By moving toward blocking a Japanese purchase of U.S. Steel , the Biden-Harris administration is putting short-term political considerations ahead of both sound economics and wise diplomacy.
Blocking the deal will endanger, not save, American jobs. The almost certain result of the Biden-Harris fake nod to “made in America” values is that thousands of Pennsylvanians will lose their livelihoods. It’s far better to have Japanese corporate owners support American jobs than to have U.S. corporate owners cut jobs while ordinary American stockholders and pension funds lose billions of dollars from their savings. Blocking the deal also could undermine one of the United States’s most important alliances, weakening the U.S. position against the rapacious Chinese communist regime.
It is no secret that U.S. Steel is struggling financially, supporting a workforce only half its former size while reporting financial losses in nine of the past 15 years. Once a behemoth, it now is a weak second among steel producers in this country and just the 27th largest globally. It produces less than 20% of all steel made in the U.S. — so there is no chance of monopolistic crowding out of the domestic marketplace — and its mills in its iconic home base of Pittsburgh are old and outdated. The hometown Pittsburgh Post-Gazette admitted that without foreign ownership, “there is no long-term future for steelmaking in Pittsburgh.” If the sale is blocked, the newspaper said, there will be “mass layoffs” among the more than 11,000 Pennsylvania employees.
That’s where Nippon Steel, the world’s third-largest steel producer, came in. On Dec. 18, 2023, it agreed to purchase U.S. Steel for $14.1 billion, and since then, it has pledged to execute binding contracts to invest $2.4 billion in upgrades to U.S. Steel facilities nationwide, including at least $1 billion in the Pittsburgh area. That’s one reason why, despite union opposition, thousands of U.S. Steel employees rallied outside Pittsburgh corporate headquarters in favor of the Japanese deal.
Nippon already operates smaller steel operations elsewhere in the U.S., in Indiana and Alabama, where it is seen as a good corporate citizen, and it has won international “sustainability” awards for its environmental record.
Indeed, all across the U.S., corporations from Japan and other U.S. allies have created hundreds of thousands of U.S. jobs and become local economic lodestars by buying or investing in U.S. companies, building manufacturing plants, and creating corporate office centers. This is especially true in the automotive industry , which of course provides demand for locally manufactured steel. All told, the U.S. enjoys $300 billion in new foreign investment each year. Except when dealing with subsidiaries of hostile nations such as China, there’s no reason the concept of “owned in America” should outweigh that of “made in America.” It is a good thing, not a bad one, to have foreign money flowing to our shores to hire American workers, buy from local vendors, build U.S. manufacturing capacity, and donate to American charities.
As it is, Biden and Harris are on shaky ground if they block the sale. By law, the president can block such a private sector deal only after receiving a final report from something called the Committee on Foreign Investment in the United States, which is supposed to analyze deals for national security implications. No matter what the report eventually says, count us extremely skeptical that the committee is more concerned with security than with politics. Other outlets have reported definitively that administration officials told Japanese representatives that Biden’s stance is motivated by a desire for union support for the Democratic presidential ticket.
It is hard to see how a $14 billion investment from a private company headquartered in a closely allied nation can hurt national security in an industry where other U.S.-owned businesses still would produce some 80% of the crucial product. And there’s no way the deal would hurt U.S. military procurement because the Defense Department buys nothing directly from U.S. Steel.
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Meanwhile, by putting so much new money into domestic production, the Nippon Steel deal would help free-world allies together outcompete Chinese rivals, thus bolstering rather than hindering U.S. security interests. And it makes no sense to insult Japan by treating its well-intentioned investments as if it is suspect. The U.S. needs a strong and Western-friendly Japan to help keep Pacific shipping lanes open and to counter Chinese hegemonic aims, which are backed by China’s increasingly militaristic language and by massive investments in naval power.
The Biden-Harris virtue-signaling against Nippon Steel is a terrible policy choice, clearly deleterious to real U.S. interests. The president and vice president should withdraw their opposition, allow the sale to go forward, and listen less to union bosses than to the actual workers whose jobs the deal would save.
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