Opposition to the merger between U.S. Steel and Nippon Steel is amorphous, using any angle that seems most politically viable at the moment. The Biden Administration’s expected national security-based opposition to the merger is just the latest form opposition has taken. Rather than relying on changing justifications for government intervention, lawmakers should allow the Nippon merger to proceed and benefit the domestic steel industry, workers, and consumers alike.
The Japanese-owned company Nippon Steel’s offer to buy the company came after a previous offer from U.S.-owned Cleveland Cliffs. Despite concessions, such as maintaining the U.S. headquarters in Pittsburgh, the deal has been politicized and its approval delayed.
The CEO of Cleveland Cliffs has tried to use union pressure and narratives about protecting workers to oppose the deal, even though Nippon already promised to maintain current worker agreements. Furthermore, U.S. Steel stated that if the deal with Nippon Steel is blocked it would jeopardize “thousands” of jobs.
Along with a focus on workers, those who oppose the merger also focused on pulling at national heartstrings. Last spring President Biden weighed in from a nationalistic perspective when he stated that U.S. Steel “has been an iconic American company for more than a century and it should remain totally American.”
As noted in reporting from NPR, U.S. Steel has a sentimental place in the American consciousness. Even though Nippon Steel isn’t domestically owned, the investments in production would still benefit domestic competition, with the company promising to invest and improve current U.S. Steel capabilities. However, strong national pride may be, it shouldn’t interfere with actualizing benefits for the American people.
The most current version of opposition originated last year when lawmakers on both sides of the aisle pushed to stop the merger under national security concerns. It appears that Biden is listening with recent reporting that the president will likely attempt to block the deal based on national security concerns.
Under this strategy, the Committee on Foreign Investment in the United States (CFIUS), an interagency committee, would be responsible for determining if the merger represented a national security threat with the ultimate decision resting with the president.
The specific national security concerns appear to focus on harming domestic steel production and limiting the ability of the U.S. to seek trade remedies. While the efficacy of trade remedies has been long debated, a new report from the American Consumer Institute shows that the Nippon merger won’t harm domestic production, but blocking it could spell trouble for competition.
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Tirzah Duren is the Director of Tech Policy with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit us on www.TheAmericanConsumer.Org or follow us on Twitter @ConsumerPal.