The first joint lawsuit from US Steel and Nippon Steel directly targets the members of the US government officially responsible for the decision, Treasury Secretary Janet Yelen and Attorney General Merrick Garland. Also targeted is the famous commission on foreign investments, the CFIUS, responsible for examining the risks to national security of foreign establishments and participations in the fields of infrastructure and technology. “The President and CFIUS have corrupted and compromised an essential mechanism for protecting national security to serve the personal political objectives of the presidency,” assure the two plaintiffs.
Their second federal appeal attacks Lourenço Gonçalves, boss of the Cleveland-Cliffs steelworks and rival of Nippon Steel in the takeover of US Steel, as well as David McCall, president of the metal workers’ union, the United Steelworkers, strong of 1.2 million members, accusing them both of collusion with the White House in order to oust the Japanese, world number three already largely established in the United States.
Diplomatic consequences to be expected
Joe Biden assures that this acquisition would “put one of the largest American steel producers under foreign control”, whose rolled sheets also equip the United States armed forces. But his own national security advisers have been warning him for a year about the economic and diplomatic consequences of such a veto of a company from an allied country. Since the creation of CFIUS in the 1970s, American presidents have only issued eight foreign investment bans, most of them in the last decade, mainly targeting Chinese companies.
But US Steel is a special case. The former number 1, today relegated to 24th in the world far behind the leaders Nippon Steel and the Chinese Ansteel, still has the prestige of a national monument, especially in the heart of the Rust Belt, in Pennsylvania, a crucial pivotal state during the last presidential election.
Since the announcement of the takeover project, in December 2023, Joe Biden took the side of United Steelworkers who feared that Nippon Steel, in the name of its project to modernize the American metallurgist, would reduce the presence of unions in US Steel factories. . At the same time, Cleveland-Cliffs, another historic company ousted during the initial call for tenders, returned to the running, arguing above all its loyalty to the unions. Only problem: this potential buyer, one of the three American steel producers, with Nucor and US Steel, which account for half of American production, would certainly come up against federal anti-trust regulations.
Without illusions, US Steel and Nippon Steel are unofficially asking Donald Trump to reverse his predecessor’s decision. But the next president has already several times confirmed his nationalist hostility to the takeover, which is openly shared, in the name of national security, by his prospective Minister of Foreign Affairs, the Republican Marco Rubio. Lourenço Gonsalves, boss of Cleveland-Cliff, is banking on the leniency of future competition authorities, and in the absence of a takeover of US Steel, on the new situation in the steel sector. “The situation, like the market, has changed,” he confided this week. A new president arrives, and with him, the protection of new customs duties.
Source: www.usinenouvelle.com
