Press reports suggest the Biden administration is poised to block Nippon Steel’s purchase of U.S. Steel. That would be a blow to both the economy of Pennsylvania and the national security of the United States.
Fortunately, what one president has done, the next president can undo. So let’s consider the situation that the new 47th president will confront.
On September 4, the American company issued a sober warning: “Without the Nippon Steel transaction, U. S. Steel will largely pivot away from its blast furnace facilities, putting thousands of good-paying union jobs at risk, negatively impacting numerous communities.”
As the company says, the key issue is scale—the size needed to “better compete on the global stage.” That is, competing against the steel-making giants of China and India. As we’ve all learned, the challenges our industries face are formidable; America's share of world steel production has fallen from 50 percent in 1950 to just six percent today.
Critics of the steel deal have made much of the “iconic” status of U.S. Steel and Pittsburgh, and that’s for sure, true—the company and the city have been entwined since 1901. However, “iconic” doesn’t pay the bills. As the company warns, “the lack of a deal with Nippon Steel raises serious questions about U. S. Steel remaining headquartered in Pittsburgh.”
It’s worth noting that “iconic” status hasn’t saved many companies from having to depart their founding city. For instance National Cash Register was founded in Dayton, Ohio, back in 1884; it remained there for 125 years, before it was bought up and relocated to Atlanta. Indeed, in 2023, the real estate firm CBRE calculated that just in the previous five years, 465 companies, nationwide, had moved their headquarters. Plenty of other companies, of course, have simply gone bankrupt and disappeared.
Happily, Nippon Steel has pledged to keep both the name U.S. Steel and its Pittsburgh headquarters. That’s good news, suggesting that a pumped-up U.S. Steel will continue to support more than 11,000 jobs, contributing $3.6 billion to the local economy. Indeed, Nippon has pledged to move its own domestic HQ from Houston to Pittsburgh, while investing an additional $1.3 billion in U.S. Steel—if, that is, the deal goes through.
This hinge moment for the Pennsylvania economy has caught the attention of Keystone State leaders. On September 5, The Pittsburgh Post-Gazette headlined: “Shapiro steps up negotiations as Biden's potential block of U.S. Steel deal jolts region.” That’s Governor Josh Shapiro. As his spokesperson told the newspaper, “Shapiro and his team have been and continue to work closely with all parties to find a solution that protects Pennsylvania jobs.”
Another important figure is State Senate President Pro Tempore Kim Ward, who told the Post-Gazette, “I think it’s a mistake to continue to fight this deal.” She continued, “I do understand that people are nervous about a foreign [company] owning U.S. Steel, but they already own one of the biggest companies in the district I serve. And it’s good. It’s fine.”
Which brings us to the federal body that reviews important foreign purchases, the Committee on Foreign Investment in the United States (CFIUS), charged with focusing on national security.
Surely Japan, a close ally for more than seven decades, poses no threat to American security. In fact, just in the past few years, the country has been working with the U.S. on such ultra-sensitive sensitive matters as embargoing Japanese-made computer chips against China, and placing new American missiles on its territory. So yes, the U.S. and Japan are allies, but is it realistic to expect maximum cooperation from Japan if the U.S. won’t reciprocate? Especially on such an obvious win-win?
With all this in mind, one past participant in the CFIUS review process urges support for the steel deal. On September 5, Matthew Slaughter, dean of Dartmouth’s Tuck School of Business, formerly a U.S. Senate-confirmed Member of the White House Council of Economic Advisers, told CNBC, “Nothing I’ve seen in the public domain makes me think this is a national security risk.”
Slaughter added, “We have long had companies like Nippon Steel operating in the United States.” Of the controversy over the deal, he concluded, “It’s kind of hard to see, other than some domestic political considerations, what’s driving this.” Amidst all the rhetoric, Slaughter reminds us that foreign companies provide 17 percent of total capital in the U.S., creating jobs that pay an average annual wage of $87,000.
Whatever happens this year, the next president might wish to examine the steel deal with fresh eyes. The stakes are both a better economy for Pennsylvania and stronger national security for the U.S.
Will the 47th president really want to say “no” to that?
James P. Pinkerton is a longtime columnist, author, and political analyst. He worked in the White House policy offices of Presidents Ronald Reagan and George H.W. Bush and in the 1980, 1984, 1988, and 1992 presidential campaigns.