How the Election Is Sinking a $15 Billion Business Deal

from The New York Times I'm Sabrina. tavernes and this is the. [Music]. daily in a highly unusual move last week. the Biden Administration signaled that. it would block a Japanese company from. buying an iconic American company in a. critical swing state. today my colleague Alan rapor on the. politics that could Doom a multi-billion.

deal and what it says about the new. Power of American. [Music]. labor it's Thursday September. 12th so Alan there's been this really. interesting standoff over the potential. acquisition of us steel and now the sale. is in Jeopardy so help us understand why. this is important well there's a really. fascinating Dynamic going on here we. have a historic American company that.

was once the largest company in the. whole United States and now it's on the. brink of being bought by a Japanese. company called nepon steel and so a lot. of people including workers the union. lawmakers are not happy about this at. all and last week we got word that. President Biden was actually preparing. to go ahead and block this steel which. in a lot of ways was pretty surprising. and why is that surprising normally. presidents don't go ahead and interfere. in foreign Acquisitions like this. especially ones that are between a US.

company and countries that are allies. but as we all know we're in an election. year and this is not a normal year so. the potential to block this deal is. really about a lot more than just the. company us steel the company's located. in Pennsylvania which is going to be a. really important swing state in the. upcoming November election that can. actually end up determining who wins the. whole thing second of all culturally. it's important because of the way the. company story is interwoven with the. history of America and history of.

American labor itself okay so let's talk. about that explain a bit of that history. well it all started around the turn of. the 20th. century. 1901 these industrialists like Andrew. Carnegie and JP Morgan come together to. form us steel the company actually was. the first billion dooll company in the. United. States it was known for building some of. the most famous Bridges and skyscrapers. and some of its Steel was even used in.

the United Nations building oh wow and. its employment actually peaked around. World War II when it had 340,000 or so. workers so really a company that just in. some ways like embodied you know. American power and American greatness in. an era where that was really on the. ascent. exactly after World War II however a lot. of that started to change the company. had gotten so big but it had also become. kind of. complacent by then Germany and Japan and.

we sort of starting their Steel. Industries from scratch with a lot of. new technology that was more advanced. than what US steel was making and US. steel was actually kind of slow to adopt. a lot of these Innovations and by the. 1960s and the 1970s there had been some. labor Strife within us steel there had. been shutdowns of Mills and the US was. finally starting to see a flood of. imports from other countries around the. world and it had been pushing hard on. the United States government to impose.

some trade restrictions and tariffs to. prevent this flood of foreign steel from. totally upending its business and that. was really what started an era of. protectionism in the United States and. over the next decade or so when China. eventually started to ramp up its own. steel production that really posed a. major threat to the industry and to the. company we saw the US steel Workforce. really start to shrink at that point. from 1979 when it had about 170,000. workers to 1995 was down to about 20,000.

workers where it is right now and in. Pennsylvania where it's headquartered. there's only about 4,000 workers. [Music]. left so how does this company that's. really just a shell of its former self. wind up where it is now as this key. talking point smack dab in the middle of. the American presidential race well a. lot of it has to do with Donald Trump. thank you everybody thank you so much I. greatly appreciate it who and his first.

election campaign back in 2016 with 30. mil from Steel City Pittsburgh played a. central role in building our nation. really put a big focus on the American. worker but our workers loyalty was. repaid you know it better than anybody. with total betrayal Steel Workers mining. workers who he said you know had been. left behind by Republicans and democrats. for decades our politicians have. aggressive pursued a policy of.

globalization moving our jobs our wealth. and our factories to Mexico and overseas. he blamed a lot of this on trade deals. that had been written by both. Republicans and Democratic. administrations and he said he was going. to tear those up make better deals and. he was going to make you know American. Steel Workers great again the. politicians have proven folks have. proven they do nothing for years they. watched on the sidelines as our jobs.

vanished and our communities were. plunged into depression level. unemployment many of these areas have. still never recovered and never will. unless I become. president and when he took office he. started imposing big tariffs on steel. and aluminum imports from around the. world he said if you don't have steel. you don't have a country and Democrats. were really forced to start embracing. these kinds of populist policies as well.

right Trump really put his finger on. something important politically does US. steel ever recover I mean you said that. Trump put tariffs on Imports so did that. help it helped for a while and gave the. company some Breathing Room the company. got a bump just after the pandemic when. there was a surge in demand for steel. but that didn't last very long profits. started declining over the last couple. years the company stock price had been. flat and shareholders had been starting. to get frustrated and last year some of. it started to see us deal as a Target in.

August a company called Cleveland Cliffs. which is based in Ohio put in a bid for. the company that was unsolicited but us. steel didn't like it and that started. this whole situation where other. companies also started making bids for. us steel and then in December nepon. steel which is the fourth largest steel. company in the world and is based in. Japan put in a $15 billion offer for us. deal which they accepted so the deal was. announced and the company thought it was. a big premium for us steel they promised.

to keep the headquarters in Pittsburgh. invest in plants and bring a lot of new. technology that us steel didn't have but. the union felt blindsided and they. quickly came out against it and said we. don't support this deel so what does the. union say about it why did it not like. the deal well when you hear the union. leaders talk about their issues with it. joining us now David McCall United Steel. Workers Union International president. David it's good they list several. problems some of of them are more.

nuanced than just the fact that it's a. Japanese company and US Steel's been. shutting down steel making capacity in. this country over the last several years. they don't trust the fact that nepon is. actually going to not lay off workers. what makes it so U insincere is they. make a statement there'll be no layoffs. there'll be no plant closures but in our. discussions with them they say there'll. be no plant closures there'll be no. layoffs unless there's a business plan. change well that's and they're are. concerned about what might happen once. their existing contract ends and for our.

members it's making sure that it is a. domestic owner that continues to be able. to back stop not only our labor. agreements but our pension plans our. retire health care plans and to make. sure they don't trust the fact that you. know a lot of the benefits that they. currently have are actually going to. continue into the future and Alan are. there grounds for the union to think. that is that true it's hard to say I. think a lot of this comes from the fact. that they felt blindsided and not looped.

into the fact that this deal was. happening or that management was going. to accept it there was definitely a lot. of mistrust between the union and. management that's been festering over. the last few years union leaders have. been saying that this is really just a. ploy by the chief executive of us steel. to get a big payout or golden parachute. as they say it when a company changes. control to another. company and so while a lot of these. issues have been sort of bubbling up. under the surface for a while the unions.

lobbying against the deal has really. been ramping up and intensifying as the. election has been drawing. closer and the big question is whether. or not all this political pressure is. going to. [Music]. work we'll be right back.

so after the deal is announced the union. starts applying political pressure to. prevent nepon steel from buying us steel. what happens how do we see that play out. so almost immediately after the deal was. announced in December there was. political push back outrage was bubbling. up you were hearing from all kinds of. politicians across the political. spectrum that this deal should not go. through Democratic senator John fedman. from Pennsylvania came out against it. Pennsylvania State Governor Josh Shapiro. expressed concerns JD Vance came out.

saying that the deal you know need to be. blocked but at the presidential level we. saved the steel industry now us steel is. being bought by Japan Donald Trump was. the first to make a move coming out. against the deal I would block it I. think it's a horrible thing when Japan. buys us steel I would block it. instantaneously absolutely and his. comments put direct pressure on Biden. who was still a candidate at the time. and he had to say something about us. steel us steel has been an iconic.

American company for more than a century. and it should remain a totally American. [Applause]. company he's built himself as the most. pro-union president ever and by the. spring Biden finally comes out and. support of the steel workers American. owned American operated by American. Union Steel Workers the best in the. world and it's that's going to happen I. promise you but of course Biden drops. out of the race and vice president. Harris becomes Democratic nominee when.

unions are strong America is. strong and we will continue to. strengthen America's. manufacturing sector and and then she. goes ahead and adopts Biden's position. on the merger to drive that point home. she says it at a rally in Pittsburgh on. Labor Day us steel should remain. American owned and American operated.

and I will always have the back of. America's steel. workers so it's kind of this funny. situation where all the candidates Trump. Biden and Harris all agree on a. policy right there's this kind of arms. race for who can actually show American. workers in the state that they have. their interests at heart the most. exactly I mean it really shows how labor. and steel have become the sort of. political OPP poster child in this.

election and so that's what set off this. protracted standoff and it's really put. us Steel in a difficult situation trying. to figure out what they're going to do. with this nipon bid and figure out. whether or not it's going to go forward. so on the national stage we're seeing. the presidential candidates really. compete for the steel workers vote which. makes sense because they need. Pennsylvania to win Biden has actually. gone a step further signaling that he. will block the deal but at this point. he's no longer in the race so why is he. doing this and how is he justifying this.

intervention so even though Biden's out. of the race he still wants Harris to win. and he's clearly hoping to give. Democrats a leg up with this move and so. the means by which he's going to. potentially block the deal has to do. with this shadowy inter agency panel. known as cifas which is the committee on. foreign investment in the United States. kind of a mouthful indeed it's kind of. an obscure panel made up of cabinet. officials across the government and it's. led by the treasury Department it.

reviews foreign Acquisitions of. sensitive companies infrastructure all. kinds of things that might potentially. pose a threat to the United States and. it has the power to make recommendations. to block these. transactions and Alan what's the. implication here because of course Japan. is an important Ally to the United. States specifically regarding China. which of course is an adversary so it's. very interesting and kind of odd that a. Japanese company would be seen as a. security threat have they actually said. anything about what the concerns. actually are not publicly the potential.

National Security concerns that they. might raise are the idea that Japan or a. Japanese company getting a hold of us. steel could potentially jeopardize you. know the security of the US steel sector. more broadly and that that's an issue if. there was sort of a National Emergency. crisis and the United States needed. steel for various reasons I think. there's also been a more broadly. considered view of National Security and. economic security and how they're.

defined and the idea that this could. erode the US industrial base if. something happens to this company is. also something that they might say is. you know a reason to block the deal so. what does US steel say about all of this. so they've continued to defend the logic. of the deal saying that they don't see. any national security threats this is. going to be good for workers good for. workers in Pennsylvania and that nepon. steel really is the only option for. allowing them to continue to invest in.

Pennsylvania but they've also been. giving some other indications that if it. doesn't go through there could be some. repercussions for uh Pennsylvania Steel. Workers they've suggested that there. could be plant closures layoffs and that. they might even consider relocating out. of the state so they can focus on some. of their plants in the South where they. don't have to rely on union labor and so. a lot of people in Pennsylvania see this. as a threat and they're not happy about. the fact that us steel is raising the. spect of leaving if this deal gets.

blocked interesting a US deal leaving. Pennsylvania would be a really bad thing. for the state and for those workers but. How likely is this to happen if nepon. steel doesn't buy this. company it's hard to know if they're. bluffing or not but I think it is. definitely a possibility I think you. know the company definitely does not. like the idea of the federal government. interfering with some sort of free. market transaction if it does happen it. most likely would happen after the. election ction obviously the union is.

not particularly happy but there's also. the possibility that nepon will live up. to their word make these big investments. in Pennsylvania potentially reopen some. of these idle plants in the Midwest and. potentially revive us steel and what if. it doesn't go through well that'll be. the most interesting situation I think. you'll probably see other companies. potentially Cleveland Cliffs or others. that made the initial bids for us deal. try to get back in the game I think. there will be a lot of backlash from. different quarters particularly Japan.

we've already heard from some lawmakers. in Japan saying it really makes no sense. for the United States to move forward. and block this deal and it's not. justified other us allies will. definitely be raising their eyebrows as. well particularly ones where the United. States is often preaching open markets. and the necessity of that I think it'll. make it harder for United States to be. able to make that case but I think it. definitely will raise some questions for. potential foreign investors who want to.

invest in Pennsylvania or in other. potentially politically sensitive States. or sectors you know whether or not they. should actually move forward with those. deals because they might get blocked so. Alan is it possible that this whole move. by Biden could just backfire like in his. scramble to show that he's all for. American ownership and Team USA he ends. up hurting the very workers he's trying. to protect and the very swing state he's. trying to win there's definitely that.

possibility there's a lot of potential. tradeoffs that have to be weighed here. and a lot of potential reverberations. that could happen depending on what he. does and if the deal is blocked and I. think that really puts the Biden. Administration in a difficult position. where they have to weigh the possibility. that you know in trying to help these. workers and keep this company. American-owned and in Pennsylvania in. the longer term they may end up costing. jobs in the state that they're trying to.

help on the other hand I think the. short-term politics are really difficult. to resist and those forces are really. strong the idea of giving us steel away. to a Japanese company and letting that. happen is something that's really. uncomfortable for a lot of people and I. think the potential ramifications of. that and the fact that the union and. labor which is so powerful and so. important particularly in election year. is against it is something that's really.

hard to. avoid Alan thank you thanks very. [Music]. much on Wednesday CEOs of nepon Steel. and US steel met with representatives. from over half a dozen US government. agencies in a last ditch effort to save. save the $15 billion.

[Music]. deal we'll be right. back here's what else you should know. today the latest numbers on the economy. show inflation is continuing to slow the. Consumer Price Index for the month of. August was. 2.5% down from 2.9% in July and it's low. level in 3 and 1/2.

years however one detail that could give. economic officials pause is housing. inflation those numbers for August. remained high but mainly the report. confirmed that inflation a key issue for. voters is continuing to cool after. surging in 2021 and. 2022 it's seen as the final big economic. measure before the Federal Reserve Cuts. interest rates for the first time since.

early 2020 a move it's expected to make. at its meeting next. [Music]. week today's episode was produced by. Diana win and Sydney Harper with help. from Olivia Nat it was edited by Lexi di. with help from Michael benois fact. checked by Susan Lee contains original. music by Dan Powell will Reed and.

and was engineered by Alyssa Moxley our. theme music is by Jim brunberg and Ben. Lansford of. [Music]. Wonderland that's it for the daily I'm. Sabrina Tavern see you tomorrow. [Music].