President Donald Trump proved his abilities as America’s “negotiator in chief” once again by greenlighting a merger between the iconic US Steel (USS) and Japan’s Nippon Steel Corporation (NSC). The deal will not only preserve existing American jobs but create new ones too, while pouring investment into the country and revitalizing America’s industrial base—a true win-win for the US and Japan.
USS has languished for decades, weighed down by obscene tax and regulatory burdens, failed union leadership, and unfair trade practices. This deadly combination is what turned the Industrial Belt into the Rust Belt, from Pittsburgh to Milwaukee.
These rubiginous cities have seen good-paying blue-collar jobs vanish, economic activity plummet, and tax revenue to state and local governments evaporate.
Meanwhile, companies like USS have been heading to bankruptcy amid a dearth of investment and technological innovation. That has caused USS to fall woefully behind some of its foreign competition, especially in the production of high-grade steel that is in high demand worldwide. This is a key reason why the USS-NSC merger is the right move at the right time.
The Japanese company will bring valuable intellectual property to western Pennsylvania, their American counterpart to upgrade production facilities for the manufacturing of high-grade steel. That will open the door to a wide array of export markets for domestic steel production, which increases global demand for American steel and American steelworkers.
The result of this greater demand is not only more jobs but faster wage growth for those employed in the industry. It’s estimated that the economic impact just in the greater Pittsburgh area will be $1 billion in just the first two years of the partnership, while 5,000 construction jobs are created, with additional construction and manufacturing jobs added thereafter.
Additionally, NSC’s investment will generate an additional $40 million in state and local taxes for governments currently drowning in red ink and desperate for more revenue.
Nationwide, the deal would create at least 70,000 jobs and add $14 billion to the American economy while expanding the country’s industrial base—a matter of national security.
President Trump has repeatedly made the case that America’s industrial base is insufficient to meet national security needs—that we need to be able to build ships, planes, and war materiel domestically in case of a conflict that disrupts trade. NSC’s investment in USS helps address that concern by not only expanding steel production but also the quality of steel produced.
Once Trump announced that this historic investment had receive the green light (after a similar version was previously blocked by the Biden administration), the stock price of USS soared 20 percent in a single day.
This harkens back to when the late great financier J.P. Morgan created USS, the world’s first billion-dollar company. A historic negotiator in his own right, Mr. Morgan convinced steel magnate Andrew Carnegie to sell his eponymous Carnegie Steel to Mr. Morgan’s new steel conglomerate.
Despite paying an eyewatering sum, Mr. Morgan got a steal of a deal from Mr. Carnegie, who was a lousy negotiator and sold out too cheap. When the industrialist asked the financier if the latter would’ve paid another $100 million (about 20 percent more), Mr. Morgan coldly replied, “Very likely, Andrew.”
Fast forward over a century, and President Trump is Mr. Morgan, not Mr. Carnegie. J.P. Morgan formed a great company by combining existing ones, and today’s merger of USS and NSC does the same thing. The domestic conglomerate that Mr. Morgan formed will now likely be superseded by an international partnership which President Trump helped negotiate. His Art of the Deal has produced an art of steel.
E.J. Antoni, Ph.D., is the Chief Economist and Richard Aster fellow at the Heritage Foundation and a senior fellow at Unleash Prosperity.
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