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LARSON: A Fresh Start in the Steel Industry

As Wall Street hedge fund billionaires lash out over the president’s economic plans, American union steelworkers see a different picture — a financial plan to encourage U.S. investment.

The details of a U.S. Steel — Nippon Steel deal to strengthen both are still being worked out, but any deal that keeps jobs in America while encouraging foreign investment in domestic manufacturing is a good one.

The American steel industry achieved a significant boost because U.S. Steel and Nippon Steel formed an alliance, demonstrating a commitment to bringing investments back to the United States. The partnership brings fresh energy to U.S. steel manufacturing, a much-needed industry while demonstrating a strategic partnership with far-reaching effects on the American economy.

The White House announced recently that President Trump has resubmitted the deal to the Committee on Foreign Investment in the United States (CFIUS). This signals that the administration is trying to get a fair assessment of the agreement.

This would be a win for American workers and the economy. The movement toward an agreement proves Trump’s ability to secure deals that serve American interests, according to his long-standing promise. The promised $14.1 billion investment from Nippon Steel represents financial support and a dedication to developing American industry. Union members welcome this partnership that will provide employment security and industrial growth to a crucial part of the national economy.

The president supports progress toward an agreement. He highlights the opportunity for improved domestic manufacturing output and decreased dependence on Chinese imports. Investment from  Nippon Steel enables U.S. Steel to develop domestic strength in the global market while building an environment for innovation and expansion.

Nippon Steel is determined to establish a strong and productive union relationship. With a proven track record of collaboration with the United Steelworkers, Nippon Steel is committed to upholding all collective bargaining agreements and recognizing the USW as the rightful bargaining representative for its members. There will be no layoffs of USW-represented employees due to this transaction. Furthermore, Nippon Steel will maintain U.S. Steel’s compensation and benefits programs for its workforce. U.S. Steel’s union workers will significantly benefit from the resources and dedication of a larger organization focused on transforming U.S. Steel into the strongest, best and cleanest steel manufacturer in the United States.

The proposed deal will have broad effects on the U.S. economy.  The transaction between corporate titans represents a strategic business move that will reshape the future of American manufacturing operations. The merger between U.S. Steel and Nippon Steel will bring advanced technology and resources, enabling the company to expand while driving positive economic effects across various industries and their workers.

Nippon Steel operates from its Houston headquarters and has demonstrated successful operations throughout U.S. territories and worldwide markets. Its financial commitment demonstrates its belief in American industrial capabilities and its understanding of the national strategic value of domestic steel production.

The path forward looks promising. Economic arguments for opposing this agreement appear invalid because the benefits of a deal directly support a long-term economic strategy. Enhancing domestic production capacity while moving away from Chinese steel is essential to secure supply chains. Domestically produced steel’s increased availability and reliability would benefit U.S. consumers and automotive manufacturers.

The 2023 announcement of a collaboration established the foundation for this acquisition. Through its collaboration with Nippon Steel, U.S. Steel can gain access to modern technologies that will secure America’s position as an industrial leader.

The Nippon Steel-U.S. Steel agreement is a vital economic achievement. Through this foreign investment approach, the administration built a financial framework that supports industrial development alongside stability and resilience in domestic manufacturing.

The business merger represents more than a standard transaction because it functions as a change-driving force that strengthens American industrial confidence. Because of sustained backing and effective partnerships, the future of U.S. Steel and the broader American economy shows positive potential.

Administration Wants to Have Steel Cake and Eat It Too

“The Japanese have a saying, ‘Fix the problem, not the blame.’” — “Rising Sun” (1993)

The Biden administration recently announced tariffs on Chinese steel imports — which are fine when he throws them around but xenophobic! when Donald Trump uses them. This is another instance where Biden shows he wants to have his cake and eat it too when pandering to Rust Belters, much like his resistance to the U.S. Steel/Nippon Steel deal.

Pennsylvania-based U.S. Steel has been entertaining bids for its business. A year ago, Ohio-based Cleveland-Cliffs offered $7.3 billion to buy the company. This offer that was quickly outmatched when Tokyo-based Nippon Steel offered $14.1 billion. U.S. Steel CEO David Burritt recently said this latter deal will likely go through this year.

Nippon Steel’s annual production is 44.37 million tons, while U.S. Steel’s is 14.49 million tons, according to data from the World Steel Association. If the two combined, like some kind of Japanese super-robot, they would become the third-largest steel producer in the world.

Now, Cleveland-Cliffs would prefer to acquire its domestic rival rather than see it plucked up by an international one. However, rather than pony up $7 billion more to outspend Nippon, it uses the much-cheaper alternative of election-year fearmongering to scare U.S. Steel into settling.

As well they might. Cleveland-Cliffs’s stock has been in a freefall, down 30 percent.

A downgrade of the stock’s value has been attributed to broader economic conditions, but analysts at Barrons also attribute this to operational missteps by CEO Lourenco Goncalves. The Zacks Ranks system put it as a rank 4/5 (sell).

Increasingly, the narrative is changing: U.S. Steel doesn’t need Cleveland-Cliffs to survive as much as Cleveland-Cliffs needs U.S. Steel. Opponents of the Nippon deal don’t want that narrative to change, imagining a 1950s-style Renaissance of domestic manufacturing if the Japanese investment deal can just be somehow stopped! This is a classic example of the fallacy of the false alternative. The truth is that no such Renaissance will happen.

Americans — and probably almost everyone else — attach a patriotic importance to manufacturing.

Opponents of the Nippon Steel deal are employing this kind of strategy now. Muscle-bound manufacturers at Bethlehem Steel played a slightly more pivotal role in winning World War II than the nerdy accountants at Ernst & Young.

Spoiler alert: WWII ended 80 years ago. And now, Japan is our No. 4 biggest trading partner. The Americans and the Japanese have been fast friends for decades.

If our domestic steel industry isn’t undergirded with this kind of capitalization, the much more significant threat is an oversupply of Chinese steel that cedes to the Communist Party there (yet) another advantage.

If the Nippon-U.S. Steel merger doesn’t go through, the most likely outcome is U.S. Steel breaking up into parts. Cleveland Cliffs will have to divest because of antitrust-happy Federal Trade Commission Chair Lina Khan’s “big is bad” attitude toward American corporations. While Nippon Steel has promised to maintain the status quo on domestic operations — except for moving the headquarters from Houston to Pittsburgh — the uncertainty of any other outcome is questionable for employees’ short-term job prospects and long-term retirement.

If a piece of U.S. Steel ends up in the hands of rivals from China or elsewhere, pensions won’t be as secure as they would be if the company stays whole. And it won’t influence the presidential election either way.

Businesses in swing states frequently get a lot of attention during presidential elections, with candidates competing to win independent voters with their economic message. Trump won Pennsylvania in 2016, lost it to Biden in 2020, and now enjoys a narrow lead there. Both have publicly stated they oppose the Nippon Steel acquisition.

The Nippon Steel-U.S. Steel merger would fix heavy problems in our domestic manufacturing industry. Election-year shenanigans from a struggling competitor shouldn’t be allowed to fix the blame.

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