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Nippon Steel, US Steel Send Letter to Biden on Merger Plans

The Edgar Thomas Plant of the United States Steel Corporation in Braddock, Pennsylvania, on October 27, 2022. Branden Eastwood/AFP/Getty Images
The Edgar Thomas Plant of the United States Steel Corporation in Braddock, Pennsylvania, on October 27, 2022. Branden Eastwood/AFP/Getty Images
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Nippon Steel, US Steel Send Letter to Biden on Merger Plans

The Edgar Thomas Plant of the United States Steel Corporation in Braddock, Pennsylvania, on October 27, 2022. Branden Eastwood/AFP/Getty Images
The Edgar Thomas Plant of the United States Steel Corporation in Braddock, Pennsylvania, on October 27, 2022. Branden Eastwood/AFP/Getty Images

Nippon Steel and US Steel have sent a letter to US President Joe Biden about their planned $15 billion merger after media reported that he was preparing to block the deal, a spokesperson for the Japanese steelmaker said.

The spokesperson did not provide details about the letter's content, but said it was signed by Nippon Steel Chief Executive Eiji Hashimoto and US Steel CEO David Burritt as well as other executives.

US Steel did not immediately respond to a request for comment outside of US business hours. The US embassy in Japan did not immediately have comment.

Japan's biggest steelmaker is pursuing a cash deal to buy the 123-year-old US Steel, despite resistance from Biden, the United Steel Workers (USW) union and many members of Congress while a US national security review is conducted.

The deal has also been opposed by both Republican presidential nominee Donald Trump and Democratic nominee Kamala Harris. Both are vying to win the critical swing state of Pennsylvania, where US Steel is headquartered.

The Committee on Foreign Investment in the United States (CFIUS) told the companies in an Aug. 31 letter seen by Reuters the deal would create national security risks because it could hurt the supply of steel needed for critical transportation, infrastructure, construction and agriculture projects.

A top Nippon Steel executive and US Steel's CEO met with senior US officials on Wednesday in an effort to salvage the deal, a person familiar with the matter said.

The outcome of the meeting was not immediately clear.

The Japan Business Federation and a number of US business groups, in a letter to Treasury Secretary Janet Yellen on Wednesday, raised concerns that the Biden administration's national security review of the deal is being unduly influenced by political pressure.

On Friday, Japan's Minister of Economy, Trade and Industry Ken Saito declined to comment on the deal, saying that doing so would interfere in US domestic affairs.

But Saito added: “It is extremely important that Japanese and US companies continue to make transactions and the growth in deals constitutes a key element of the strong economic relationship between the two nations.”

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US Locks in Steep Tariff Hikes on Chinese Imports

Stacked containers and cranes are shown at the Port of Los Angeles in Los Angeles, California (AFP)
Stacked containers and cranes are shown at the Port of Los Angeles in Los Angeles, California (AFP)
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US Locks in Steep Tariff Hikes on Chinese Imports

Stacked containers and cranes are shown at the Port of Los Angeles in Los Angeles, California (AFP)
Stacked containers and cranes are shown at the Port of Los Angeles in Los Angeles, California (AFP)

The Biden administration on Friday locked in steep tariff hikes on Chinese imports, including a 100% duty on electric vehicles, to strengthen protections for strategic domestic industries from China's state-driven excess production capacity.

The US Trade Representative's office told Reuters that many of the tariffs, including a 100% duty on Chinese EVs, 50% on solar cells and 25% on steel, aluminium, EV batteries and key minerals, would go into effect on Sep 27.

The USTR determination showed a 50% duty on Chinese semiconductors, which now include two new categories - polysilicon used in solar panels and silicon wafers - are due to start in 2025.

Adjustments to the punitive “Section 301” tariffs on $18 billion worth of goods announced in May by President Joe Biden were minimal and disregarded auto industry pleas for lower tariffs on graphite and critical minerals needed for EV battery production because they are still too dependent on Chinese supplies.

USTR left unchanged the tariff increase to 25% from zero on lithium-ion batteries, minerals and components, with the increase for batteries for EVs taking effect Sep 27 and those for all other devices, including laptops and cell phones, on Jan 1, 2026.

Lael Brainard, the top White House economic adviser, told Reuters that the decision was made to ensure that the US EV industry diversifies away from China's dominant supply chain.

She said such “tough, targeted” tariffs are needed to counteract China's state-driven subsidies and technology transfer policies that have led to over-investment and excess production capacity.

But Washington is investing hundreds of billions of dollars worth of its own tax subsidies to develop domestic EV, solar and semiconductor sectors.

“The 100% tariff on electric vehicles here does reflect the very significant unfair cost advantage that Chinese electric vehicles in particular are using to dominate car markets at a breathtaking pace in other parts of the world,” Brainard said.

China has vowed retaliation against the “bullying” tariff hikes and argued that its EV industry's success is due to innovation, not government support.

The higher US tariffs take effect as Vice President Kamala Harris and former President Donald Trump are both courting voters in auto and steel producing states, trying to position themselves as tough on China ahead of the November presidential election.

Trump has vowed to impose 60% tariffs on all Chinese imports.

The European Union and Canada also have announced new import tariffs on Chinese EVs, the latter matching the 100% US duties.

The final tariff decision does provide some temporary relief for US port operators who were facing a new 25% tariff on massive ship-to-shore cranes, an industry that China dominates with no US producers.

The duty would add millions of dollars to the cost of each crane.

USTR said it will allow exclusions from the tariffs for any Chinese port cranes that were ordered prior to the May 14 initial tariff announcements, as long as they are delivered by May 14, 2026.

USTR raised tariffs to 50% on medical face masks and surgical gloves, from an initially proposed 2%, but delayed their start to allow a shift to non-Chinese suppliers.

The planned duty on Chinese syringes, which were in short supply during the COVID-19 pandemic, will immediately rise to 100% from a previously planned 50%, but USTR will allow a temporary exclusion for enteral syringes, used to feed infants, for a year.

The agency also said it will consider requests for tariff exclusions for five Chinese industrial machinery categories, including those for machinery for purifying or filtering liquids, industrial robots and printing machinery.

It will allow tariff exclusions for Chinese solar wafer and cell manufacturing equipment, but not for equipment used to make full solar modules.