Biden's Steel Block: Politics Over Prosperity?
U.S. Steel's Future in Jeopardy, Legal Battle Looms Over Blocked Nippon Deal.
So, yesterday, President Joe Biden blocked the sale/merger of U.S. Steel to Nippon Steel. Nippon and U.S. Steel issued a joint statement condemning Biden’s decision as the result of a process “deeply corrupted by politics.” They also threatened legal action to try to revive the deal. U.S. Steel was in a difficult financial situation and depended on this sale to survive. Now, it is unclear how long U.S. Steel will be able to continue operations, jeopardizing the very workers Biden purported he was going to protect by blocking the sale.
Blocking this sale is an affront to the property rights of these two corporations, which should be free to contract and transact as they see fit without any meddling by the federal government. It also steals the potential value of U.S. Steel shareholders and workers. U.S. Steel could have desperately used the infusion of capital to improve working conditions, modernize facilities, and increase efficiencies. Biden’s blocking the sale puts national security at risk because a stronger, more efficient US Steel under Nippon's management would enhance national security by ensuring a robust domestic steel supply. The argument that foreign ownership inherently poses a security risk does not stand when blocking the sale will likely mean the company's collapse or significant downsizing. Even under foreign ownership, a strong US Steel contributes more to economic strength and defense than a weakened or non-existent one.
Biden’s blockage of this transaction also creates a moral hazard and represents government overreach. The government should not be involved in such business decisions as it is economically unwise and interferes with the free market.