How the Election Is Sinking a $15 Billion Business Deal
8Digest
This episode of The Daily from the New York Times delves into the Biden administration's potential block of a Japanese company's acquisition of US Steel, a historic American company. The episode explores the political and economic implications of this move, particularly in the context of the upcoming presidential election. The episode begins by discussing the political dynamics surrounding the potential acquisition of US Steel by Nippon Steel. It highlights the importance of Pennsylvania as a swing state and the cultural significance of US Steel in American history and labor. The episode then traces the history of US Steel, from its formation in 1901 to its decline in the latter half of the 20th century. It discusses the company's role in American industrial power and its struggles with globalization and competition. The episode examines Donald Trump's role in the resurgence of US Steel, focusing on his campaign promises to protect American jobs and his implementation of tariffs on steel imports. It explores the short-term benefits and long-term challenges faced by the company. The episode presents the United Steelworkers Union's perspective on the Nippon Steel acquisition, highlighting their concerns about job security, benefits, and the potential for plant closures. The episode details the political pressure exerted by various politicians, including Trump, Biden, and Harris, to prevent the Nippon Steel deal. It emphasizes the importance of the steel workers' vote in Pennsylvania and the candidates' efforts to demonstrate their support for American labor. The episode explains Biden's decision to signal his intention to block the deal, despite being out of the presidential race. It introduces the Committee on Foreign Investment in the United States (CIFIIS) and its role in reviewing foreign acquisitions. The episode discusses US Steel's defense of the deal and their warnings about potential repercussions for Pennsylvania workers if it is blocked. It explores the possibility of plant closures, layoffs, and relocation. The episode examines the potential backlash from Japan and other US allies if the deal is blocked. It discusses the implications for foreign investment in the United States and the potential for Biden's intervention to backfire.
Outlines
The Politics of US Steel Acquisition
This episode of The Daily from the New York Times discusses the Biden administration's potential block of a Japanese company's acquisition of US Steel, a historic American company. The episode explores the political and economic implications of this move, particularly in the context of the upcoming presidential election. It delves into the political dynamics surrounding the potential acquisition of US Steel by Nippon Steel, highlighting the importance of Pennsylvania as a swing state and the cultural significance of US Steel in American history and labor.
The History and Impact of US Steel
The episode traces the history of US Steel, from its formation in 1901 to its decline in the latter half of the 20th century. It discusses the company's role in American industrial power and its struggles with globalization and competition. It examines Donald Trump's role in the resurgence of US Steel, focusing on his campaign promises to protect American jobs and his implementation of tariffs on steel imports. It explores the short-term benefits and long-term challenges faced by the company.
Political Pressure and Potential Consequences
The episode presents the United Steelworkers Union's perspective on the Nippon Steel acquisition, highlighting their concerns about job security, benefits, and the potential for plant closures. It details the political pressure exerted by various politicians, including Trump, Biden, and Harris, to prevent the Nippon Steel deal. It emphasizes the importance of the steel workers' vote in Pennsylvania and the candidates' efforts to demonstrate their support for American labor. The episode explains Biden's decision to signal his intention to block the deal, despite being out of the presidential race. It introduces the Committee on Foreign Investment in the United States (CIFIIS) and its role in reviewing foreign acquisitions. It discusses US Steel's defense of the deal and their warnings about potential repercussions for Pennsylvania workers if it is blocked. It explores the possibility of plant closures, layoffs, and relocation.
Potential Backlash and Trade-offs
The episode examines the potential backlash from Japan and other US allies if the deal is blocked. It discusses the implications for foreign investment in the United States and the potential for Biden's intervention to backfire.
Keywords
CIFIIS (Committee on Foreign Investment in the United States)
An interagency panel that reviews foreign acquisitions of sensitive companies and infrastructure in the United States. It has the power to recommend blocking transactions that pose a threat to national security.
Swing State
A state in a US presidential election where the outcome is uncertain and could potentially determine the winner of the election. Pennsylvania is a key swing state in the 2024 election.
Globalization
The process of interaction and integration among people, organizations, and governments worldwide. It has led to increased trade, investment, and cultural exchange, but also to challenges for domestic industries and workers.
Protectionism
Economic policies that aim to protect domestic industries from foreign competition through measures such as tariffs, quotas, and subsidies. Protectionist policies can have both positive and negative effects on the economy.
Labor Union
An organization that represents workers in a particular industry or profession. Unions advocate for better wages, working conditions, and benefits for their members.
Q&A
Why is the Biden administration considering blocking the Nippon Steel acquisition of US Steel?
The administration is concerned about the potential national security implications of a Japanese company controlling a major American steel producer. They also believe that the deal could erode the US industrial base and harm American workers.
What are the political implications of this move, particularly in the context of the upcoming presidential election?
The acquisition has become a major political issue, with both Democrats and Republicans vying for the support of steel workers in Pennsylvania, a key swing state. The Biden administration's intervention is seen as an attempt to appeal to labor unions and demonstrate their commitment to protecting American jobs.
What are the potential consequences for US Steel and its workers if the deal is blocked?
US Steel has warned that blocking the deal could lead to plant closures, layoffs, and even relocation out of Pennsylvania. The union is also concerned about the potential impact on workers' benefits and job security.
What are the broader implications of this situation for foreign investment in the United States?
The Biden administration's intervention could create uncertainty for foreign investors who are considering investing in politically sensitive sectors or states. It could make them hesitant to proceed with deals, fearing that they might be blocked for political reasons.
Show Notes
In a highly unusual move, the Biden administration signaled last week that it would block a Japanese company from buying an iconic American company in a critical swing state.
Alan Rappeport, who covers the Treasury Department for The Times, discusses the politics that could doom the multibillion-dollar deal, and what it says about the new power of American labor.
Guest: Alan Rappeport, an economic policy reporter for The New York Times.
Background reading:
- President Biden is expected to block Nippon Steel’s takeover of U.S. Steel.
- How swing-state politics are sinking a global steel deal.
For more information on today’s episode, visit nytimes.com/thedaily. Transcripts of each episode will be made available by the next workday.
Table of contents
United States
Finance fun fact: US Steel first company to become a billion dollar company