Biden blocks US Steel takeover by Japan-based Nippon
CHRIS KLEPONIS/AFP via Getty Images
(WASHINGTON) — President Joe Biden on Friday announced a decision to block the $14 billion acquisition of U.S. Steel by Japan-based Nippon Steel, saying domestically produced steel is essential to U.S. national security.
“Without domestic steel production and domestic steel workers, our nation is less strong and less secure,” Biden said in a statement.
The move marks the latest effort on the part of the Biden administration to protect U.S. markets from foreign-owned firms.
Biden has preserved many of the tariffs imposed by former President Donald Trump, and he enacted a law that would ban China-based social media platform TikTok later this month if the company doesn’t find a new parent company. The Supreme Court is set to hear arguments this month in a legal challenge brought by TikTok.
The decision comes weeks after a federal committee declined to issue a recommendation on the merger, leaving Biden an opportunity to block the deal.
The Committee on Foreign Investment in the United States, tasked with the potential acquisition, shared concerns about the national security risks posed by the loss of the country’s second-largest steel producer.
In response to the committee’s decision, Nippon Steel alleged the White House had “impermissible undue influence” on the review. Nippon Steel has previously threatened to challenge the White House decision in court.
The fate of U.S. Steel – a storied 120-year-old firm based in Pittsburgh, Pennsylvania – became a lightning rod during the 2024 election season.
This is a developing story. Please check back for updates.
(WASHINGTON) — The Federal Reserve held interest rates steady on Wednesday, just days after President Donald Trump called on the central bank to lower them.
The announcement put the central bank on a potential collision course with Trump, though a longstanding norm of independence typically insulates the Fed from direct political interference.
The decision to maintain the current level of interest rates pauses a series of three consecutive interest rate cuts imposed by the Fed over the final months of 2024.
The Federal Open Market Committee (FOMC), a policymaking body at the Fed, said on Wednesday that the central bank remains attentive to concerns centered on the potential for both a rise in unemployment and a surge of inflation. Inflation stands at a moderately elevated rate, while unemployment remains at a historically low level, the FOMC added.
Taken together, those two considerations — employment and inflation — make up the Fed’s “dual mandate.”
“The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance,” the FOMC said.
“The economic outlook is uncertain, and the Committee is attentive to the risks to both sides of its dual mandate.”
The Fed indicated last month that it would cut interest rates at a slower pace than it had previously forecast, however, pointing to a bout of resurgent inflation. That forecast sent stock prices plummeting, though markets have broadly recovered the losses.
Inflation has slowed dramatically from a peak of more than 9% in June 2022, but price increases remain nearly a percentage point higher than the Fed’s target rate of 2%.
During a virtual address to the World Economic Forum in Davos, Switzerland, last week, Trump demanded a drop in interest rates after calling for a reduction of oil prices set by a group of nations known as OPEC, which includes Saudi Arabia.
The prospect of low oil prices will enable the Fed to dial back its fight against inflation and bring down interest rates, Trump said.
“I’m going to ask Saudi Arabia and OPEC to bring down the cost of oil,” Trump said, later adding: “With oil prices going down, I’ll demand that interest rates drop immediately.”
The U.S. does not belong to OPEC, nor does the president play a role in the organization’s decisions regarding the price of oil sold by its member states.
Several past presidents have sought to influence the Fed’s interest rate policy, including Trump, who repeatedly spoke out in favor of low interest rates during his first term.
On the campaign trail in August, Trump said a U.S. president should have a role in setting interest rates.
Fed Chair Jerome Powell struck a defiant tone in November when posed with the question of whether he would resign from his position if asked by Trump.
“No,” Powell told reporters assembled at a press conference in Washington, D.C., blocks away from the White House.
When asked whether Trump could fire or demote him, Powell stated: “Not permitted under the law.”
The Fed retreated in its fight against inflation over the final months of last year, lowering interest rates by a percentage point. Still, the Fed’s interest rate remains at a historically high level of between 4.25% and 4.5%.
Last month, Powell said the central bank may proceed at a slower pace with future rate cuts, in part because it has now lowered interest rates a substantial amount.
Powell also said a recent resurgence of inflation influenced the Fed’s expectations, noting that some policymakers considered uncertainty tied to potential policy changes under Trump.
“It’s common-sense thinking that when the path is uncertain, you get a little slower,” Powell said. “It’s not unlike driving on a foggy night or walking around in a dark room full of furniture.”
(NEW YORK) — President-elect Donald Trump this week vowed to block the purchase of U.S. Steel by Japanese steelmaker Nippon Steel Corp., promising to bolster the domestic steel industry with tariffs.
“I am totally against the once great and powerful U.S. Steel being bought by a foreign company, Trump said in a post on Truth Social, pledging to make U.S. Steel “Strong and Great Again, and it will happen FAST!”
Trump has proposed a tax as high as 20% on every product imported from all U.S. trading partners, as well as a tax of between 60% and 100% on all goods from China, the world’s leading steel producer.
Those policies could modestly improve the outlook for domestic steelmakers by hiking prices, boosting revenue and increasing employment, though the benefits would not lift the sector to the heights attained in its heyday, experts told ABC News.
The experts warned, however, that a potential rekindling of consumer price increases as a result of the wide-ranging tariffs could damage the steel industry as part of a wider economic slowdown.
The policies also risk harming the nation’s manufacturing sector as a whole, since the tariffs would hike costs for factories that rely on raw steel as an input, making those firms less competitive with their international counterparts, the experts said.
“We have tried to help the steel industry many, many times before,” Kyle Handley, a professor of economics at the University of California, San Diego, told ABC News, pointing to steel tariffs established during Trump’s first term and retained under President Joe Biden.
“Yet, here we are and the industry still needs more help,” Handley added.
In response to ABC News’ request for comment, the Trump transition team touted the tariffs imposed during his first term in office.
“In his first term, President Trump instituted tariffs against China that created jobs, spurred investment, and resulted in no inflation. President Trump will work quickly to fix and restore an economy that puts American workers [first] by re-shoring American jobs, lowering inflation, raising real wages, lowering taxes, cutting regulations, and unshackling American energy,” Trump transition spokeswoman Karoline Leavitt said in a statement.
Tariffs remain popular with steel industry leaders. The Steel Manufacturers Association, or SMA, the largest U.S. trade association representing steelmakers, has urged the incoming Trump administration to strengthen steel tariffs.
“We are under constant threat from nonmarket economies who evade our trade laws to dump cheap, heavily subsidized, high-emissions steel and other products into the American market, making it hard for domestic manufacturers to compete,” SMA President Philip Bell said in a statement on Tuesday.
“Fortunately, President-elect Trump has vowed to use every tool he can to end unfair trade while stimulating growth in jobs and productivity,” Bell added.
In 2018, Trump slapped tariffs on aluminum and steel from a host of countries, including Mexico, Canada and the European Union.
Over the ensuing years, U.S. steel prices soared and output climbed.
The average price of a ton of hot-rolled steel — a common metric used for steel prices — soared from about $700 to $1,850 between 2017 and 2021, according to a study last year by the United States International Trade Commission, a government agency.
However, prices also spiked in non-U.S. steel markets over that period amid a global rise in demand, leaving only a modest impact from the tariffs, the study found. Steel production showed a similarly incremental advance, ticking upward by nearly 2% per year on average due to the tariffs, the study showed.
“It was a good thing for the steel industries because they were getting higher prices for steel and producing more,” Handley said.
The tariffs did not cause a sustained increase in employment for the steel industry, however, according to some data. Nationwide employment at steel and iron mills stood at 80,600 in 2017 — and registered the exact same number of workers last year, government data showed.
Technological advances in steel production have made the work less labor intensive, reducing the need for employees, Katheryn Russ, an economics professor at the University of California, Davis, told ABC News.
The proposed across-the-board tariffs could amplify the benefits for the steel industry that resulted from tariffs initiated during Trump’s first term, Russ said. But, she added, “It is unclear how it would affect employment in steel plants.”
Trump’s proposals would also intensify the negative effects that resulted from the first round of tariffs, including cost increases for a range of manufacturers that use raw steel as inputs, experts said. Those higher costs would hurt the competitiveness of such U.S. producers, risking lost revenue and potential layoffs, they added.
“Everybody who buys steel would now have higher costs,” Handley said. “We can have a debate about who should win or lose from that, but you can’t have everybody win.”
Economists widely forecast that tariffs of the magnitude proposed by Trump would also increase prices paid by U.S. shoppers, since importers typically pass along a share of the cost of those higher taxes to consumers.
A potential price spike risks slashing consumer purchases and slowing the economy, which would hurt a wide swath of businesses, including steel producers, Gordon Johnson, whose firm, GLJ Research, analyzes the steel industry, told ABC News.
“People will buy less of everything,” Johnson said. “That would be very bad for all U.S. businesses — steel companies as well.”
Still, Johnson said he understands the enduring cultural resonance of the steel industry, citing the phenomenon as a reason for why the sector receives attention from policymakers.
“When you say ‘steelworkers,’ you think of some guy who gets up at 6 a.m., gets McDonald’s coffee, puts on overalls and a big flannel and goes to work in the mill,” Johnson said. “He’s a hard worker and a quintessential U.S. citizen.”
He added, “Steel was a historic and traditional American staple. That’s why people care so much.”
(WASHINGTON) — Consumer prices rose 2.9% in December compared to a year ago, ticking up from the previous month and extending a resurgent bout of inflation just days before President-elect Donald Trump takes office. The reading matched economists’ expectations.
The fresh data arrives after a jobs report last week showed stronger-than-expected hiring in December, which sent the stock market plummeting and bond yields soaring on fears that the Federal Reserve may delay long-forecasted interest rate cuts.
The Fed may find additional reason to delay those interest rate cuts in Wednesday’s report, since stubborn price hikes may raise concern that inflation would move even higher if interest rates were to be lowered.
The inflation reading in December marks an increase from year-over-year inflation of 2.7% in the month prior.
Core inflation — a closely watched measure that strips out volatile food and energy prices — increased 3.2% over the year ending in December, ticking lower than the previous month, the data showed.
Food prices rose 2.5% in December compared to a year ago, moving higher than the previous month but marking slower price increases than the overall inflation rate.
Prices increased for an array of goods last month, including shelter, airline fares, used cars and trucks, new vehicles, motor vehicle insurance, and medical care, the U.S. Bureau of Labor Statistics said. By contrast, prices dropped for personal care products and alcoholic beverages, as well as a host of foods, such as white bread, seafood and ice cream.
Egg prices continued to skyrocket in December due to an avian flu that has decimated supply in recent months. The price of eggs soared 36% compared to a year prior, data showed.
Inflation has slowed dramatically from a peak of more than 9% in June 2022, but price increases remain above the Fed’s target rate of 2%.
The Fed retreated in its fight against inflation over the final months of last year, lowering interest rates by a percentage point. Still, the Fed’s interest rate remains at a historically high level of between 4.25% and 4.5%. The Fed has already indicated worry about the resurgence of escalating inflation over the latter part of 2024.
Last month, the Fed predicted fewer rate cuts in 2025 than it had previously indicated, suggesting concern that inflation may prove more difficult to bring under control than policymakers thought just a few months ago.
Speaking at a press conference in Washington, D.C., in December, Fed Chair Jerome Powell said the central bank may proceed at a slower pace with future rate cuts, in part because it has now lowered interest rates a substantial amount.
Powell also said a recent resurgence of inflation influenced the Fed’s expectations, noting that some policymakers considered uncertainty tied to potential policy changes under Trump.
“It’s common-sense thinking that when the path is uncertain, you get a little slower,” Powell said. “It’s not unlike driving on a foggy night or walking around in a dark room full of furniture.”
Trump has proposed tariffs of between 60% and 100% on Chinese goods, and a tax of between 10% and 20% on every product imported from all U.S. trading partners.
Economists widely forecast that tariffs of this magnitude would increase prices paid by U.S. shoppers, since importers typically pass along a share of the cost of those higher taxes to consumers.
