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Trump Vows to Block Sale of US Steel to Japanese Company

Reuters
By Yuval Rosenberg and Michael Rainey
Tuesday, December 3, 2024

Happy Tuesday! Democrats are still debating why they lost in last month’s elections and who will lead them going forward, but there wasn’t any doubt about who will be leading the party in the Senate, where Democrats on Tuesday again chose Sen. Chuck Schumer as their leader. In a closed-door meeting, Democrats reportedly chose Schumer unanimously and tapped Sen. Dick Durbin of Illinois to continue as their whip, the No. 2 job. Sen. Amy Klobuchar of Minnesota will step up to the No. 3 job as chair of the Steering and Policy Committee, while New Jersey Sen. Cory Booker will move up to the No. 4 spot as chair of the Strategic Communications Committee.

Here's what else is happening.

Trump Vows to Block Sale of US Steel to Japanese Company

Once again wading into international economic affairs more than a month before taking office, President-elect Donald Trump vowed on Monday night to block the acquisition of U.S. Steel by Nippon Steel of Japan.

“I am totally against the once great and powerful U.S. Steel being bought by a foreign company,” Trump said on his social media platform. “Through a series of Tax Incentives and Tariffs, we will make U.S. Steel Strong and Great Again, and it will happen FAST! As President, I will block this deal from happening. Buyer Beware!!!”

Nippon Steel announced last year that it intends to acquire U.S. Steel for $14.9 billion, sparking protests from both Democrats and Republicans worried about the potential national security implications of foreign ownership of a key part of the nation’s industrial base.

Earlier this year, President Joe Biden announced that he opposed the sale, saying in March that “U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated.” A final decision on the fate of the proposed deal is awaiting the result of an ongoing review by the Committee on Foreign Investment in the U.S., an interagency panel run by the Treasury Department that can recommend that the president block an asset sale based on national security grounds.

Steelworkers are divided on the proposed acquisition. David McCall, international president for United Steelworkers, said earlier this year that Nippon Steel could damage the U.S. steel industry by importing key components from Japan and China, which suffer from excess capacity. “This is just a first step in a long-term reduction and destabilization of the U.S.-based steelmaking processes that will eventually lead to the United States being reliant on imports of slabs and hot band material critical to infrastructure and national defense,” he said in June.

But some workers at U.S. Steel say they think Nippon offers the best hope for the future, since the Japanese firm seems to be in better financial shape than Cleveland-Cliffs, another suitor based in the United States. Jack Maskil, a vice president at the Steelworkers local branch in West Mifflin, Pennsylvania, told the Associated Press that U.S. Steel “provided a very, very good life for our families for a lot of years.” At the same time, his workers feel that the Nippon deal means that “a lot more families for futures to come will be able to share the same.”

In a statement, Nippon said its purchase of the American steel giant would offer no threat. “Nippon Steel is determined to protect and grow U. S. Steel in a manner that reinforces American industry, domestic supply chain resiliency, and U.S. national security,” Nippon said, per CNBC.

Earlier this year, Wilbur Ross, the American businessman who served as commerce secretary in the first Trump administration and whose private equity company rolled up bankrupt steel companies into the International Steel Group, which was then sold to Luxembourg-based Mittal Steel, also expressed support for the acquisition, charging that opposition to the deal stems largely from xenophobia.

As for the brighter future promised by Trump for a U.S. Steel that remains in American hands, the president-elect provided no further details. In his successful bid for a second term, Trump vowed to impose tariffs on Chinese imports, which could benefit the U.S. steel industry, though the details still need to be hammered out. Trump also pitched tax cuts for companies that maintain production in the U.S., which could give domestic producers a boost to their bottom lines, assuming Congress is willing to provide those cuts in new legislation next year.

Wall Street Has Doubts About DOGE but Believes Trump Will Cut Taxes

Wall Street investors don’t believe that President-elect Donald Trump will fully follow through on some key campaign promises — but they are confident that he will deliver tax cuts.

Counting on tax cuts and tariffs: Goldman Sachs’s economic team, led by Jan Hatzius, recently surveyed more than 500 investors to compare their expectations with those of the banks’ own analysts. They found that nearly all investors expect the 2017 Republican tax cuts to be extended, with roughly two-thirds forecasting that all the 2017 cuts will be kept in place and about one-third looking for at least a partial extension (see chart below).

About two-thirds of those surveyed also see some additional personal tax cuts being enacted, and about 60% expect the corporate tax rate to fall, though Goldman’s team notes that could happen in several ways. “Some investors who expect a decline might mean just for manufacturing; others might expect a broad decline in the statutory rate to 20%, which we think is possible; and others might expect a larger decline, which we think is unlikely,” Goldman economists David Mericle and Ronnie Walker wrote in a note to clients.

For their part, Goldman’s economists expect the statutory corporate rate to stay at 21%, with the rate for domestic manufacturers cut to 15%.

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Investors also expect Trump to raise tariffs. About 60% say they see Trump boosting tariffs on imports from China and foreign cars, while almost 40% also forecast across-the-board tariffs of 10% or 20% paired with higher tariffs on goods from China. Goldman’s analysts expect Trump to raise tariffs on imports from China by an average of 20 percentage points, with added tariffs on imported cars. “While Trump has also proposed a universal 10-20% tariff on all imports, we see this as a serious risk—we place 40% odds on a universal tariff ultimately being implemented,” Goldman’s economists say.

Asked what policies concern them the most, 60% of those surveyed cited larger tariffs, which investors see as spurring higher inflation. Only about 20% pointed to the possibility of policy measures that raise fiscal sustainability fears.

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Downgraded expectations for DOGE: Investors are more skeptical about other Trump campaign promises, the survey found. While Elon Musk, as a leader of Trump’s new Department of Government Efficiency, has talked about slashing at least $2 trillion from the federal government’s annual budget of about $6.75 trillion, just 32% of those surveyed by Goldman expect spending cuts of more than $100 billion a year. Another 19% expect cuts of between $25 billion and $100 billion. More than four in 10 investors, 42%, expect cuts to be “insignificant or quite modest.”

The Goldman team still expects federal spending to grow, particularly for defense.

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Immigration expected to slow but stay positive: Wall Street also doesn’t believe Trump will be able to fully carry out his promised immigration policy changes, including mass deportations of millions of undocumented immigrants. The survey finds investors still expecting more people to enter the United States than leave it.

Goldman’s analysts say that net immigration to the United States averaged about 1 million people a year before the Covid 19 pandemic and climbed to about 3 million people in 2023 before falling to a rate of roughly 1.75 million lately. About half of survey respondents predict that immigration will slow to a net gain of between half a million and 1 million people a year. And more than 20% of investors expect immigration will stay above the pre-pandemic rate.

“Perhaps surprisingly given the number of headlines and discussions in markets about potential large-scale deportations, only 6% of respondents expect net immigration to turn negative,” Goldman’s analysts write.

They project immigration to fall to about 750,000 people a year in 2025 — “only moderately below the pre-pandemic trend because there are legal and logistical limits to executive action.”

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