industry, including the workers themselves, knows it. The real reason Biden stopped Nippon Steel from buying U.S. Steel was politics—a combination of placating his union allies and a misguided belief that U.S. Steel must remain in American hands at all costs. The irony is that this economic nationalism and union nostalgia could kill 3,000 union jobs and push U.S. Steel out of Pittsburgh.
During the election, the proposed takeover of U.S. Steel by a Japanese company became a heated issue in Pennsylvania. While Biden and Vice President Kamala Harris cited national security concerns, Donald Trump said in a Truth Social post that the tariffs he planned to place on imported steel would revive the industry. The far more likely result, however, is that Pennsylvania steelworkers will soon be out of work, as U.S. Steel had vowed to move to non-union Arkansas if its deal with Nippon Steel were turned down.
“They’re simply being ignorant and unknowledgeable,” Troy Stephenson, treasurer of United Steelworkers (USW) Local 2227, told The Free Press. “They pride themselves on foreign investments and saving jobs, and that’s not what they’re about,” added the fourth-generation steelworker, who, like many of his peers, voted for Trump.
“If there’s no company, what good are tariffs?” said Andy Macey, a mechanical repairman at U.S. Steel’s Clairton Works. Macey, 70, was a steelworker in the 1980s when U.S. Steel, unable to compete with cheap foreign imports—much of it from Japan—began shutting down factories. “When I walked out of that steel mill with my coworkers, we had tears in our eyes,” he said, remembering the daily food and unemployment lines. Macey said that a locker buddy committed suicide the night he was laid off. He pushed for the Nippon deal because he didn’t want younger steelworkers to suffer the same fate.
U.S. Steel is now down to 20,000 workers from its high of 340,000 in the 1940s. In 2021, it scrapped a $1.5 billion upgrade to the Mon Valley Works in the Pittsburgh area and purchased a new lower-cost steel mill in Arkansas instead, closing older mills and laying off 4,000 union workers as it idled mills in St. Louis and Detroit. When Nippon Steel offered to buy U.S. Steel in late 2023, it could have been—should have been—the U.S. company’s salvation.
Nippon Steel promised to invest $2.7 billion in U.S. Steel’s aging union facilities, including $1 billion in the Mon Valley. The Japanese even sweetened the pot with a $5,000 bonus for workers if the deal passed.
In recent weeks, in a last-ditch effort to save the deal, Nippon Steel made a series of even more extravagant promises, including offering the federal government a veto over any reduction in U.S. Steel’s production capacity, and a “full-time board observer.” And it agreed to provide U.S. Steel with “sufficient resources” to pursue trade complaints against foreign steel producers, including their Japanese owners—a remarkable concession.
But none of it was enough.
Local union leaders from two of the three Mon Valley plants supported Nippon, with Jason Zugai, vice president of USW Local 2227, saying that 95 percent of the union members at his Irvin Works support the deal. U.S. Steel’s corporate executives, elected officials, and hundreds of workers rallied to show their support in late November. That same month, Japanese prime minister Shigeru Ishiba warned in a letter to Biden that blocking the deal would “cast a shadow on the achievements you have accumulated over the past four years,” weakening an alliance critical to countering China.
But none of that support could override the fierce opposition of the national United Steelworkers brass, who endorsed Biden in 2020 and again in 2024 before he dropped out. USW president David McCall claimed Nippon intended to shut down Mon Valley steelmaking and subject American steel producers to Japanese dumping, a threat to U.S. national security and supply chains—claims that Nippon Steel has vehemently disputed.
McCall wants U.S. Steel to come crawling to its Ohio-based rival Cleveland-Cliffs, which made an unsolicited offer to buy it out in 2023 and lost a bidding war to the much wealthier Nippon. Waiting in the wings for Biden to block the Japanese steel giant, Cleveland-Cliffs CEO Lourenco Goncalves called Japan “not a friend” in March.
Goncalves couldn’t be more wrong. Japan is one of Uncle Sam’s closest allies. It harbors the Seventh Fleet of the U.S. Navy and is our largest source of foreign direct investment. The U.S. has insisted that the Japanese hold back their semiconductor equipment exports to help the U.S. maintain its competitive edge in the AI race with China, our actual foe. Why should Japan partner with us if we ignore their government’s pleas and block investment in American steel?
Shortly before Christmas, the Committee on Foreign Investment in the United States, which is part of the executive branch and includes representatives from a number of cabinet departments, found itself unable to come to a unanimous decision about whether or not the Nippon Steel deal should be stopped. According to the Financial Times, the three most important committee members—the Treasury Department (which leads the committee), the State Department, and the Pentagon—found no security risks. In other words, in kowtowing to a union leader who has been a long-time political ally, Biden ignored the wishes of an important ally, Japan; members of his own cabinet; and the union workers themselves. He is also hurting the country, which would be far better served if Nippon Steel reinvigorated U.S. Steel, something it is uniquely positioned to do.
A final irony: On the same day Biden blocked the Nippon Steel deal on “national security” grounds, the U.S. approved the sale of $3.6 billion worth of air-to-air missiles to Japan.
It’s all so needless. The president’s political life is over. Yes, he’s spent his long career portraying himself as a friend of unions, and especially of unionized steelworkers. But blocking the Nippon Steel deal will simply add to his already tarnished legacy.
Ethan Dodd is a journalist who lives in Washington DC and focuses on business and economics.