Japanic! at the Steelco

U.S. Steel gives American protectionists just what they wanted … good and hard.

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U.S. Steel's Mon Valley Works Clairton Plant and Clairton Coke Works facility in Clairton, Pennsylvania, on Monday, September 11, 2023. (Photo by Thomas O'Neill/NurPhoto/Getty Images)

Happy New Year. While most of us were holiday hibernating, venerable steelmaker and longstanding champion of American economic nationalism U.S. Steel gleefully agreed to be acquired by its onetime nemesis, Japanese multinational Nippon Steel. Since U.S. Steel had been on the auction block since the summer (when Ohio-based Cleveland Cliffs, backed by the United Steelworkers union, initiated an unsolicited buyout that U.S. Steel quickly rejected), the only surprising thing about the sale announcement was the name of the acquirer: Nippon Steel had never been mentioned as a possible suitor. Beyond that, the announcement gave us little to get worked up about. U.S. Steel would keep its name; Nippon Steel would honor existing USW and other contracts; and the merged company was eyeing domestic expansion (to meet an expected increase in steel demand), not painful contraction.

Within hours of the announcement, however, people did get worked up. In particular, the USW and a bipartisan cadre of protectionist politicians, wonks, and pundits denounced the deal as undermining national security and the U.S. industrial base, threatening American workers, and revealing fundamental flaws in corporate governance and U.S. regulation, which (supposedly) prioritizes shareholders and managers over the former priorities. A trio of Pennsylvania Democrats (Sens. Bob Casey and John Fetterman, along with Rep. Chris Deluzio) and a trio of “national conservative” Republicans (Sens. J.D. Vance, Marco Rubio, and Josh Hawley) each wrote to Treasury Secretary Janet Yellen, chairwoman of the Committee on Foreign Investment in the United States (CFIUS), to block the transaction because of its “dire” implications for the U.S. industrial base and national security. The pols and pundits were followed by President Biden himself, who—via economic adviser Lael Brainard—didn’t go so far as to oppose the deal but instead pulled the classic Washington move of calling for an “investigation” by CFIUS … while explicitly praising the USW (whose support they think they need in 2024). The union, the Financial Times reported, “welcomed Brainard’s intervention.”

(Of course it did.)

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  1. Avatar photo
    Ben Connelly

    Starting the new year off right with some shilling for globalist neoliberalism! Bodes well for the year ahead.

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  2. SamCOS

    Scott, you are one of the few people who when you appear on a podcast I make sure I listen. This was a great explanation of the realities.

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  3. Iowafocus

    maybe I’ll read the article

    but first things first: that headline’s a beaut

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  4. Harbage6179

    Next they’ll champion pulling said troops out of Japan. In the 80s we built garbage cars and the Japanese handed us our lunch. They’re a positive influence on America. I hope all the accolades we get now are deserved.

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  5. BPhillips

    J.D. Vance, Marco Rubio, and Josh Hawley all with the same policy - you know there's something wrong with it. That should have been a red flag for Fetterman to reconsider.

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    1. Avatar photo
      Porouke

      Example #13,474 of how 2016 broke Marco Rubio.

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  6. Tuller

    Nippon Steel benefitting from those sweet American Steel tariffs is the Chefs kiss of US protectionism. So many great bank shots of bipartisan support for everyone in the US to pay higher steel prices to benefit a Japanese company. Steel Executives lobbied Trump for tariffs and then dump their stock, so many great storylines. Even a Terry Bradshaw reference. Good times.

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    1. Very Old Grumpy Guy

      Right! Look, I get it. To paraphrase talking Barbie from last century, "Economics is HARD!" Competitive systems are hard to understand. To be fair, I also have to acknowledge that the people who lose their jobs to the creative destruction of capitalism are truly hurt and will not be re-assured that the rest of us are better off. They also tend to be the least adaptable of our fellow apes.

      But, that is no reason for us to impose the tremendous inefficiencies on our economy we do - like the Jones Act! (A bone for Scott and his CATO gang.)

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  7. Avatar photo
    PSM

    Japanic! at the Steelco has to be a top 5 Dispatch headline.

    Also a great article.

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  8. Sdwats61

    Not only do US Steel management and shareholders get a sweet deal for decades of economic mismanagement, the protectionists get to raise money by panicking gullible voting bases. Everybody wins, except for US steel consumers. Isn't this a great country?

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    1. Very Old Grumpy Guy

      Everybody wins except sugar consumers, aluminum consumers, any consumer whose good could travel by waterways, but does not (Jones Act). But, let's be honest? Who cares about consumers? They are dopes, right? They must be, as they continually, overwhelmingly support this nonsense. It is one thing we are bi-partisan about.

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    WKDawson

    Good reminder. I suppose it hurts a little to think of US Steel, but at this point, I can only think of them as "US Steal" anymore.

    I remember probably Jonah Goldberg on his Remnant podcast somewhere in 2017 making the point that protectionism would just raise the cost to US consumers. I know the free market proponents have repeated themselves endlessly that "protectionism doesn't work", but I thought _surely_ this would give these companies the boost that they needed, agree or not with the policy.

    Golly, even though US Steel gets a steal with Trump & Biden protectionism, they still end up on the chopping block ... you get a break, you hit the ground __running__ man. There can be little excuse but mismanagement and it's about time someone who can do the job better takes over that operation.

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    1. Very Old Grumpy Guy

      I understand your intuition. The impulse to help the "home team" is totally understandable. My only suggestion, for those of advanced age among you, think back to how horrendous cars were in the 70's when US manufacturers dominated the market. Not only did foreigners make consumers better off, US made cars are now MUCH better. Competition helps the producers get better, too!

      There is a political analogy. Look at places in which elections are non-competitive. Are cities (overwhelmingly blue)and heavily blue or red states well run? Nope. But we will keep eating the rat poison of noncompetitive elections, screaming "Give me more of that sweet stuff!"

      No system is better off for a lack of competition.

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  10. Natty Bumpo

    Great piece. I was not concerned about the deal and assumed that it would bring some benefits to US Steel as a business. I did know that they had become a smaller business over the years although I did not know the numbers. I also could see the reaction against the deal as political pandering, though I expect that some parties (most likely Fetterman) really believe that this will be bad for rank and file workers. I hadn't considered the buying into the market idea, but it seems obvious when you discuss it. Nothing at all wrong with this. And the national security risk is pretty much non existant.

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