Japan’s largest steel company, Nippon Steel, wants to acquire US Steel. Many decades ago, it was a veritable symbol of American industrial might and technological prowess. But less so these days.
United States President Joe Biden says he opposes the deal. That was only two months after his latest love-fest with Japanese Prime Minister Fumio Kishida, touting the strength of the Japan-US alliance: Rock solid and based on shared mutual values.
The decision to approve or reject the deal has been pushed back until after the November election.
Former President Donald Trump is also against the deal, as is Vice Presidential candidate, Senator JD Vance.
One might get the impression from the rhetoric that the end of the republic is nigh if foreigners get their hands on US Steel.
The main reason given is national security.
Is There a National Security Issue?
It’s prudent that a country closely watches its key industries ー and who owns them. But maybe the biggest issue with the US Steel deal is that it’s embarrassing.
People are nothing if not tribal. And who doesn’t want the home team to succeed ー and on its own?
It’s also an embarrassing reminder that America’s business and political elites tossed away the country’s manufacturing dominance over the last five decades – shipping much of it overseas.
But a little embarrassment is sometimes useful if it helps you improve.
And this is a deal where swallowing one’s pride is worth it.
‘Not Unprecedented’
For one thing, the Japanese are our friends. And Nippon Steel’s proposal is not unprecedented.
Mitsubishi UFJ Financial Group (MUFG) wrote a $9 billion USD check to save Morgan Stanley, the American financial icon and a key player in global capital markets. That was in 2008 when it was within hours of collapse.
Morgan Stanley got a new lease on life. The Japanese got a good investment while becoming the bank’s largest shareholder. And it has worked out well for both sides. Nowadays nobody even knows Morgan Stanley is Japanese-owned.
The Japanese, in effect, did this as a favor for the Americans. They could have let the Wall Street firm collapse owing to the irresponsibility of their own making ー and stepped in to profit. They didn’t.
But does letting foreign entities own a US company put us at risk?
That depends on which foreigners and the particular deal.
In this case, Japan is a longtime ally ー and an excellent partner. Also, the deal benefits both nations.
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