Jeffrey Kupfer: Politicians shouldn’t endanger the U.S. Steel deal
President Biden is apparently on the cusp of using his executive powers to block Nippon Steel’s acquisition of U.S. Steel, claiming that it would harm U.S. national security. It’s a claim that doesn’t stand up to scrutiny and obscures what appears to be the real reason for his action – a desire to curry favor with the United Steelworkers in a pivotal battleground state.
A couple weeks ago, the Committee on Foreign Investment in the United State (CFIUS) reportedly informed both Japanese owned Nippon Steel and U.S. Steel that it believes the transaction could harm national security by reducing domestic steel production. Putting aside the fact that Biden had already put his thumb on the scale of the CFIUS review when he said months ago that it was vital for U.S. Steel to remain American owned, CFIUS’s contention is easily refuted.
First, Nippon has pledged to invest at least $2.7 billion into U.S. Steel’s aging facilities, many of which are located in Pennsylvania. U.S. Steel CEO David Burritt has been clear about the need for this investment, stating that this multi-billion-dollar infusion is essential for modernizing the mills and retaining thousand of jobs (as well as keeping the company’s headquarters in Pennsylvania). Jason Zugal, vice-president of one of the Steelworker’s local unions, recognizes the importance of the investment, noting that “the deal on the table would solidify the jobs in the Mon Valley for the next 50 to 100 years.”
Second, Nippon has committed that core senior management of the U.S. entity, as well as the majority of its board of directors would be U.S. citizens. These officials would make the decisions about company operations and whether to seek tariff relief against unfair foreign competition. And for those concerned about Nippon reneging on its promises, CFIUS would require a national security agreement that spells out the conditions and would be enforceable by the U.S. government.
Unfortunately, the country’s other major political figures have the same misguided view as Biden.
Democratic presidential nominee Kamala Harris recently said U.S. Steel “should remain American-owned and American-operated,” and that it “is vital for our nation to maintain strong American steel companies.” We all would like U.S. Steel to regain its flagship status and return to being one of the world’s largest steel producers. But saying we want something does not make it so. A successful company will require investment and innovation – and the Nippon deal is the best offer on the table.
Moreover, Harris showed her real motivation, announcing her opposition on Labor Day, a not-so-subtle nod to the Steelworkers union. The USW leadership, upset that the companies did not consult them before announcing the offer, also has a cozy relationship with rival steelmaker Cleveland Cliffs, which has open ambitions of derailing the deal so it can acquire U.S. Steel at a lower price.
The Republican side has been no better. “I will stop Japan from buying United States Steel,” Donald Trump said in August. “They shouldn’t be allowed to buy it.” His opposition appears to be a protectionist reflex, no matter the economic harm or job losses. His running mate, J.D. Vance has also opposed the deal, which is especially ironic since he admitted in his bestseller Hillbilly Elegy that a Japanese acquisition of a steel company in his hometown had probably helped the local mill survive.
These politicians also seem to forget that we are talking about Japan, one of our closest allies and a country that we are increasingly relying upon as the rivalry with China heats up. The U.S. coordinates with Japan on national security matters and stations thousands of American servicemembers there.
There are plenty of experts who recognize that the acquisition is in America’s economic and national security interest. A report from the Center for Strategic & International Studies concluded that opposition does “not reflect a careful assessment of the U.S. national interest,” and that the deal “would likely support U.S. economic growth, jobs, and innovation without in any way jeopardizing national security.”
Additionally, former Cabinet officials of both parties have commented there’s no legitimate rationale for preventing the deal.
Recently, scores of U.S. Steel workers – including some union members – demonstrated in favor of the acquisition. They understand what is best for them. Our political leadership apparently does not.
Jeffrey Kupfer, an adjunct faculty member at Carnegie Mellon University’s Heinz College, is a former acting deputy secretary in the U.S. Energy Department and former special assistant to the president for economic policy.
Serious questions: what was the author paid for this article, and by whom, and what was Broad + Liberty paid to post it? Why haven’t there been any articles on Broad + Liberty with a counter argument for this issue?
This specific article boiled down:
1. there are zero national security concerns if this sale happens.
2. However, because after this sale there will indeed be possible national security concerns… don’t worry because we have already promised – we really promised – to take steps to possibly mitigate those obvious national security concerns…
I posted comments on this article the other day and it is nowhere to be found. Is there some form of editorial surgery operating with comments?
George, it confused me too until I realized this was a separate and additional article (two days in a row) on the topic. Have you seen their TV ads, too? They are really ramping up marketing efforts to try and persuade people that it is a “good” deal. Won’t be surprised if they offer fries and a burger to everyone like NY did when they were pushing that harmful Mrna experimental gene therapy shot.
Without all the ancillary fluff, my basic point is that from a national security perspective, any problematic issues could be solved by simple expropriation from foreign owners. WWI set the precedent with our seizure of German assets (i.e. German Bayer, I.G. Farben. Zeiss and so on). As historical perspective. foreign ownership/management can be illustrated by the fact that the Reading Railroad was financially controlled by English investors who also appointed an Englishman as president for a time. English financial control lasted until almost the end of the Gowan years. Another example: The Great Northern Railroad was controlled by German investors in the second half of the 19th century. They installed Henry Villiard as president to guard their investment and who did a bang-up job at running the railroad. We buy Toyota cars, Subaru, Nissan and no one seems worried the businesses in American are control by Japanese executives.
Think of this deal in reverse… USS buying Nippon steel! Never happen!!!
The Japanese economy is based on Unfair Trade and TARGETTING !!!
The Japanese targeted the far superior US company I worked for and put them out of business … then they unfairly got the business they could not fairly compete to get so they cheat.
This sale of USS is another example of the result of TARGETTING!
The Japanese government unfairly subsidizing Japanese companies then buy the companies they unfairly put out of business!!! TARGETTING!
What happens when the CRAZIES want to go to WWlll, and we have no way of playing CATCH-UP for REBUILDING the ARMED FORCES? The COMMUNISTS WITHIN OUR COUNTRY will not allow any production of STEEL, for they wish to see this GOD BLESSED USA burn from SEA TO SHINING SEA! PRAY FOR THE DEAR LORD JESUS TO WAKE US UP, TO THE WANTING OF TERRYING US TOTALLY DOWN AND OUT!!!