As soon as President-elect Donald Trump takes office, he should reverse President Joe Biden’s wrongheaded and arguably illegal decision to block the sale of U.S. Steel to Nippon Steel of Japan.
Biden made the long-anticipated decision on Jan. 3, citing spurious “national security” concerns. During the presidential campaign, Trump also said he opposed the sale to Nippon Steel, but he should change his mind. It would save jobs and perhaps create new ones. Stopping the sale would probably mean the elimination of up to 11,000 jobs in Pennsylvania and would cost U.S. Steel shareholders some $4 billion, according to a widely cited report first obtained by the Washington Examiner last July.
Rather than protecting national security, preventing the sale would be more likely to harm it. Japan is a close, important, longtime ally and a crucial counterweight to the aggressive Chinese communist regime in Beijing. An alliance between Nippon Steel and U.S. Steel would be an economically good thing — a publicly traded Japanese company with plenty of American stockholders that invests in production and jobs here in the United States. It would be militarily and diplomatically wise to improve the industrial bases for both allied nations while China seeks to corner industrial markets and build an increasingly formidable Navy.
U.S. Steel, based in Pennsylvania, has been struggling for years. Thirteen months ago, Nippon Steel offered to buy it for $14.1 billion and invest another $1.4 billion or more into plant refurbishment while honoring all existing collective-bargaining agreements with U.S. Steel employees. By contrast, the Ohio-based Cleveland-Cliffs company offered barely half as much to buy U.S. Steel, and it is expected to shutter all or most operations in western Pennsylvania if it takes over. The Pittsburgh Post-Gazette editorialized last year that without Nippon Steel’s purchase, “there is no long-term future for steelmaking in Pittsburgh,” and in September, thousands of Pennsylvania workers demonstrated in favor of Nippon Steel’s acquisition.
Ordinarily, a president cannot block corporate mergers. The Justice Department can try to get courts to block them by arguing that they create a near-monopolistic restraint of trade, but that isn’t remotely applicable here: U.S. Steel produces less than a fifth of all steel made in this country. That consideration also eliminates the national security argument that foreign ownership would cripple domestic production in the event of a war.
Nonetheless, using provisions from the Defense Production Act of 1950, Biden said national security concerns allowed him to block the sale. Long-standing legal interpretation has held that a president may not declare a national security rationale unless something called the Committee on Foreign Investment in the United States concludes there is a security risk.
In this case, the committee voiced some concerns about national security implications, but it did not make a recommendation against the sale. Biden ignored this and hyperbolically cited those “concerns” to justify his interference.
During November’s election campaign, Biden, Trump, and Vice President-elect J.D. Vance (R-OH) ignored the compelling arguments in favor of the sale and sided with union leaders who opposed it rather than with Pennsylvania’s rank-and-file workers who supported it. Most conservative economic groups that are friendly to Trump, such as the Heritage Foundation and the Committee to Unleash Prosperity, strongly support the sale to Nippon Steel.
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Trump should take this into account and reverse course, heeding his own words on Sept. 24 about friendly foreign investment. He said, “Here is the deal that I will be offering to every major company and manufacturer on Earth — I will give you the lowest taxes, the lowest energy costs, the lowest regulatory burden, and free access to the best and biggest market on the planet. But only if you make your product here in America. … And hire American workers for the job.”
That’s what Nippon Steel wants to do. Trump should live up to the commitment he stated in Savannah, counter the cynical ploy of Biden who is staggering out of the White House in a miasma of shame and hypocrisy, and save American jobs and stockholder value by allowing the sale to proceed.