PROTECTIONIST FOLLIES, OR RENT-SEEKERS DOING THEIR THING.

I have no reason to change my position with respect to the sale of United States Steel from where it was a year ago.  "It's not as if we didn't see something like this coming, long ago.  In February 2022, policy wonks Rosemary Bezy and Patricia DeMarco expressed dismay when U. S. Steel built new capacity in ... Arkansas."

The political economy is straightforward enough:  Hillary Clinton couldn't even carry Arkansas in 2016, whilst Donald Trump and Joe Biden both contend for voters in Ohio and Pennsylvania.

We can't bring back those workers or their health, but we can note that U. S. Steel is still slow to adapt.  It's probably still heretical in the union halls of the Mon Valley or to the northwest along the Mahoning to say Nucor-Yamato.  Never mind that Nucor and Yamato established a joint venture to recycle scrap into heavy structurals a quarter century ago in Blytheville, Arkansas.

They're still at it, and it's apparently OK for a United States located company to include Yamato in its corporate title, while an aircraft carrier called Kaga takes delivery in San Diego of F-35s to help contain China.

As are the rent-seekers.

I don't understand why people working the continuous caster in Arkansas are any less part of building America than their predecessors at Homestead or Edgar Thomson were.  Nor that anyone is troubled by other international steel companies, including Arcelor Mittal, were also shopping for U.S. Steel, nor did anybody notice that Cleveland-Cliffs used to be the iron ore division of Republic Steel, which, to the extent there are any properties in operation, has sold plants to inter alia Mittal.  When J. D. Vance sounds like the circa-1980 Robert Reich and Ira Magaziner, dear reader, perhaps it's time to worry.

That post concluded with a Noah Smith quip, "If Nippon Steel were trying to buy Nucor, I doubt that John Fetterman and the Pennsylvania Dems would be so up in arms!"

It's sentimentality, rather than any sensible economics, that makes politicians so fretful about further changes to the legacy steel companies.  It shouldn't be, as Reason's Eric Boehm noted, any of the president's business.

In a more sane country, President Joe Biden would not need to form an opinion about the potential sale of U.S. Steel to Japan-based Nippon Steel—and if he did have an opinion about it, it wouldn't matter.

"It is important that we maintain strong American steel companies powered by American steel workers. I told our steel workers I have their backs, and I meant it," Biden said in a statement on Thursday. "U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated."

It remains unclear exactly what steps the White House plans to take to prevent Nippon, a publicly traded international company that already operates steel plants in the United States, from acquiring U.S. Steel.

Our President issued a ukase that might bar United States Steel from that acquisition.  It's one that Donald Trump could reverse, although it's unlikely he will.  Mr Boehm is scornful.  "It's a disgraceful decision that serves as a perfect epitaph for Biden's political career."

So it always is with Democrats.

By intervening in the private business affairs of the two companies, Biden is demonstrating once again his expansive view of executive power, hubristic sense of government's ability to order economic affairs, and willingness to stretch the definition of "national security" to justify his big government agenda even when there is plainly no national security threat.

Those elements have been central to Biden's political persona for decades. Even as his charisma and mental facilities have failed, they remain. From his earlier support for the drug war, the USA PATRIOT Act, and Obamacare to his administration's attempts at broad student loan forgiveness and inflation-inducing Bidenomics, Biden has rarely been deterred by norms or laws that limit federal power or by economic good sense. If there's something Biden wants to do, he'll simply find a way to do it.

Interestingly, though, recent developments in the pending sale, or not, of U. S. Steel, including Our President's ukase,  have not included the environmental objections Washington Monthly contributor Garphil Julien raised last April.

Globally, steel production is responsible for 11 percent of the world’s carbon emissions. Reducing this number is essential to any serious effort to slow and reverse climate change. Accordingly, the Biden administration is negotiating with other responsible governments to form a Global Arrangement on Sustainable Steel and Aluminum, commonly known as a “Green Steel Club.” The arrangement would set high tariffs on carbon-intensive steel imported from countries with unsustainable practices, which mostly means China.

China is not only the world’s largest steel producer, controlling 55 percent of global production, but also one of the dirtiest. Fully 90 percent of China’s steel is produced using blast furnaces, which require large amounts of coking coal. For every ton of Chinese steel produced, about half a ton of coking coal is used as an input. When it comes to producing steel with less carbon emissions, China remains a laggard, so shifting more production away from China will benefit the whole planet.

Yet another laggard in efforts to decarbonize steel production is Japan’s Nippon Steel, the world’s fourth-largest steelmaker. The company recently announced that it is “considering” a $733 million investment in green steel produced by hydrogen in Australia or Brazil. But, according to Industrious Labs, the company doesn’t have a legitimate plan to transition away from blast furnaces and incorporate zero-carbon technologies into its processes. The company has been ranked among the worst performers among its Asian counterparts in decarbonization.

So, what would Nippon do with U.S. Steel? If the deals go through, Nippon would gain control of six blast furnaces in the U.S., including three of the highest polluting steel mills in the Midwest. Would Nippon replace those plants or, at least, invest in making them cleaner? It’s possible, but nothing in the past behavior of this company (with a market capitalization of over $23 billion) suggests it would. Meanwhile, Nippon does not need to make such an investment because its dirty steel-producing facilities in the U.S. would be safely protected behind the Green Steel Club’s trade barrier.

Rather, though, than rethink the regulations that make construction of nuclear power plants to support direct reduction of iron and electric furnace steel-making, this Mr Julien would rather Dementia Joe go full mercantilist.

Biden’s opposition to Nippon’s takeover of U.S. Steel is consistent with his efforts to lessen America’s dependence on insecure, over-extended supply chains. As one of the president’s closest economic advisors, Lael Brainard, the director of the National Economic Council, put it, “The purchase of this iconic American-owned company by a foreign entity—even one from a close ally—appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability.” The administration must also continue to address China’s massive and unfair steel subsidization and promote a global transition to green steel, which can help the environment, produce resilient supply chains, and create American steel jobs. In 2015 and 2016, the U.S. lost 16,000 steel jobs because of unfair trade practices. It needs to be addressed whether Nippon’s acquisition hinders America’s efforts.

If the deal goes through, Nippon might invest more in building up steel production in the U.S., or it might not, but regardless, a purchase of U.S. Steel will leave foreign investors controlling still more of America’s strategic industrial base, and not in a way likely to spur investment in green technology. Biden is hardly being protectionist, let alone a Trumpist, when he says that the last thing that we need to be doing is selling off more of our remaining industrial base to overseas investors with a history of being major polluters. As the president has clearly stated: “It is important that we maintain strong American steel companies powered by American steel workers.”

Preferably, and perhaps Trumpists would concur, steel workers in Pennsylvania and Ohio rather than Arkansas and Texas.  It's more sentimentality than sensibility.  Sorry, Salena Zito, now is not the time for nostalgia.

U.S. Steel was once the world's largest corporation. Its origins reach back to business titans Andrew Carnegie and J.P. Morgan when, in 1901, Morgan financed the merger of Carnegie's Carnegie Steel Company with eight other smaller steelmakers for just under $500 million.

Charles M. Schwab served as the first president of the merged entity, and almost immediately, U.S. Steel became the most iconic manufacturing company in the world. It placed Pittsburgh on the map as a powerhouse of industry, and over the decades, the city was so identified by U.S. Steel's economic and cultural impact that its NFL franchise football team was named after it.

That "powerhouse of industry" avoided being broken up during the Taft or Wilson presidencies by raising a price umbrella crafted at dinner parties hosted by Judge Gary, the legal side of Team Carnegie.  But then, pretending that competition, the discovery of gains from trade, requires the protection of competitors, was the policy preference of the Carter-era retreads who staff the Jarrett regency, and it has the support of more than a few Pennsylvanians.

Sentiments here in Western Pennsylvania over the blocked merger are mixed. Allegheny County at-large Councilman Sam DeMarco, a Republican, is for the sale to Nippon, telling the Washington Examiner that he is very disappointed to see Biden block the Nippon Steel-U.S. Steel merger. "U.S. Steel is the county's largest manufacturing employer, and the failure to approve this deal may end up costing almost 12,000 direct and indirect workers their jobs and could lead to the region losing an estimated $3.5 billion in annual economic activity, as well as $140 million in state and local taxes," he said.

That's not how whoever is advising Dementia Joe sees it.  Reason's Eric Boehm has even more.

In blocking U.S. Steel's acquisition by Nippon Steel, Biden apparently tossed his concerns about competition and consolidation out the window.

At first blush, that might seem counterintuitive. How can preventing a merger lead to greater consolidation?

The answer lies in the third party that played a major role in blowing up the U.S Steel/Nippon Steel deal: Cleveland-Cliffs, the Ohio-based steelmaker that lost to Nippon in the bidding war to buy U.S. Steel.

It is widely assumed that Cleveland-Cliffs will be able to purchase U.S. Steel (probably at a steep discount) if the deal with Nippon does not go through, and that likely explains why Cleveland-Cliffs has lobbied so hard to tank the deal. The company pulled together an unconventional alliance of politically connected allies, including labor unions and environmental groups, to bolster its own significant lobbying efforts.

If Cleveland-Cliffs ends up buying U.S. Steel, it will enjoy a near-monopoly on a variety of steel products produced in America. Combine that with the fact that tariffs and other trade barriers make it more expensive to import steel, and it means steel-consuming industries will have few options for supplying their needs.

I'm in a stroppy mood this evening, and have to wonder how Lina Khan and the rest of the hold-overs from the Joe Bain school of industrial organization would have responded had U. S. Steel accepted a tender offer from Cleveland-Cliffs.  I thought we had the amended Clayton Act and the merger guidelines to deal with that.  Mr Boehm knows his history.  "That is exactly what Biden and his allies have been warning about since taking office: that greater corporate consolidation will harm consumers and allow businesses to engage in price gouging and other unscrupulous, anticompetitive practices."

Free Press contributor Ethan Dodd takes stock.

Blocking the deal is just going to hurt the U.S. steel industry, and everyone in the industry, including the workers themselves, knows it. The real reason Biden stopped Nippon Steel from buying U.S. Steel was politics—a combination of placating his union allies and a misguided belief that U.S. Steel must remain in American hands at all costs. The irony is that this economic nationalism and union nostalgia could kill 3,000 union jobs and push U.S. Steel out of Pittsburgh.

During the election, the proposed takeover of U.S. Steel by a Japanese company became a heated issue in Pennsylvania.

There's more commentary, and Donald "Cafe Hayek" Boudreaux, who is similarly skeptical of this ukase, links to much of it.