Tangle - The U.S. Steel sale, explained.

I’m Isaac Saul, and this is Tangle: an independent, nonpartisan, subscriber-supported politics newsletter that summarizes the best arguments from across the political spectrum on the news of the day — then “my take.”

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Today's read: 13 minutes.

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Quick hits.

1. Ryan Wesley Routh, the suspect in Sunday’s assassination attempt on former President Donald Trump, appeared in court to face federal gun charges. (The latest) Separately, The Wall Street Journal reported that Routh had been flagged by U.S. authorities for erratic behavior in recent years. (The report)
2. Boeing is planning to freeze hiring and potentially conduct temporary layoffs amid a factory workers’ strike that began last week. (The strike)
3. Ohio Gov. Mike DeWine (R) announced he is sending the state police to Springfield, Ohio, to bolster security after multiple bomb threats forced elementary schools to evacuate in the past week. (The announcement)
4. Oral arguments in federal court began in TikTok’s challenge to a law that would ban the social media app in the U.S. if it is not sold. (The case)
5. The Senate will vote today on legislation to establish a nationwide right to in vitro fertilization. (The vote)

Today's topic.

The potential sale of U.S. Steel. On Friday, The Washington Post reported that President Joe Biden is unlikely to make a decision on whether to block Japanese steelmaker Nippon Steel’s bid to acquire U.S. Steel until after the election. White House officials said Biden remains opposed to the deal but is reportedly concerned about the economic and political ramifications of doing so. 

Back up: In December 2023, U.S. Steel agreed to be acquired by Nippon in a $14.1 billion acquisition after a months-long sales process that included a lower bid from Ohio-based Cleveland-Cliffs. Nippon is Japan's largest steelmaker, and the acquisition would make them the world’s second-largest steel producer by capacity behind China Baowu Steel Group. U.S. Steel, which is headquartered in Pittsburgh, Pennsylvania, formed in 1901 and was once the largest steel producer and largest corporation in the world. In recent decades, however, the company — along with the broader domestic steel industry — has declined. 

The acquisition must be approved by both U.S. Steel’s shareholders and federal regulators. In April, shareholders approved the deal, but regulatory review by the Committee on Foreign Investment is ongoing, and the White House says it is waiting for the interagency review board’s recommendation. 

What’s happened: The United Steelworkers union, which represents about 11,000 workers at U.S. Steel, immediately opposed the deal and was joined by some Democratic and Republican politicians, including Pennsylvania Sens. John Fetterman (D) and Bob Casey (D). Critics of the acquisition say it poses a threat to the U.S. steel industry and supply chains, while United Steelworkers’ leadership worries that Nippon would not honor pension agreements or keep its promise to invest in facilities in Pennsylvania.

However, U.S. Steel has said that it may close some operations in Pennsylvania and even relocate its Pittsburgh headquarters if the acquisition does not go through. Many steelworkers and Pittsburgh-area politicians support the deal, viewing it as a lifeline for the steel industry (Nippon has pledged to invest $2.7 billion in U.S. Steel’s facilities). Chris Kelly, the mayor of West Mifflin, Pennsylvania (which is home to a U.S. Steel plant), said he worries that a failed deal will shutter the plant, resulting in job losses, tax hikes, and reduced public services. 

Despite these concerns, both the Democratic and Republican presidential nominees have vocally opposed the deal. In April, President Biden vowed to block the acquisition, calling U.S. Steel “an iconic American company for more than a century” that “should remain totally American.” Vice President Kamala Harris affirmed her opposition to the deal earlier this month during a campaign event in Pennsylvania. Former President Donald Trump said he would "instantaneously" block the deal if elected. 

What now: In May, Nippon Steel postponed closing the deal in response to a Justice Department request for more documentation. The deal is expected to close by December. Earlier this month, NBC News reported that Biden was preparing to formally block the acquisition, but recent reporting suggests the president is reevaluating the decision. 

Today, we’ll dive into arguments about the deal from the right and left, followed by my take. 

What the right is saying.

• The right mostly supports the deal, suggesting it offers a crucial lifeline to the American steel industry.
• Some question the logic of Biden’s opposition to the acquisition.
• Others say national security concerns outweigh potential economic gains.

In The Wall Street Journal, Charlie Dent wrote “Biden may sabotage the steel industry.”

“The American steel industry has faced significant challenges for decades. Global competition has intensified, and despite various efforts to revitalize the industry, many companies are struggling to stay afloat. The U.S. government continues to intervene with domestic subsidies, job-killing tariffs and ‘buy America’ policies to protect the declining industry. But these interventions often come at a high cost to taxpayers, workers and consumers,” Dent said. “Japan-based Nippon Steel is one of the world’s leading steel producers. It’s offering a different path forward for U.S. Steel. We share deep military, economic and cultural ties with Japan, whose companies have a proven history of responsible investment in the U.S.”

“The reality remains that if the deal falls through, U.S. Steel has warned that plant closures could be on the horizon. This news should be a wake-up call for American taxpayers, steelworkers, consumers and policymakers,” Dent wrote. “Why should the U.S. government continue to pour billions of taxpayer dollars into subsidizing an industry that a reputable, financially sound investor is willing to sustain and revitalize? This isn’t about selling out American interests; it’s about taking advantage of the strengths of a friendly ally to build a more resilient American steel industry.”

In National Review, Dominic Pino said the government’s “steel strategy stinks.”

“The play here is to reject a very generous offer, against the near-unanimous wishes of the people who own the company, from a buyer who is promising to do the things you want to happen, because the buyer is from . . . Japan,” Pino wrote. “America’s best friend in Asia? The country whose prime minister addressed Congress earlier this year and said ‘the people of Japan are with you, side by side, to assure the survival of liberty’? The current top source of foreign-direct investment in the U.S.? That the U.S. is treaty-bound to defend if attacked? Where 55,000 U.S. troops are stationed? Seriously?”

“Rejecting the investment would probably cost jobs in Pennsylvania. It would also make it more challenging to modernize outdated equipment, harming the ability of the company to stay competitive in the future,” Pino said. “Biden was always going to do what the union bosses wanted, because that’s what Democrats do. But Republican opposition on ‘strategic’ grounds is just as nonsensical as opposition on economic grounds. The supposedly pragmatic realism of populist economics is anything but.”

In Newsweek, Sen. Marco Rubio (R-FL) argued the sale “is bad news for national security.”

“It's hard to think of a more poignant metaphor for the deindustrialization of America. But the sale of U.S. Steel isn't just symbolic. It also presents real danger to our long-term economic and national security,” Rubio wrote. “Some of our fellow conservatives scoff at our concerns. They note that Japan is a close ally to the United States. What objection could one possibly have to allowing a friend to control one of our most important steel companies? Of course it is true that Japan is an ally… But even the best of friends don't see eye to eye on everything—to argue otherwise in the dangerous realm of national security would be foolish.”

“We must abandon the ‘short-termism’ and naïve globalism so prevalent on both Left and Right. Far too many seem to think that immediate profits matter, while long-term strength and sovereignty do not. But there is a difference between tending to the present and forgetting about the future, just as there is a difference between domestic and foreign companies,” Rubio said. “We also need a broader understanding of national security… As COVID-19 revealed, depending on foreign companies for everything from medicine to missiles may not seem dangerous in peacetime, but in a time of crisis, it can throw the whole country off balance.”

What the left is saying.

• The left mostly supports the deal, with many criticizing Biden for ostensibly opposing it on political grounds. 
• Some say the acquisition would revitalize the steel industry. 
• Others praise Biden for standing firmly behind the union. 

The Washington Post editorial board said “not even winning Pennsylvania can justify this bad move on U.S. Steel.”

Biden blocking the deal “would make little sense, even in the context of Mr. Biden’s project to promote domestic manufacturing. The president has spent billions of dollars in this effort. Under both Mr. Biden and his predecessor, Donald Trump, the United States has ring-fenced the steel market with stiff tariffs to stop cheap imports, attract investment and stimulate domestic production. The bid by Nippon Steel, which promised to inject $2.7 billion of new capital and supply better technology, would seem to be a win for those policies,” the board wrote. “What’s truly inexplicable, though, is the likely rationale for the ban: national security. Perhaps in the 1980s, Japan could have been considered a strategic economic threat.”

“At $7.3 billion, the only U.S.-origin alternative offer for U.S. Steel, by Ohio-based steelmaker Cleveland-Cliffs, is less than half what Nippon is willing to pay for a company that might be iconic but has slid to 24th-largest among the world’s producers. Along with the hostile signal it would send other geopolitical allies interested in investing in U.S. industry, the lack of any plausible economic reason to block this sale leaves politics as the only explanation,” the board said. “Still, the foreseeable negative impacts of blocking the Nippon Steel bid — a more concentrated, less competitive U.S. steel industry and a damaged alliance with a key Pacific nation — outweigh this policy’s electoral upside.”

In Bloomberg, David Fickling wrote “the past’s dead hand weighs on US Steel takeover.”

“The deal has been opposed since it was first announced in December on the patently absurd grounds that ownership by a company from Japan — one of America’s closest allies for eight decades, and home to the largest contingent of US troops overseas — poses a national security risk,” Fickling said. “Almost no one believes this rationale. The truth is that steel mills are a perennially protected species that have been deeply bound up with ideas of nationhood for centuries. Founded by the Gilded Age industrialist Andrew Carnegie, US Steel was America’s first billion-dollar company. It built America’s railroads, skyscrapers, and formidable 20th-century war machine.”

“Politicians should be encouraging, rather than blocking, this process. In their own grudging way, both Nippon Steel and US Steel are being dragged kicking and screaming into the future. Few places in the US exemplify this process better than Pittsburgh, which has long left behind its heavy industrial past to reinvent itself as a booming center for healthcare and services,” Fickling wrote. “During an election year, it’s natural to see politics being played in Pennsylvania… Let’s hope the game ends once the ballots are in, though. The future for such places will be cleaner, healthier, more profitable — and with better jobs.”

In The American Prospect, Robert Kuttner called Biden’s opposition to the deal “unprecedented and magnificently pro-union.”

“This move doubles down on Biden’s commitment to rebuild domestic industry and rejection of corporate-driven ‘free trade’ and his alliance with the labor movement. There is a process for government evaluation of proposed foreign takeovers of American companies on national-security grounds,” Kuttner said. “Biden’s stunning move is entirely legitimate. For one thing, a leading Japanese steelmaker was buying an American producer against a background of steelmaking overcapacity worldwide and in Japan. So the deal might well lead to reduced U.S. steel production and jobs.”

“Biden’s effective killing of the Nippon deal reopens the possibility of acquisition of U.S. Steel by Cliffs, in collaboration with the Steelworkers. Veterans of the four-decade struggle to revive a domestic, unionized steel industry told me they never thought they would live to see this day,” Kuttner wrote. “An acquisition of U.S. Steel by Cliffs would be a gain not just for shareholders but for stakeholders—union workers, their families and communities. It’s been a long time since we’ve seen this brand of capitalism.”

My take.

Reminder: "My take" is a section where I give myself space to share my own personal opinion. If you have feedback, criticism or compliments, don't unsubscribe. Write in by replying to this email, or leave a comment.

• Part of what makes this story so interesting are the strange factional alignments.
• More than anything, I think national politicians are misunderstanding Pennsylvania; Pittsburgh in particular is not the 1960s steel town they still think it is.
• Once you accept that, you can accept that Nippon Steel gives the existing mills their best chance for solvency.

This is one of those stories where the political alignments are neither predictable nor sensible, which for me makes it very interesting to write about.

Consider: Trump has staunchly opposed the deal, saying he'd kill it on Day 1 no matter what. Biden has also said he'll block the deal, but is now reportedly re-evaluating his position. At the same time, conservative and liberal pundits broadly support the deal. Union bosses are opposing it, but perhaps that’s to negotiate for their rank and file, who — along with local politicians — seem to support it. There is no real left-right alignment on this, and figuring out the factions is rather head spinning.

So I'll throw my hat in the ring: I'm more supportive of the deal than not. Or, at least, I’m more supportive of the government not interfering in this deal than stepping in without a leg to stand on.

The Tangle staff has some Pittsburgh street credit to throw around here — I'm a Pennsylvania boy and University of Pittsburgh alum. Tangle Managing Editor Ari Weitzman grew up in Pittsburgh and was recently a homeowner in the city’s north hills. I like to think we know the city's ethos well, and keep up with its politics enough to be able to read the situation here. 

When you think of Pittsburgh, you probably think of a rugged, soot-blackened town churning out American steel. To be sure, the blue-collar cultural identity still exists, as it does in many rust belt towns. But the region’s cornerstones have long since shifted, and the reality is that Pittsburgh is just no longer a steel town.

In a way, Ari’s upbringing is representative of this shift. Ari told me that his mother worked in the Edgar Thompson plant, U.S. Steel’s last remaining integrated mill in the region. Her job was to help steelworkers transition out of the steel industry with new skills, like engine repair, welding, obtaining a commercial driver’s license, or even brisket smoking. 

Pittsburgh has come a long way since the 1900s, and even since the 1980s, when U.S. Steel erected the city’s tallest building with its own product. The city’s largest industries are now healthcare and banking; the city, Carnegie Mellon University in particular, is a cradle of robotics innovation; the Pittsburgh Plate Glass company has successfully pivoted to becoming a paint company; and the U.S. Steel tower now has the name of the region’s medical behemoth, UPMC, emblazoned at its top.

This is simply not the city or region aging politicians think it is. Pennsylvanians are split over whether fracking provides more harm than good, and overwhelmingly want the industry to be regulated. Yet, both campaigns are racing to support fracking unequivocally. A similar disconnect is apparent in this story: Over time, Germany and Japan eclipsed the U.S. in steel production (which is now dominated by China), and Pittsburgh steelworkers want the labor protections that this deal would provide. Yet, both Democrats and Republicans are staunchly signaling their opposition. 

They are selling to an idea of a city, state, and region that no longer exists — one that they do not know.

60 years ago U.S. Steel had 340,000 employees and an output of 35 million tons of steel. In 2022, it employed 15,000 (and just 3,000 in the Pittsburgh area) and shipped 11 million tons of steel. The production per employee has gone way up, but gross output and employment have gone down; that's the world we live in now. Fighting deals like this, which could introduce new technology and investment in the sector, is not the way to protect jobs or stop the industry from going where it is very clearly going.

Nippon is one of the world's leading steel producers, with deep pockets, a plan to invest over a billion dollars into mills in Pennsylvania and Indiana, and a commitment to preserving the legacy of U.S. Steel as it stands today (right down to keeping its name and logo). Without a deal, or with a different one, the path forward could be far worse — one that guarantees mill closures and job losses, even beyond the ones that have already come.

For Trump or Biden or Harris, I get the optics. You want to keep this company, literally named "U.S. Steel," American. You want to appear tough on national security. You want to protect unionized workers and not risk jobs being cut or off-shored. You want to sell a narrative to Pennsylvania voters that you are protecting them from corporate overlords, or from foreign barons. Indeed, there is a world where Biden or Trump successfully tanks this deal and U.S. Steel ends up being bought by an American company like Cleveland-Cliffs, which is both American and unabashedly pro-union (and part of why many union workers hope for that outcome). Maybe that would be a better outcome for workers, the state, and the industry.

But that path is a risk. U.S. Steel’s CEO Dave Burritt is already threatening to close open mills if the deal collapses, as Nippon is offering him the best price per share for the company. That outcome — a blocked deal without an alternative — would be catastrophic. 

In many ways, Trump and Biden are also constructing a false narrative. There are few arguments against allowing the deal that don't start and end with "the company isn't American," which stops well short of productive analysis. This company isn't from China or Russia or Saudi Arabia or any other country that poses a legitimate national security threat. Nippon Steel — literally “Japan Steel” — is headquartered in Japan, one of our strongest allies on the planet, with a proven track record of investment and economic partnership here. They are about as trustworthy an international partner as we could find.

Of course, the government ought to prevent monopolies, fraud, or corporate thuggery. But this isn't that — this is the government potentially stopping a deal that could rescue a company because of some invisible specter of national security concerns, all with the risk that taxpayers will continue to have to subsidize that company to keep it alive.

I do mourn a moment like this, which seems to mark another turning point in U.S. steel production. Walking through the city or visiting its steel mills, you will undoubtedly get pangs of great American pride and nostalgia for a different era. Steelworkers built Pittsburgh; generations of wealth and prosperity in Western Pennsylvania were built on the backs of the steel industry. There is a long and storied tradition of pride in that era. But it can't last forever. It hasn't. It couldn't. This is, in no uncertain terms, the free market at work. As a company, U.S. Steel has failed. 

Steel will always be the industry that built Pittsburgh, and this deal is its best shot to stay afloat. But it doesn’t have to be the industry that builds the future. In fact, it won’t be. It already isn’t.

Once you accept that reality, it’s easier to accept the deal. 

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Your questions, answered.

Q: A question I have for you; let's say Harris wins and Trump loses. What do you think Trump does? Do we have to redo this whole thing over again 4 years from now, with Harris and Trump facing off again? Does Trump give up? 

— Steve from Pittsburgh, PA

Tangle: This is a really dangerous question to answer, because the common-sense answer is yes — you’d think Trump would give up and stop running for president. 

It seems infeasible that any candidate could come back and be their party’s nominee again with a resume like the one Trump would have in 2028: Lost a presidential election in 2020. Denied the results of that election. Set the agenda of the party and handpicked many candidates to a disappointing performance in the 2022 midterms. Convicted of sexual assault in a civil case. Convicted of felony charges. Lost a second presidential election in 2024. Under indictment in three other distinct federal cases. Will be the oldest ever presidential candidate at 82 years old at the time of the 2028 election. 

And yet… all of that — with the exception of the second election loss and his exact age — is already true, right now, and he’s still the unquestioned leader of the party, still setting the agenda, still dominating the entire Republican field in primary races, and still running in a dead heat against the Democratic Party’s handpicked candidate. Add in the two assassination attempts (which somehow haven’t seemed to register as the big deals that they are), and you see a candidate who is undeterrable — one that the political class seems incapable of moving away from or defeating. 

That, in no small part, is part of Trump’s appeal. Indeed, it is core to it. It’s obvious that Democrats despise him. It’s obvious that many Republicans despise him, too. But the fact that he continues to barrel forward and successfully mold the party to his liking, time and time again, speaking for a large swathe of Americans who continue to feel unheard, is what makes him so magnetic.

All this is to say: Despite all the context, if Trump loses in 2024, I just don’t think 2028 would be any different at all. I wrote Donald Trump’s political obituary on January 6 as we were living through it — I thought there was no way he’d ever recover. But he did. I was about as wrong as I could be. Maybe he loses in 2024 and doesn’t become the nominee again in 2028, but really — at this point, would you bet against it?

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Under the radar.

For the first time in four years, inflation-adjusted incomes for middle-income American households rose in 2023, according to new Census data that came out last week. In 2023, the median household earned $80,610, up 4% from 2022 after adjusting for inflation, with after-tax median income rising by 3.7%. However, median household income is still slightly below the 2019 record levels in real terms, when they hit $81,210 in 2023 dollars. Additionally, the Census report shows that inflation-adjusted wage gains were highest among the low earners. Axios has the story.

Numbers.

• $8.18 billion. U.S. Steel’s market cap as of September 17. 
• $19.91 billion. Nippon Steel’s market cap as of September 17. 
• 20,000. The approximate number of workers employed by U.S. Steel in 2024.
• 53,000. The approximate number of Pittsburgh workers employed by the University of Pittsburgh Medical Center (UPMC) at the end of 2021.
• 189,800. The total employment in the iron and steel mills and ferroalloy production industries in the U.S. in 1988.
• 83,600. The total employment in the iron and steel mills and ferroalloy production industries in the U.S. in 2023.
• 98.2. The amount, in million metric tons, of steel production in the U.S. in 2006.
• 82.0. The amount, in million metric tons, of steel production in the U.S. in 2022.

The extras.

• One year ago today we had just published a Friday edition on Ashton Kutcher.
• The most clicked link in yesterday’s newsletter was a judge striking down North Dakota’s abortion law.
• Nothing to do with politics: A niche years-long internet mystery has just been solved: who is “celebrity #6?”
• Yesterday’s survey: 2,776 readers responded to our survey on who to blame for the second assassination attempt on Trump, with most blaming the shooter and political rhetoric. “This is human nature in action. I don't think our better selves are coming out anytime soon. People like to hate too much,” one respondent said.

Have a nice day.

Jon Bon Jovi, frontman of the rock band Bon Jovi, recently helped a woman in crisis off the ledge of a Nashville bridge. While filming a scene for a music video, Bon Jovi and a production assistant noticed the woman on the bridge's precipice. Together, they were able to help her back away from the edge. Nashville Police Chief John Drake said of the incident that “it takes all of us to help keep each other safe.” The Washington Post has the story. 

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