FirstFT: Joe Biden plans to intervene in Nippon Steel takeover of US Steel

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Good morning. We have an exclusive report today that Joe Biden plans to intervene in Nippon Steel’s proposed purchase of US Steel. The move could threaten the $14.9bn deal and anger Japan, one of Washington’s closest allies.

Biden will issue a statement expressing serious concern about the Japanese group’s proposed acquisition of the US manufacturing icon before Prime Minister Fumio Kishida arrives for a state visit in Washington on April 18, according to six people familiar with the decision.

The White House has privately informed the Japanese government of the president’s decision, according to people with knowledge of the matter.

One person familiar with the deliberations said it was “embarrassing” for an administration that talks about the importance of allies and particularly the US-Japan alliance to “send a signal of distrust regarding Japanese ownership of US companies” as Kishida prepares to visit.

“The president knows all this, but sadly it looks like election year politics will win out,” the person said. Here’s why the deal could fall victim to the 2024 presidential campaign — plus the reaction from Japan’s business community.

• TikTok bill passes House: The US House of Representatives has voted overwhelmingly to approve a bill that would ban app stores from distributing TikTok if its Chinese owner does not divest ownership of the video-sharing platform.

And here’s what else I’m keeping tabs on today:

• Economic data: The US reports retail sales and producer price inflation data for February.

• Results: Apple supplier Foxconn reports fourth-quarter earnings.

• Pakistan: The IMF begins a second and final review of the country’s $3bn standby arrangement, during which Islamabad will ask for a new longer-term funding deal (Reuters).

• Nato: Secretary-general Jens Stoltenberg holds a press conference to present his annual report for 2023.

Five more top stories

1. China is scrapping infrastructure projects as it struggles to reconcile austerity and economic growth. Beijing has ordered a dozen highly indebted areas to curb infrastructure spending as it tries to unwind a decade-long investment binge many believe is unsustainable. But the austerity drive may make achieving the government’s ambitious 5 per cent growth target even more difficult.

2. Exclusive: The US has held secret talks with Iran this year in a bid to convince Tehran to use its influence over Yemen’s Houthi movement to end attacks on ships in the Red Sea, according to US and Iranian officials. The indirect negotiations took place in Oman in January and were the first between the foes in 10 months.

3. Japanese companies including Honda, Nippon Steel and ANA Holdings have granted workers their biggest pay rise in more than three decades. The pay negotiations have been closely followed by investors this year as robust wage growth is crucial for the Bank of Japan to gain enough confidence to begin unwinding its ultra-loose monetary policy measures.

4. Ukraine has stepped up drone strikes on oil refineries deep inside Russia. In a second day of assaults on Russian energy infrastructure, explosions were confirmed on sites in the country’s heartlands such as Ryazan, Kstovo and Kirishi. The attacks come amid growing frustration in Ukraine with the hesitant approach western powers have taken to targeting Moscow’s energy revenues.

5. Cathay Pacific reported its highest annual profit in more than a decade as strong travel demand buoyed the Hong Kong flag carrier’s earnings. The airline posted net profit of HK$9.8bn (US$1.3bn) for the year, with its chair declaring it had “finally left the Covid-19 pandemic behind” after three years of losses.

News in-depth

Ukrainian soldiers on the frontline are warning of exhaustion and low morale as the military struggles with personnel shortages. A new mobilisation law — due to be put to a parliamentary vote on March 31 — seeks to update the country’s legal framework ahead of a probable recruitment wave this year in which up to 500,000 people could be drafted. But the law is proving controversial.

We’re also reading . . . 

Chart of the day

A flood of solar panels made in China, the dominant solar equipment supplier, is driving prices to record lows in the US. It has been a boon for renewable energy developers but a threat to solar manufacturers trying to create a domestic supply chain for the country’s fastest-growing source of electricity generation.

Take a break from the news

The power of place, women launching start-ups, and the good, bad and ugly of management are among the topics of business books we are reading this month.

Additional contributions from George Russell and Gordon Smith