Matthew P. Goodman
Reports that President Joe Biden has decided to block the proposed acquisition of U.S. Steel by Japan-based Nippon Steel have created a stir in Washington. If true, a decision to block the deal would be widely understood to be a political move to appeal to voters in Pennsylvania and the industrial Midwest. Politics matters, but so does policy, and neither would be well served by this action.
It is difficult to see what U.S. policy objectives would be advanced by a decision to block the Nippon Steel transaction. Indeed, the move would do damage to three of the Biden administration’s own policy priorities: First, it would weaken U.S. economic competitiveness and supply-chain resilience. U.S. Steel has been unprofitable for most of the past fifteen years, and the billions of dollars that Nippon Steel proposes to invest in modernizing U.S. Steel’s plants in Pennsylvania and Indiana would likely save American jobs and help make the company more competitive against China’s now-dominant producers. Blocking the deal could have a chilling effect on other prospective foreign investment into the United States, which the administration has touted as strengthening the U.S. economy and reducing vulnerabilities caused by far-flung supply chains.
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