Biden’s Rejection of US Steel Deal Undermines Manufacturing Revitalization Efforts
President Biden’s recent decision to block Nippon Steel’s acquisition of US Steel has taken financial markets, national-security officials, and America’s allies by surprise.
Political maneuvering was always expected during the Japanese bid for a struggling yet significant American steel company.
Both Biden and former President Trump had indicated their intention to halt the deal, using populist language that resonates in crucial swing states like Pennsylvania, where jobs are at stake.
However, Biden seems unlikely to return to public life. During this lame-duck period, he could have cemented a legacy of prioritizing national interest over political gain and economic responsibility over populist theatrics.
He had the opportunity to illustrate that America is welcoming to business—particularly with key allies—and especially in industries such as steelmaking, which is vital for national security yet currently underfunded and unable to compete globally. He missed that chance.
If navigating today’s multipolar world requires skillful strategic thinking, Biden has shown a preference for simplistic approaches, taking actions that undermine potential successes.
While Trump is unlikely to overturn Biden’s decision regarding Nippon, the more profound question is whether America can reverse the effects of decades of deindustrialization and recognize the current necessity for support—even in sensitive industries—as we aim to rebuild and reindustrialize towards a more prosperous and secure future.
Deindustrialization has been the preferred industrial policy for America and much of the Western world since the 1970s.
By relocating low-value manufacturing to regions such as East Asia, where labor is inexpensive and environmental regulations are less stringent, America has allocated its resources towards higher-value endeavors, such as product design and capital management.
This policy was championed in Washington by investment bankers, management consultants, efficiency-driven CEOs, and supported by academic economists.
While they were not entirely wrong—deindustrialization has significantly increased America’s overall wealth, with the country housing seven of the top 10 global companies by market capitalization—the drawbacks have also become glaringly apparent.
Widespread inequality has produced immense wealth for a select few while relegating millions to lower-paying service jobs with limited prospects for advancement. Furthermore, complex and extended supply chains have resulted in critical products, such as semiconductors, biologics, aerospace components, and rare-earth elements, no longer being produced domestically at a competitive scale.
The answer lies in reversing the trend of American manufacturing moving abroad and instead inviting innovation back into the country.
Companies based in allied countries like South Korea, Taiwan, and Japan are willing to establish and acquire manufacturing facilities in the U.S. under favorable circumstances.
This brings us back to US Steel.
Currently, America ranks as the fourth-largest steel producer globally, generating approximately 81.3 million tons, behind China, India, and Japan.
US Steel accounts for about one-fifth of the American market but is no longer competitive internationally, selling steel at significantly higher prices and relying on heavy trade tariffs for its survival.
These tariffs inevitably increase costs for anything made with steel, from new construction to heavy equipment.
Nippon Steel’s offer was not merely a financial rescue for a struggling enterprise but an opportunity to gain technical expertise and competitive strategies from a flourishing business.
A more robust, global, and competitive US Steel would clearly align with the best interests of the United States.
Yet Biden asserted, “We need major US companies . . . to keep leading the fight on behalf of America’s national interests”—echoing a misguided, unilateral industrial strategy that does not align with 21st-century needs.
In choosing between maintaining an industry or allowing Japanese investment and expertise, we seem to prefer the former.
We cannot afford to cling to the nostalgic visions propagated by Biden and others.
America’s true strengths have always been an openness to innovative ideas and technologies, as well as an unwavering belief in the power of market competition to motivate companies to pursue their profitable advantages.
By blocking the US Steel takeover, Biden signaled that America is neither open nor secure enough to permit one of our most critical allies to invest in our domestic steel industry.
It is time to embrace change and refresh America’s perspective to facilitate renewed industrial growth.
Danny Crichton is a fellow at the Manhattan Institute and the head of editorial at Lux Capital. Adapted from RealClear Pennsylvania.