OPINION:
There has been much controversy over Nippon Steel’s proposal to buy U.S. Steel, based in Pittsburgh. The Biden administration and the Trump campaign have made noises that they don’t favor the deal, yet they would be smart to support it, both to bolster foreign investment in U.S. companies and save American jobs. A failure of this deal will continue to make American automobile manufacturers reliant on Chinese-made steel to make American cars.
The Nippon Steel deal is consistent with free market principles that Republicans and rational Democrats have embraced in the past. Sadly, some are playing politics with the deal to pretend they are defending American manufacturing when the opposite is true. If this deal falls through, American steel manufacturing will be in decline and Americans will be more reliant on China to produce steel for American consumers and auto manufacturers.
There are no rational arguments that foreign governments will control U.S. steel production because of this deal. Nippon Steel is a publicly traded company based in Japan. The company is owned and controlled by its shareholders, removing any objection that the Japanese government is interfering in American steel production. The company is global with manufacturing spanning 15 countries and a long history of success. Its U.S. headquarters is in Texas, and the company has already invested in Standard Steel in Pennsylvania — making the U.S. Steel proposal less scary for workers at the company who can see the success of Standard Steel.
The massive increase in demand for steel may make us more reliant on foreign-produced steel if this deal goes south. The Biden infrastructure deal and explosion of the need for specialized steel to produce electric vehicles has increased demand for steel production. Domestic manufacturing will benefit Americans in two ways. First, it will wean us off our demand for Chinese-made steel. Second, it will prevent American consumers from paying higher tariffs on Chinese-made steel recently imposed by the Biden administration.
It would be economic suicide to deter foreign investment in the U.S. economy. According to U.N. Trade and Development statistics for 2023, investors from Japan were the world’s leading investors in the U.S. economy, with $721 billion in investment. Foreign investment from all nations focused on manufacturing has prevented a domestic manufacturing decline. High tariffs and other protectionist ideas targeting allies such as Japan, Germany and others will poison economic growth in the United States.
Elements of the Republican Party are dragging leaders to the ideological left when it comes to economic policy. I refer to them as “economic isolationists” because they favor policies that would wall off America from the rest of the world. High tariffs deter American consumers’ access to foreign products; consumers then face fewer choices and higher prices. Foreign governments respond to protectionism by engaging in policies that wall off their own economies from American products. This death spiral of government sanctions will end up sabotaging the American economy. Economic Isolationists should be ignored.
The protectionist, big government wing of the Republican Party has become louder recently, with groups such as American Compass having access to some prominent Republican politicians. They promote policies more akin to those of progressive Democrats, including high taxes (to balance the budget), pro-union policies and protectionism. They argue that massive tariffs will magically make American manufacturing great again.
The group has adopted the word “globalization” to demonize free trade. They argue that removing government interference from free and fair trade has resulted in “production shifted from some countries to others, taking labor demand with it and leaving behind a weakened industrial base, collapsed communities, and poor employment prospects.”
The Nippon Steel deal proves the opposite. A publicly traded Japanese company wants to invest in an American company that will strengthen our industrial base and save American jobs. More government intervention in the economy to replace the collective decisions of consumers and private enterprise is bad policy.
Policymakers should avoid the sugar high of bashing foreign investment in the U.S. economy while supporting policies that preserve the long-term health of the economy and openness to foreign investment. The economic isolationists are demagogues who want to wall off America from the world. Politicians should embrace the American tradition of the voluntary exchange of goods and services between individuals and corporations from different nations.
The Nippon Steel deal to invest in U.S. Steel makes economic sense. Those opposing the deal should be challenged on how preventing a massive investment in domestic steel manufacturing will help the economy and preserve American jobs.
• Brian Darling is former counsel and senior communications director for Sen. Rand Paul, Kentucky Republican.
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