US Steel: Why the Japanese Buyout of Pittsburgh Company Shouldn’t Be Blocked

Most leading Washington politicians want to block Japan’s Nippon Steel from buying U.S. Steel. It’s a quintessentially American company headquartered in Pittsburgh. Keeping U.S. Steel American has a logical ring to it. Admittedly, merging the United States’ eponymous steel company with Nippon could make us look weak to some. Japan protected its own steel industry, which gives us more than enough rights to protect ours from Japan.
However, independent analysts rightly question CFIUS’s conclusion about a deal that would create the world’s third-largest steelmaker better equipped for global competition with China. The combined company would straddle the globe and bring U.S. Steel from its current $18 billion revenue to a whopping $80 billion, including billions in investments to modernize U.S. Steel blast furnaces and make U.S. Steel jobs more secure.
That is too much power for one steel company to wield against consumers. The United States and free markets need multiple companies producing domestic steel to take full advantage of the market competition, which makes our economy efficient.
Refusing that money is ill-advised, not least because it will snub an important U.S. ally. It will hurt U.S. bargaining positions on other matters, including controls that we want Japan to impose on computer chip technology that China wants to buy. This all problematizes job and national security arguments against the deal.
Nippon promised to guarantee the union’s contract and forego plant closures and layoffs. Nippon promised the union to protect worker benefits, job security, and workplace rules.
China cracks down on its unions, which is partly why its wages are low enough to attract global investment. That global investment then pushed up Chinese wages as a whole and pushed down U.S. wages as U.S. industry fled to cheaper labor abroad.
Yes, we should pay a bit more for American steel, because U.S. wages are higher than Chinese wages. Yes, we should protect the U.S. steel industry from artificially low Chinese imports. But certain privileged classes of workers should not be allowed to push their factories into unprofitability and bankruptcy, which hurts other U.S. workers and consumers, including by threatening thousands of jobs in Pittsburgh.
The Nippon offer to modernize U.S. Steel is one good step toward saving U.S. jobs and reindustrializing the United States after decades of damage from cheap Chinese steel imports. It’s time to partner with Japan’s capital and American know-how instead. Bring back the once-great U.S. Steel, backed by more than $17 billion of new money invested in U.S. factories, on U.S. soil, for American jobs.