For the past six years, the domestic steel industry has been the beneficiary of some favorable actions from the Beltway.
Starting in 2018, then-President Trump put in place Section 232 tariffs, protecting the steel (and aluminum) industry from foreign competitors on the basis of national security concerns. The administration followed with other tariffs to put further bite on foreign product. And while the Biden administration has made some moves to soften 232 to a degree, protection remains the rule. From those measures, the domestic industry has benefited tremendously, earning historically high profits in 2018 and continuing to see greater returns over the past half-dozen years.
Alas, two major steelmakers are now feeling the downside of the lack of separation of steel and state.
In late 2023, U.S. Steel concluded the “exploration of its options” with the announcement it had reached a deal with Japan’s Nippon Steel, rebuffing an offer from Cleveland-Cliffs and other unnamed bidders. It seemed then, and now, to be a good outcome for U.S. Steel. Nippon, the leading steelmaker from one of our country’s most-trusted allies, is a well-respected name in the industry, one with an existing foothold in the U.S. The deal would bring Nippon’s technological know-how to the domestic steelmaker. And unlike a potential Cliffs move, this would not create serious antitrust issues and vocal opposition from steel buyers.
However, 10 months on, that deal looks no closer to completion.
Initial opposition to the deal came from an expected source, the United Steelworkers. Whether launched to extract greater concessions from Nippon or simply because it didn’t trust the union’s interests would be protected in the transition, USW leadership has remained steadfastly opposed to the deal since its announcement.
What the two producers might not have expected was the strong resistance from the political class, including the vice president-turned candidate and the two men leading the Republican ticket.
But this is an election year, when pragmatism gives way to passion and a dry analysis of a proposal’s merits is no match for electoral math.
Organized labor retains a significant presence in Pennsylvania and other battleground states, working against the deal. And even to those who may not belong to a union, the optics of an iconic U.S. company being sold to foreign interests can be off-putting.
Until recently, I assumed the election would signify the end to the protracted battle. That regardless of which party captured the White House in November, government agencies would quietly sign off on the proposal in the waning days of 2024.
Now, I’m not so sure. The rhetoric has heated up in the last few months, culminating with President Biden hinting he might scotch the deal on those same grounds used to boost the industry six years earlier: national security.
Who says irony is dead?