Kyle Sammin: The U.S. Steel merger is good for workers, good for Pennsylvania
When Donald Trump imposed a “temporary” 25 percent tariff on steel in 2018, many Democrats and their friends in the media pounced on the plan as ill-considered and harmful to the American economy. Even some Republicans were uncomfortable with the executive action.
Legality was not the issue: the section of the Trade Expansion Act of 1962 that grants the president this power is not often used, but it is not unheard of or unclear in its scope. The problem was that Trump’s actions flew in the face of a bipartisan consensus in favor of free trade with the world, a consensus that had held sway in Washington since the Clinton administration.
Joe Biden condemned these tariffs in 2020, saying that “America’s farmers and manufacturers are getting crushed” by Trump’s trade policy. Once elected, he kept Trump’s tariffs in place. This year, he broadened them, at least as to products from China.
A new consensus is emerging, one that cuts across party lines.
That is understandable enough and happens all the time in politics: one party adopts a popular policy, the other tries to copy it. Neither party has uniform agreement within its ranks on the issue, and neither will endorse it fully, but here in 2024, both parties effectively endorse protective tariffs.
The upwelling of populism over the last decade derives in large part from the perception that the Washington elites in both parties had sold out workers by allowing firms to outsource to Mexico, China, and others.
What is strange, though, is that the steel tariffs are working but Trump, Biden, and Kamala Harris are all aghast at the evidence of their success and dead set on reversing it.
That evidence is best seen right here in Pennsylvania with the announced merger of Nippon Steel and U.S. Steel.
Before the tariffs, U.S. Steel would have been under tough competition from cheap Chinese steel dumped here by their manufacturers. And this is not just an example of China being more efficient or paying lower wages – the dumping is a deliberate tactic to drive American and other Western competitors into bankruptcy.
In the old way of thinking, the Clinton Democrat way, cheap steel (like all cheap goods) would be a win for America — we’d get low-cost stuff, just what consumers want! Sure, some American workers would lose their jobs, but they’d be retrained. Remember “learn to code?”
Tariffs reversed that decades-long trend. Instead of dumping steel from abroad, foreign companies are investing in America — keeping those jobs here. Free trade lets manufacturers seek out the cheapest product to the exclusion of all other considerations. Tariffs, on the other hand, align their financial incentives with the economic health of this nation and all the communities that depend on manufacturing.
The Clintonites were always going to be against the idea, as were free-trade Republicans — somehow, the crowd that fawned over Hamiliton on Broadway never grasped the essence of the main character’s economic ideas: trade protection. But rejection of the merger by the very people whose actions made it possible is harder to figure.
As Becky Corbin wrote here last week, “generally, such a rare show of cross-party agreement might appear to be commendable, but a closer examination reveals that such groupthink is leading us astray,” by causing a self-defeating policy choice to look reasonable. Perhaps Trump and Harris misunderstand the point of the tariffs that they support. Perhaps they just think this cynical protest will gain them support in western Pennsylvania.
Either way, the consensus that tariffs are good but foreign investment is bad just makes no sense.
Harris’s position on trade is like her position on other issues: whatever she thinks she needs to say to get elected. One can often say the same on Trump, but trade protection has actually been one of his few consistent beliefs for decades. He, of all people, should understand that foreign money pouring into the United States to increase domestic manufacturing — and to employ American workers in high-wage jobs in the process — is a good thing.
Tariffs are part of a top-down industrial policy. It means the government choosing which industries to help — something conservatives have long opposed. But Trump, along with millions of Americans, now realizes that free trade does not mean that we are free from industrial policy; it means we will have China’s industrial policy imposed upon us.
Trump — and Biden and Harris — should take the win that their policies have produced.
Kyle Sammin is the managing editor of Broad + Liberty.
The use of flippancy and “gotcha” statements is unproductive. Thus, with sincere respect, you seem to have inserted a new idea: “that tariffs are good but foreign investment is bad” rather than face the actual arguments they’ve made.
1. Nippon is the Japanese word for Japan. Japan’s steel company is not merely investing; rather, they are trying to buy U.S. steel. The actual arguments Harris and Trump made are: Nippon Steel’s proposed $14.9 billion takeover of U.S. Steel would create national security risks (because it could hurt the supply of steel needed for critical military, transportation, construction and agriculture projects.)
2. The Committee on Foreign Investment in the U.S. said in its 17-page letter to Nippon Steel that decisions by Nippon could “lead to a reduction in domestic steel production capacity.” CFIUS added: “… U.S. Steel frequently petitions for (trade) relief, [BUT] Nippon Steel features prominently as a foreign respondent resisting trade relief for the U.S. domestic steel industry.”
3. Nippon is running television ads in the United States promoting the purchase. That is a red flag in itself.
The issue to me is liken to a remark sometimes attributed to John Kerry: “I was for it until I wasn’t.” What seems to be missing in the overall consideration of US Steel/Free trade/Tariffs is the realization that trade and industrial policies have become weaponized fully. Old Timey economic theories have been so bastardized as to be unrecognizable, so, i suggest that they be discarded in future economic policy. As far as Nippon Steel. Let them buy U S Steel, if their ownership ever proves problematic in the future, just appropriate U S Steel and void Nippon ownership. WWI began the precedent: The US appropriated German Beyer, American holding of I.G. Farben and Zeiss optical. When in a corner, theory is usually ignored. I like to think: “When you are up to you a– in alligators, it is hard to remember your objective was to drain the swamp.”
George, after Nippon buys U.S. steel how long will it take for critical processes and the talent with the know-how to leave U.S. soil? 25-30 years?
What are you going to appropriate when it is overseas? The U.S. is led by C-Suite looking at quarterly goals. The cultures that gave us “The Art of War” plan with 25–100-year goals. To take your example one step further, our children will be swimming with alligators and saying: wish our dads taught us to make those weapons to deal with these alligators.