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OPINION

Biden’s Union-Based Concerns Undercut U.S. Security and Jeopardize Steel Production

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
AP Photo/Susan Walsh

In a final effort to sabotage the United States on its way out the door, the Biden Administration is threatening to use the Committee on Foreign Investment in the US (CIFIUS) to block the acquisition of US Steel by Nippon Steel – a federal agency that’s supposed to aid national security rather than undermine it, which such a block would accomplish. 

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China’s push to dominate the world steel market is not a quaint quirk of command economy planning. Rather it is a strategic decision to dominate world production, undercut market economies and deny the means of production to Western democracies on a grand scale. It’s one of the ways China aims to win World War III without having to actually fight it. 

One thing is clear: China wants to make sure we are unable to defend ourselves and our allies against Chinese aggression. 

Moreover, as China’s domestic economy sours, its ability to undermine production elsewhere increases. China produces about 55 percent of the world’s steel, and their steel output has surpassed 1 billion metric tons since 2020. Currently six of the top 10 steel producers of are Chinese. In 2023, exports increased by 35 percent to 90 million tons dwarfing the production of the United States and Japan combined.

The U.S. steel industry and the totality of America’s manufacturing base have been fending off attacks from China since their admittance to the WTO in 2001. Battered by successive waves of dumped products, the industry has used trade remedies and President Trump’s national security tariffs to claw its way back.  This effort provided much needed support to U.S. Steel, however, China’s relentless campaign undercut U.S. Steel’s ability to invest in modernized facilities, train workers, and expand production. 

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To support American manufacturing from Detroit to Des Moines, and maintain the United States’ core industrial capabilities in the fight against Chinese mercantilist belligerence, U.S. Steel needs an injection of capital and technology.  As part of the deal, Nippon Steel has committed to investing nearly $15 billion in U.S. Steel and share its state-of-the-art technology to make cutting edge steel on American soil with American workers.  

Melding new Japanese technology and American grit, this deal will ensure, rather than weaken, American national security.

Such a partnership would make U.S. Steel part of the third-largest steel company in the world, with the financial footing to fight Chinese cheating.  And U.S. Steel would remain an iconic American company: headquartered in Pittsburgh, with a U.S.-citizen majority board of directors, and U.S. citizens in key positions.  This agreement would ensure the economic security of the people of Pennsylvania.  Nippon Steel has committed that there will be no job losses or plant closures as a result of this transaction, and to honor and assume all United Steelworkers (USW) agreements with U. S. Steel, including the Basic Labor Agreement (BLA) and all compensation, benefits, and profit-sharing obligations. 

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Now, some folks wary of a non-U.S. buyer or perhaps interested in a better labor deal, have advocated for a buyout by Cleveland-Cliffs (CC).  However, such a deal would be a road to nowhere for U.S. Steel and its workers, and a net negative for American national security.  Purchase by CC would consolidate all U.S. blast furnace production under one manufacturer – essentially putting all U.S. eggs in one basket.  This would raise serious antitrust concerns and lead to higher prices for American manufacturers and ultimately American consumers.  

Moreover, CC’s recent purchase of Canadian manufacturer Stelco means it does not have the necessary capital that Nippon Steel has. In short, the interest by CC appears to be more focused on controlling the competition and appeasing union leadership than the long-term health and security of American steel production

Finally, U.S. Steel executives have been clear, U.S. Steel needs an injection of capital and technology to bring it into the modern era.  Without this deal, it could be forced to take drastic action, which could include pivoting away from blast furnace facilities – jeopardizing thousands of good-paying union jobs – and moving its headquarters out of Pennsylvania. This would ultimately destabilize the domestic steel industry when we need an “all hands on deck” approach to counter China. 

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The acquisition plan proposed by Nippon Steel not only avoids this outcome, but aligns the United States and one of our closest allies to strengthen America’s hand against China and push back against the insidious effects of Chinese subsidization, overcapacity, and flood of cheap imports. 

We beat the Japanese in World War II thanks to Pennsylvania’s Bethlehem Steel. Now we need Pennsylvania steel workers to join forces with the Japanese to stave off World War III – seems like a bargain. 

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