The announcement of US President Donald Trump at his recent summit with Japanese Prime Minister Ishiba Shigeru that Nippon Steel will invest in US Steel – instead of resuming the business – may have been premature. It is not yet known if one or the other of the companies has accepted such a solution. But Trump’s desire to seek a counter is an important evolution.
Former President Joe Biden rejection The Japanese takeover offer had little sense. The American strategy in Northeast Asia has been built on the invigoration of trilateral cooperation with Japan and South Korea to counter the growing threat of China and North Korea. The administration has embarked on initiatives ranging from reinforcement Military cooperation at “unprecedented levels” of greater cooperation on economic security, including the protection of critical supply chains.
In addition, the economic theory of the takeover is strong. Due to booming foreign competition and poor commercial decisions, US Steel, formerly the largest steel producer in the world, class 24th by 2023, behind companies in China and Japan. According to an expert, the company to have “As much as years ago”, if not for the prices imposed by Trump during his first mandate and the Biden administration. The takeover, however, would have led to improvements in the company and on the national steel market.
By rejecting the offer, biden assertive That “there was credible evidence” that the Japanese SI “could take measures that threatens to harm the national security of the United States”. It is difficult to imagine what this threat is – especially since Biden has never highlighted specific evidence and that Japan has been a close ally of the United States for decades.
Observers are right to blame the internal policy of Biden’s decision and Trump’s opposition to the merger on the campaign track. United Steelworkers, who represents 11,000 US Steel employees, was vocal to oppose the agreement, accusing the Japanese company of illegal and bad faith practices with regard to the union. The union direction Rather supported a merger with an American steel company which was overbidly by Japanese, while its basic members support The takeover of Japanese.
Although Washington’s rejection of the merger was criticized in the United States and Japan, it also opened the door to China to launch its own campaign highlighting the disadvantages of Washington’s friend. “Being an enemy of the United States is potentially dangerous, but being your ally is in reality harmful”, a Chinese point of sale wounded. Another do The point that “a suffocating friend in America can signify pain for friends and allies”. An expert even suggested That Japanese could consider building “cutting -edge installations independently in China, similar to Tesla”.
Commentators sharp “Everything that happens during an American electoral year”, noting that the opposition to the merger was supposed to respond to voters. Biden’s without proof assertion that takeover was a “national security threat” could be applied to scuttle any important trade agreement that Washington does not like. In addition, as a Chinese state media observedThe list of national security threats “develops more and more bizarre”, citing a complaint by the Republican senator Rick Scott in 2023 that even Chinese garlic posed a danger.
China also stressed that, unlike its supposed support for free trade, the United States has imposed prices to protect its steel industry. In fact, an American analyst note That American imports of Chinese steel have so considerably fallen that prices will not have a significant impact of the Chinese economy. Despite everything, the steel industry of China is sufficiently competitive Chinese steel To rebuild the Verrazano bridge bridge.
Of course, Beijing has neglected to mention its role in this melodrama. While its own domestic steel demand decreased, China has flooded the world market for cheap products. Exports reached 94.5 million tonnes in 2023, far exceeding the previous three years. Foreign steel companies have not been able to overcome the excess offer, incentive Anti -dumping case against China in countries around the world. China’s steel dumping has also put doubt to the long -term perspectives of the US Steel.
To resolve the challenge we are faced with US Steel will require a president like Trump who is ready to conclude agreements where the others are not. The administration should continue two initiatives. First, Washington should follow the game book for China-US relations that Trump used during his first mandate.
After imposing Over $ 300 billion in prices on Chinese products, Trump has reached a agreement With Beijing in 2020 in which China is committed to opening certain markets to foreign companies, to better protect technological secrets and buy American cultures and energy.
If Trump again uses the same manual, he may well follow the 10% prices imposed on China in February, that he called an “opening salvo”, with another major trade agreement. Exactly the provisions of a new agreement could include speculation. If he approaches the spill of Chinese products on foreign markets, in particular steel, American steel and American steel industry with driving on a playground more level.
But that alone would not restore the economic health of the industry. Trump’s solution would not be indicated either after its recent summit with Ishiba, Nippon, abandoned its takeover offer and take a minority stake in American society. Like the president of US Steel observedOnly a complete takeover would ensure that the production of interior steel is “exploited, melted and manufactured in America”.
A proposed trip By the president of Nippon Steel in Washington, will offer Trump an important opportunity to reverse the Biden administration’s decision to oppose the takeover. Ishiba’s commitment to invest In the United States, another additional dollars billion could easily provide the US president from retiring and let the agreement go forward.