The Uncertain Future of U.S. Steel
In September 2024, President Biden announced that he intended to block Nippon Steel’s $14.9 billion acquisition of U.S. Steel that was announced in the year prior (Lynch & Stein, 2024). President-elect Trump has repeatedly affirmed that he would do the same. One might think that this bipartisan agreement signals a rare consensus in which both parties truly have the best interests of the American people in mind — but scores of politicians, economists, and steelworkers disagree.
Once the largest corporation in the world, U.S. Steel has since sunk to twenty-fourth in global steel production, and it is no longer even the foremost steel manufacturer within its eponymous United States. The struggling Pittsburgh titan produced less steel in 2022 than it did in its first year of business more than a century ago (Boselovic, 2001; Annual Report, 2022). The decline of U.S. Steel reflects a broader downturn in the American steel industry, which lost 35 percent of its production between 1970 and 1987 even as global production rose 21 percent (Berman, 2024). However, the proposed acquisition has the potential to reverse that trend and reposition U.S. Steel as a major global player. Nippon Steel has pledged $2.7 billion in investments to modernize U.S. Steel’s facilities in Indiana and Pennsylvania, bolstering domestic operations at a time when certain steel-intensive industrial sectors like electric vehicle manufacturing are booming. With the potential combined firm becoming the third-largest steel producer in the world, this strategic consolidation promises not only lower prices for U.S. buyers but also improved supply chain security — a key aspect of the Biden administration’s friendshoring strategy aimed at strengthening economic partnerships with our allies so as to wean domestic consumption off of Chinese-made goods. For some focused on the international economic pecking order, this ostensible alignment between the proposed acquisition and the current administration’s stated policy objectives discredits the blockage’s rationale. Currently, China dominates the global steel market, but the Japanese takeover would form a large enough base of production to be internationally viable. Crucially, Nippon has promised that this transition would involve “no job losses, no plant closures, and no transfers of production” (CBS, 2024).
However, many are wary of these promises, including president of the United Steelworkers (USW) David McCall. McCall warns that even if current levels and distribution of production are maintained for a few years post-takeover, a Nippon-led U.S. Steel will inevitably shut down costly union-staffed facilities in the North in favor of cheaper non-union counterparts in the South or overseas (McCall, 2024). The official condemnation of the deal by the USW likely influenced the subsequent decisions of Biden and Trump to themselves denounce it. Some shrewd observers argue that this move from both sides was purely political and has nothing to do with what is best for the American people: to do anything but reject the deal would have risked jeopardizing union worker support in key swing states like Michigan, Ohio, and Pennsylvania in the 2024 election. Biden and unsuccessful Democratic nominee Kamala Harris had primarily framed their opposition as a defense of American economic sovereignty and workers’ interests, arguing that U.S. Steel should always remain domestically owned. Trump has similarly vowed to block the deal when he enters office, emphasizing the need to protect the American steel industry from foreign control as part of his larger “America First” plan. A bipartisan coalition of lawmakers, led by senators from steel-producing states, has also raised national security concerns, citing Nippon’s previous partnerships with Baoshan Iron & Steel, a Chinese state-owned firm (Berman, 2024). Although Nippon ended this partnership in August 2024, doubts remain about the long-term security implications of the acquisition.
Executives from Nippon and U.S. Steel argue that the merger would enhance U.S. national security by creating a more competitive alternative to China’s dominant steel producers. U.S. Steel CEO David Burritt has repeatedly emphasized that the combined firm would be better positioned to compete globally and safeguard American interests. However, McCall points out that Burritt stands to secure a $70 million payout if the takeover is completed, as he will be given a golden parachute agreement to exit his current role (McCall, 2024). As it stands today, the deal is in limbo, facing a litany of significant challenges due to union resistance, political opposition, and national security concerns, leaving the future of U.S. Steel uncertain. In light of the recent election, the acquisition is almost certainly doomed unless Trump’s stated opposition truly was a purely political move and he subverts expectations. It would not be the first time.
Edited by Justin Hahm
References
2022 Annual Report—U.S. Steel. (2022). https://investors.ussteel.com/sec-filings/all-sec-filings/content/0001104659-23-030780/tm231813d6_ars.pdf
Berman, N. (2024). Why Biden Wants to Block the Nippon-U.S. Steel Deal. Council on Foreign Relations. https://www.cfr.org/in-brief/why-biden-wants-block-nippon-us-steel-deal
Boselovic, L. (2001). Steel Standing: U.S. Steel Celebrates 100 Years. Pittsburgh Post-Gazette. https://web.archive.org/web/20181012210047/http://old.post-gazette.com/businessnews/20010225ussteel2.asp
Lynch, D., & Stein, J. (2024). Biden preparing to block Nippon Steel purchase of U.S. Steel. The Washington Post. https://www.washingtonpost.com/business/2024/09/04/biden-prepares-reject-us-steel-deal/
McCall, D. (2024). Here’s why the United Steelworkers oppose Nippon’s takeover of U.S. Steel. Fortune. https://fortune.com/2024/10/04/united-steelworkers-nippon-takeover-us-steel/
The Founding of U.S. Steel and the Power of Public Opinion. (2019). Harvard Business School. https://www.library.hbs.edu/us-steel/exhibition/the-founding-of-u.s.-steel-and-the-power-of-public-opinion
Getty Images. What next for US Steel? [Photograph]. The Economist. https://www.economist.com/business/2025/01/09/what-next-for-us-steel
