CPA applauds call from senators Brown, Vance, Casey that Biden block Nippon Steel acquisition

The Coalition for a Prosperous America (CPA) today released a statement in support of U.S. Senator Sherrod Brown (D-OH) calling on President Biden to examine the relationship between Nippon Steel and the Chinese steel industry as the company seeks to buy U.S. Steel. In a letter sent to the President, Brown highlighted a new report from Horizon Advisory that details the longstanding relationship between Nippon Steel and the Chinese steel industry and the dangers it could pose to American national and economic security. Last month, President Biden said he was opposed to Nippon’s acquisition, saying that the U.S. needs to “maintain strong American steel companies powered by American steel workers.”

“As you examine this deal, I urge you to thoroughly investigate the allegations raised in this report and examine Nippon’s ties to the Chinese government and the danger this merger poses to American national and economic security,” Brown wrote. “We cannot allow our U.S. industrial base to be compromised through further entanglement with one of our biggest national security threats, and our largest economic competitor that we know does not follow our trade laws.”

Yesterday, the Financial Times reported that Senators JD Vance (R-OH) and Bob Casey (D-PA) also echoed Brown’s call to the White House to stop Nippon’s acquisition of US Steel. “Nippon Steel’s deep ties to the Chinese Communist party are troubling, and its relationship with the CCP must be scrutinized as it pursues an acquisition of US Steel,” Casey said.

Vance has also said the acquisition should be blocked because “the foreign takeover of US Steel poses significant national security risks.” In a statement to the Financial Times, Vance said, “We cannot allow one of the largest American steelmakers to be gobbled up by a foreign entity with ties to the Chinese Communist party and its military-industrial apparatus. The president must find the courage to do what’s right and block this deal without delay.”

“Senators Brown, Vance, and Casey are right to sound the alarm on why Nippon’s acquisition of U.S. Steel poses a serious threat to American national and economic security,” said Michael Stumo, CEO of CPA. “President Biden was right to come out and oppose this merger, but it is critical that his statement of opposition result in action.”

The Horizon Advisory report details alarming ties between Nippon Steel and the Chinese steel industry. This includes that “Nippon is credited by Chinese press, industry, and government sources as critical to the development and maturation of China’s steel industry” and that “. Nippon has maintained close ties to the PRC – despite ebbs and flows in broader Sino-Japanese relations over the past 50 years.

Below are additional key points from the report.

• In addition to market dependence on China, Nippon directly owns operations in the country. Those operations risk sharing technology and production expertise with the PRC’s industrial base.

• Nippon has a long-run history supporting the establishment and foundation of the Chinese steel industry; PRC discourse about industrial modernization has referred to the Japanese conglomerate as a “master.” Nippon is also looked to by Chinese peers as a critical source of strategic guidance for maturing the operations of what has grown into the world’s dominant steel industry.

• That relationship brings Nippon into close and frequent interaction with China’s steel industry. Nippon maintains active joint ventures with a range of Chinese state-backed steel champions.

• In addition, steel is a critical input into shipbuilding; Nippon’s integration in China’s steel sector means that the company, whether directly or indirectly, feeds into the PRC’s shipbuilding industry, with it the naval buildup that that the People’s Liberation Army draws on, increasingly, to project power globally.

• Open-source materials suggest that Nippon may have had a presence in Xinjiang or that its supply chain and business partners introduce exposure to the region; its joint venture partners include the keystone backbone players of the Chinese steel industry; its partners support Chinese shipbuilding and automotive sectors; and Nippon’s variety of value-added businesses downstream in China are technology transfer and acquisition targets for Chinese partners in the CCP’s military-civil fusion system.