On September 5, 2024, the Roosvelt Institute released a compelling analysis arguing that President Biden's recent actions surrounding the proposed acquisition of US Steel by Nippon Steel demonstrate a significant shift towards a foreign policy that prioritizes the middle class. This assertion stems from Biden's strong statement in April, asserting that US Steel should remain “domestically owned and operated.” This declaration has sparked widespread bipartisan support, with policymakers increasingly recognizing the critical role of domestic steel in various industries, infrastructure, and clean energy systems. As the debate has intensified, US Steel has threatened to close its Pennsylvania headquarters and plants if the acquisition proceeds, further complicating the situation and raising the stakes for workers and communities reliant on these jobs.
The controversy surrounding this merger has drawn a wide range of reactions, with some commentators labeling it as “a threat to economic liberty” and “naked cronyism.” Others have criticized the president's involvement, claiming it is unprecedented for a sitting president to comment on an ongoing case under review by the Committee on Foreign Investment in the United States. However, these criticisms overlook the legitimate concerns surrounding the deal. The United Steelworkers union has raised alarms about contract violations and questionable practices by both US Steel and Nippon, demanding solidarity in their fight against the merger. The stakes are high, as the outcome could determine not just the future of US Steel, but also the livelihoods of thousands of workers.
Biden's approach marks a departure from traditional norms, as he previously walked a picket line with the United Auto Workers, signaling his alignment with labor interests. In this case, the USW's concerns are echoed by rival steel company Cleveland-Cliffs, which has taken a more cooperative stance with the union. Cleveland-Cliffs has publicly criticized the acquisition, emphasizing the need to maintain strong American steel companies powered by American steelworkers. This sentiment resonates with Biden's assertion that a robust domestic steel industry is essential for national security. The administration's willingness to side with labor over corporate interests reflects a broader commitment to revitalizing the American manufacturing sector, which has faced significant challenges due to globalization and outsourcing.
The merger's implications extend beyond economic concerns, as it involves complex diplomatic relations with Japan, a key U.S. ally. Critics have pointed out that Biden's stance could be perceived as economic nationalism, potentially straining relations with Japan. Former Japanese officials have expressed surprise at the U.S. administration's position, while Nippon Steel has ramped up lobbying efforts, hiring former Secretary of State Mike Pompeo to advocate for the deal. This highlights the intricate balance Biden must strike between supporting American workers and maintaining strong international alliances. The diplomatic fallout from this decision could have lasting effects, influencing not just trade relations but also broader geopolitical dynamics.
Biden's national security advisor, Jake Sullivan, has articulated a foreign policy for the middle class, emphasizing the need to address rising inequality and environmental degradation. This approach suggests that when faced with a choice between labor interests and foreign relations, the administration will prioritize the working class. The USW's current contract with US Steel stipulates ongoing capital investments in domestic facilities and requires advance notice for major acquisitions. Nippon's failure to consult with the union before announcing the deal has raised further concerns about the potential consequences for American workers. The union's insistence on transparency and communication reflects a growing recognition of the need for accountability in corporate governance.
Labor unions have increasingly filled the void left by a finance sector that has become detached from the real economy. The USW's allegations against US Steel's CEO, claiming attempts to inflate share prices for personal gain, underscore the need for accountability in corporate governance. Additionally, the union has raised valid questions regarding Nippon's ties to Chinese producers, which have historically undermined U.S. steel manufacturers. As CFIUS reviews the acquisition, it must consider whether the deal poses a threat to national security and the stability of domestic supply chains. The potential for foreign control over critical industries raises alarm bells among lawmakers concerned about the long-term implications for American sovereignty and economic independence.
Environmental considerations also play a crucial role in the discussion. Nippon Steel has been criticized for lagging in decarbonization efforts, contrasting sharply with Cleveland-Cliffs, which is actively collaborating with the U.S. Department of Energy on clean air initiatives. The limited number of integrated steel plants in the U.S. further highlights the stakes involved in this merger. With only eight such plants remaining, any potential idling of operations could have dire consequences for national and economic security. The environmental impact of steel production, particularly in terms of carbon emissions, has become a pressing concern as the U.S. seeks to transition to more sustainable industrial practices. The potential acquisition raises questions about whether Nippon would prioritize environmental standards in its U.S. operations.
As the situation unfolds, the future of the proposed merger remains uncertain. US Steel's threats may be a negotiating tactic, while the administration could consider using the Defense Production Act to ensure the protection of domestic steel assets. This act allows the government to prioritize domestic production for national defense, a precedent set during World War II. Such measures could be seen as a necessary response to protect American jobs and industries from foreign control. Regardless of the outcome, this controversy may serve as a wake-up call for global companies, emphasizing the importance of honoring workers and communities in their business practices. If successful, Biden's approach could pave the way for a foreign policy that genuinely supports the middle class, ensuring that the needs of American workers are placed at the forefront of economic decision-making.
