American politicians oppose Nippon-US Steel deal

Japan’s Nippon Steel is set to take over US Steel for $14.9 billion. According to a special report put out by Western news agency Reuters, the Biden administration believes that the takeover by the Japanese company would pose a security threat to the United States, and that it would harm the American steel industry. 

Democratic presidential nominee Kamala Harris said she wants US Steel to be “American owned and operated”, and Republican presidential nominee Donald Trump said that he would block the deal if he is elected. It is a rare bipartisan consensus at a time when American politics is polarised on the most fundamental issues. The Committee on Foreign Investments in the United States (CFIUS) “has identified risks to the United States arising as a result of the transaction,” according to a source cited by Reuters.

On the other hand, American business circles believe that the deal is positive and that it is the only way to save US Steel. The two companies on their part had argued, “Rejection of this transaction will lead to the idling of US Steel’s blast furnace facilities…likely cost thousands of jobs; and ultimately weaken the quality and resiliency of steel supply to US industries.” The American steel major feels that a takeover by Japan’s Nippon Steel is beneficial to it, to its workers and to American industry. This is a strange conflict of interest between American politicians and American business.

The politicians’ viewpoint is understandable because whatever the degree of difference, leaders from all sides do cater to the sense of national pride, and they feel that they must stand up for anything and everything American.

The evidence suggests otherwise. American markers are flooded with foreign-origin goods and manufactures. And the politicians cannot bring themselves to admit that a takeover by a Japanese company is necessary to save an American company. Perhaps a more enlightened leader would have argued that the foreign takeover will help America improve the quality and supply of its steel, and that it is part of enlightened self-interest to take help from outside the country to get over hurdles.

The best argument for the Nippon Steel takeover of the US Steel is that it will save jobs, that is American jobs, and there cannot be a better argument for convincing the voters. It is most surprising that Americans should feel threatened by Japan, which is a close strategic ally. Of course, Americans always felt the sting of competition posed by the Japanese companies, but it never became an issue of American security.

The irony of the situation is that American politicians and policymakers have always preached to the developing countries the need to allow entry of foreign companies as part of economic reforms, and they have been critical of barriers. They dismissed notions of national pride and sentiment saying that the aim should be to improve the economic well-being of the people. But they are unable to accept the argument when it touches their own companies and their own economy.

In some ways, the American economy is in need of infusion of foreign technology in some of the sectors though America maintains its technological leadership in space, in AI and in computer software. But American manufacturing is no more the world leader, and the state of American infrastructure leaves much to be desired. In many ways, the United States faces the same dilemmas like that of developing countries, and the political pressures too are the same. The hard rethink that is happening over the Nippon-US Steel deal will make American politicians more empathetic of the choices faced by the political leaders of developing countries.