Nothing is certain, but by the time you read this, Nippon Steel’s proposed $14 billion investment in reviving the fortunes of Pittsburgh-based United States Steel may be dead.
If it is, it’s because it was killed an unholy alliance led by big labor working with the Biden White House and backed by a coterie of economically ignorant business and political reporters.
The deal could breathe life into a fading industry that once symbolized America’s manufacturing might. Without it, the downward slide of U.S. industry caused by destructive state and federal tax and regulatory policies continues.
Even President-elect Donald Trump has criticized it, one suspects, because of the optics. MAGA-supporting voters just can’t see the virtue of a Japanese firm taking over U.S. Steel during a presidency their votes made possible. Trump believes the imposition of tariffs on steel imports will make what’s made in the U.S. competitive on a global scale but it’s hard to see how. Making what’s made in China more expensive may eliminate a competitive advantage but doesn’t lead to economic growth.
U.S. Steel CEO David Burritt explained the reality in a guest essay in the New York Times. His company, he wrote, is only “the third-largest steel maker in the United States and just 24th globally. Our employment peaked in 1943, and production peaked in 1953. Our primary customers now are auto companies and appliance manufacturers, not the military and infrastructure sectors that once defined us.”
It’s time to face the fact the decline was caused by a generation of change-resistant corporate managers who sought rent-seeking protection from politicians and regulators living in the hip pockets of uncompromising labor bosses. They were more interested in their own influence than the welfare of the workers, who dues they faithfully collected, month after month, year in and year out until plants closed and businesses left.
That’s the America Joe Biden talks about when he talks about union jobs being “good jobs.” He doesn’t want the Japanese anywhere near U.S. Steel, even after Nippon promised to invest an additional $1 billion to upgrade the Gary, Indiana, plant on top of the $14 billion they’ve already committed to a new U.S. Steel, headquartered in Pittsburgh and competitive in the global marketplace.
Originally, the opponents of the deal who wanted a chance to pick over U.S. Steel’s carcass once it had to be sold for parts, as Burritt wrote, would likely be the case if the deal failed to win approval, sought to stop what had been proposed on the grounds it was “anti-competitive.”
As that effort failed, a competing, lower bid by Ohio-based Cleveland Cliffs that United Steelworkers preferred was rejected. What would have resulted from that, some economists suggested, would have turned the U.S. domestic steel industry into something where too much power and market control were concentrated in the hands of too few people.
To keep things in play while the Biden administration searched for a way to justify what many believed it wanted to do, the Nippon offer was referred for review to an obscure, multi-agency federal panel that can review and block foreign investments in U.S. firms on national security grounds.
Now, the Japanese haven’t been a threat to U.S. national security since mid-1945. It should have been easy for the Committee on Foreign Investment in the United States to find an economic alliance between Nippon Steel and U.S. Steel wasn’t a threat to us, them, or anyone except the Chinese.
That’s not the way things went down. The Financial Times cited four people familiar with deliberations who said U.S. Trade Representative Katherine Tai “opposed the deal” and that committee members representing the U.S. Departments of Commerce and Energy had “reservations.” Critics questioned whether Tai’s ties to Cleveland Cliffs played a role in her thinking and wondered why the U.S. Trade Representative had a part to play in evaluating the national security implications of international business deals.
What the gambit did was add credibility to the suggestion the fix was in from the start and that the Biden White House wanted a diplomatic way to say “No” to the Japanese so it could say “Yes” to steelworker union bosses whose political support was necessary for Democrats to win the election.
None of that worked out as planned. The Committee on Foreign Investment in the United States punted late Monday, turning the matter back to Biden for a final decision. Except it was always his to make. Thanks to recent congressional revisions, the president can still reject a deal to which the committee has given a green light.
Peter Roff is former U.S. News and World Report contributing editor and UPI senior political writer.
