Nippon/U.S. Steel Would Enhance U.S. National Security

Reports are leaking out of Washington that President Biden is prepared to intervene in Nippon Steel’s $15 billion capital investment in U.S. Steel. The Committee on Foreign Investment in the United States, or CFIUS, chaired by Treasury Secretary Yellen, is said to have somehow raised national security concerns, as the proposed acquisition has become a political issue in a key battleground state and as Vice President Harris announced her opposition to the deal.

Many impartial observers doubt that CFIUS could actually find “credible evidence” that the proposed investment would harm national security, as the law requires. Secretary Yellen would be hard pressed to make the case that our closest ally would “take actions” to threaten our national security, as the law also requires. Indeed, former Treasury Secretary Larry Summers has said there is “no legitimate national security rationale” for blocking the deal, and doing so would be a “bad precedent.”

White House interference with this investment in America would cause immeasurable economic harm to Pennsylvania and the U.S. steel industry, and seriously damage our relationship with our closest economic and military ally. It also would have real negative implications for future foreign investment in the U.S. if it appears this investment was blocked because of election-year politics.

The $15 billion deal is a clear win for American workers and the U.S. steel industry. It would invest billions of dollars in America to modernize the U.S. steel industry, and make it more competitive with China. Nippon has promised to keep U.S. Steel’s headquarters in Pittsburgh, honor all union labor agreements, and retain Americans in top management and in control of the company’s Board of Directors.

All this goes away if the White House blocks the deal. U.S. Steel’s headquarters would likely close and move out of Pittsburgh. Steel mills would be closed and steelworkers would lose their jobs. The biggest winner would be China, which dominates the global steel market and is the real threat to our national security.

It would be a major diplomatic error for the White House to call a Japanese investment in America a national security threat. Japan is the number one foreign investor in America, with hundreds of billions of dollars invested in American companies. Japan is the largest investor in the U.S. manufacturing sector, and has a long established record of treating American workers well. Hundreds of thousands of Americans work for U.S. subsidiaries of Japanese companies, including fourteen massive automobile assembly plants, dealerships, and other related companies.

What’s more, Japan is a close partner protecting our national security interests in the Pacific. There are seven U.S. military bases in Japan, with 60,000 U.S. military personnel and their families stationed there. Japan is also the home to the U.S. Seventh Fleet, with thousands of our sailors, ships, and airplanes there.

Finally, Japan is the largest foreign holder of U.S. Treasury securities, helping the Treasury Department finance the national debt with more than $1 trillion in U.S. Treasuries. Secretary Yellen will have a difficult time explaining why the largest foreign holder of our national debt would take actions which would threaten our national security.

The Nippon-U.S. Steel deal has many benefits, and there are many negative consequences if it is blocked for political reasons. It is a good deal for US Steel and Pennsylvania. It will help modernize aging steel mills, save steelworker jobs, and boost the U.S. manufacturing sector. Rather than harming our national security, it will make the U.S. steel industry more globally competitive and increase our national security. It is a deal that should not be blocked.