Political courage has never been harder to find in Washington. A prime example of this is opposition from President Joe Biden’s administration and presidential nominees Donald Trump and Kamala Harris to the Nippon Steel-U.S. Steel deal — despite the fact that the alternatives are U.S. Steel going bust or forming a trust reminiscent of Andrew Carnegie.
The holdup is purely political. The leader of United Steelworkers, David McCall, has been vocal that his buyer of choice is Ohio-based steelmaker Cleveland-Cliffs, spurring Biden, Trump and Harris to pledge fealty to the union so their campaigns can ring out votes in Pennsylvania.
Unlike most promises we hear during election cycles, whoever wins the White House could have to put their words into action. The Committee on Foreign Investment in the United States (CFIUS), the interagency body tasked with conducting national security reviews of foreign investments in the country, is expected to make a decision after the election as to whether the proposed transaction between Nippon, Japan’s largest steelmaker, and U.S. Steel poses a national security risk. If CFIUS finds national security concerns, it could withhold clearance of the transaction until measures are taken by the parties to mitigate risk. If risk mitigation is not possible, CFIUS submits the case to the president, who has 15 days to approve or deny the transaction, thus forcing the issue on a lame-duck Biden or, depending on who wins the presidential election, Trump or Harris.
Since all are against the deal, they will have difficulty approving the transaction, even if they are shown the facts everyone can see after a few Google searches.
Blocking the deal is not going to stop Pennsylvania’s Mon Valley plant and Indiana’s Gary Works plant from aging out or U.S. Steel from seeking another buyer. If Nippon Steel was out of the picture, the only other buyer in play would be Cleveland-Cliffs, creating a monopoly in which one company controls 95% of U.S. iron ore, 60% of automotive-grade steel and all the silicon-infused electrical steel production crucial for electric vehicles. To put it in stark terms, it would create the type of trust that our anti-trust laws were created to combat.
Such a monopoly would be severely detrimental to the country and our industrial capacity. In an October 2023 letter submitted to congressional committees focused on competition, the U.S. automotive industry raised concerns that such concentration of power over the materials needed for car production would cut into the profitability of their companies. This is because the more a firm becomes dominant in the marketplace, the more it will base prices on the level of which buyers have the ability to pay — and not supply and demand. Similar to U.S. Steel price fixing in the early 20th century, research and development efforts could also suffer since there would be less incentives for the dominant firm to drive costs down, a situation only amplified because of high tariffs stifling foreign competition.
Not only would this mean job loss in the auto sector, but it also would destroy downstream jobs, slow steel innovation, inhibit electric vehicle rollout and put a big gaping hole in the Biden-Harris (and Republican vice presidential nominee JD Vance’s) anti-trust vision.
McCall, Biden, Harris and Trump all have it wrong. The politicians are basing their words on their own nativism and McCall’s flawed belief that Cleveland-Cliffs would be a better partner for USW. Nippon has, from the start, “promised to honor existing agreements with the United Steelworkers (USW) trade union.” Nippon has, from the start, promised: “No transfer of any of U.S. Steel’s production capacity or jobs outside the United States. No layoffs or plant closures or idling of U.S. Steel facilities as a result of the transaction.”
A collapse of this deal would stem the flow of international investment in this country and create an economic landscape that runs counter to the growth goals by everyone in the White House and seeking the presidency.
How much is a few ten thousand votes worth? God forbid politicians are forced to be skeptical when they are forced to put their patriotism and careers on the line. In the absence of their courage, let’s hope they do what they do best — lie.
Vincent Trometter is director of government relations at the nonprofit Competitive Markets Action Inc. in Washington. He also worked internationally on global trade issues for the economic development agency Enterprise Ireland.
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