Nippon Steel: Nikkei Cites Me On Why Trump Is Very Unlikely To Reverse Biden
Nikkei asked four Americans, including me, whether Donald Trump might reverse both Joe Biden and his own previous declarations, and approve Nippon Steel’s acquisition of US Steel. Three of the four said no, and one said it was possible. The piece was published in Japanese under the URL https://www.nikkei.com/article/DGXZQOGN175CF0X10C25A1000000/, available only to Nikkei subscribers.
While I have no permission to summarize the others’ comments, I can reproduce my own, from which Nikkei took some portions. I commented:
I don't know of any case where the CIFIUS [Committee on Foreign Investment in the United States] reversed or even reviewed a decision]. I would be very surprised if Trump reversed himself (and Biden) on this issue. It does not fit with his nationalistic profile. He'd be more likely to try to save US Steel by raising tariffs and supporting a buyout of US Steel by Cleveland Cliffs and Nucor. You can get a clue to Trump's mindset by looking at how Lourenco C. Goncalves tried to ingratiate himself with Trump by his "Japan is evil" tirade. Any CC-Nucor buyout of US Steel would need to be arranged so as to overcome huge antitrust hurdles. If Cleveland Cliffs bought US Steel by itself, it would have a monopoly in the kind of steel that US automakers need. It’s not clear that adding Nucor changes the essential situation. The automakers have already warned that they would push hard for the Antitrust division of the Justice Dept to block it, as it normally would.
Some people in Japan argue that, since Trump is a businessman, he will do what's good for the US economy. This is a big illusion. Trump is most interested in his own power, and part of what gives him power is his linkup with the rising nationalism of his voter base. This is true even when it hurts the economy and his own base. For example, his steel tariffs saved 26,000 steel jobs, but at the cost of 443,000 jobs destroyed in steel-using industries like auto and machine. And yet, a growing share of blue-collar workers in those hurt industries voted for Trump. So, Trump would not support Nippon Steel just because that is the best way to revive both US steel and the overall steel industry in the US. Trump's criterion is: what's in it for me?
For more on how the Nippon Steel case and other ways Trump would impact Japan’s economy, see my previous blog showing the video of the four-person session (including me) at the Foreign Correspondents Club of Japan, “Deep Dive.” Click here.
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How do you Make America Great Again by selling a company called "US Steel" to foreigners? How could anyone approve the deal without igniting MAGA ire? This should be a slam dunk, no deep thinking necessary. I'd thought that a factor in Biden nixing the deal was to avoid handing such an easy propaganda win to the MAGA team.
What was astonishing from the get-go was that the parties ignored that this issue would come to a head during a US election year. Bad situational awareness (to speak euphemistically) by the boardrooms of both Nippon Steel and US Steel.
Interesting convo with renowned Japanese economist Yuji Genda. He suggested that if the last generation witnessed a deliberate revolution we’re now witnessing a neoprotectionist revolution. At every level of society from the family to geopolitics everyone’s goal is to protect themselves and their people. Protection isn’t necessarily bad but it has all kinds of negative consequences. Neoprotectionism is not isolationism. It can in fact be quite aggressively externally focused.