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Questions of national security and supply chain reliability – in a high-risk situation due to the Gaza war – have put President Joe Biden’s administration on alert after announcing the purchase of the century-old US steel mill Steel for a Japanese company. The $14 billion deal sparked strong reactions from unions on Monday, who fear a deterioration in working conditions under the new management. But this Thursday it was the White House itself that raised its voice, joining the criticism that prominent Democrats also expressed.
In a statement, Lael Brainard, Biden’s national economic adviser, called for a “serious review” of the agreement between US Steel and the Japanese company Nippon Steel for several reasons: The protection of its workers and US Steel’s historical development were crucial during World War II. World War; the importance of the national industry as the main support of the middle class and the need to ensure the country’s strategic autonomy. More or less the same claims made by the campaign that put Biden in the White House in 2020. A president today in weak hours, according to voting intention polls, less than a year before the new appointment with the polls.
The statement signed by Brainard describes in detail everything that is involved. “The President believes that U.S. steel was an essential part of our democratic arsenal during World War II and continues to be a staple of all domestic steel production, which is critical to our security.” [defensa] National. And you’ve made it clear that we welcome manufacturers from around the world to build their future here with American jobs and American workers. However, he also believes that the purchase of this legendary American company by a foreign company – even a close ally [como Japón]– deserves serious consideration for its potential impact on national security and supply chain reliability,” explains Brainard. He notes that the transaction will be submitted for review by the Intergovernmental Panel on Foreign Investment with the support of Congress and “the administration will take action if necessary.”
According to a document filed with the Securities and Exchange Commission (SEC), approval from the committee is one of the conditions for the operation.
The statement from the top economic adviser in the White House shows how much is at stake for Biden if his administration, through the aforementioned committee, blocks the agreement on national security grounds, as it would send a negative signal to the rest of the world about the opening the US economy for foreign investment. In addition to the unions, and in particular the powerful United Steelworkers with a strong presence in the steel industry, several politicians from the Rust Belt (the name for the vast region in the center and northeast of the country that was once industrialized and abandoned in the 1970s) have been one Review of the agreement requested. US Steel’s headquarters are in Pennsylvania, one of the states that runs through the Rust Belt.
Pennsylvania’s two senators, both Democrats, wrote to Treasury Secretary Janet Yellen, who is leading the committee’s review process, demanding that the deal be voided. United Steelworkers has called on regulators to review the operation to determine whether it benefits workers and serves the national security interests of the United States, its president David McCall said in a statement applauding Brainard’s words this Thursday. Biden is the most pro-union president in US history and he appears unwilling to reject them.
Brainard’s statement is a repeated statement of intent, virtually identical to the then-Democratic candidate’s 2020 campaign promises, about his commitment to the national industry. “Steel is the backbone of American manufacturing in every sector, from infrastructure to automobiles to our clean energy future. “Since Biden took office, 800,000 manufacturing jobs have been created,” emphasizes the national economic advisor. In a clearly election-tactical tone, Brainard reminds us that thanks to the president’s policies, “factories are returning home, jobs are returning home, American companies are producing in the United States again after decades of relocation.”
President Joe Biden delivers a speech on the industry at the White House on February 8, 2022. Alex Brandon (AP)
Betting on the national industry is the spirit and purpose of Biden’s Made in America program, but the same goal also animates the bipartisan infrastructure bill, Biden’s first major legislative initiative; the ambitious Inflation Reduction Act and the Chip or Microconductor Act to overcome strategic dependence on China: a policy that runs through his administration program “President Biden has taken action to protect American steel companies from unfair and market-distorting trade practices in China ..” other countries,” emphasizes Brainard. For the Democratic president, the middle class is the backbone of the United States and industry is its framework.
The “Rust Belt”, an industrial elegy
Throughout 2020, Biden campaigned persistently in the relocation-affected factory areas that voted massively for Donald Trump in 2016. U.S. Steel, its past strength and subsequent decline, is emblematic of this Rust Belt, the Northeast and Midwest region of the country that has experienced a significant decline since the 1970s. Deindustrialization, accompanied by high unemployment and poverty rates – and exacerbated by the effects of the opioid crisis – threw broad swathes of the once white middle class, embodied by workers, into the arms of the Republicans. (Labor), to whom Biden virtually dedicated his 2020 campaign.
This industrial belt is also the epicenter of the phenomenon in which Professors Angus Deaton and Anne Case confirmed an epidemic of “deaths of despair,” according to the title of their well-known 2015 essay, subtitled “The Future of Capitalism: Impoverishment, Conditions of despair.” Abandonment, inattention and a lack of expectations that have shortened the life expectancy of this white middle class since the 1990s due to the three experts-defined “diseases of hopelessness”: alcoholism, drugs – including drug addiction, opioids – and suicide.
An abandoned Packard Motor Car plant in Detroit, Michigan, part of the Rust Belt, in April 2011. ERIC THAYER (Reuters)
The same harsh and unpleasant scenario between the countryside and the polluting factory smokestacks, depicted in the book that broke sales records in 2016 (a year after Deaton and Case’s essay): Hillbilly, a rural elegy by current Congressman Republican J. D Vance, who recently made the leap into politics thanks to his success. Areas where the ideal of the American dream faded decades ago due to the effects of globalization and the flight of companies to countries with cheap labor and heavy deregulation. In 2016, the region surrendered to populist siren songs; In 2020, Biden’s promises were believed, and that’s now the added pressure on the Democrat.
All of these factors come together in the spirit of US Steel, which decades ago ceased to be the leading company it was in the early 20th century and during World War II, and in its strategic sales. Another point: With two wars going on, the one in Ukraine and the one in Gaza, there is another additional element to scrutinize the sale. The Department of Defense requires a range of steel products for weapons and related defense systems. Donald Trump’s administration estimated demand at about 3% of total U.S. steel production and considered this large enough to justify imposing a 25% tariff on steel imports from around the world.
US Steel and Nippon Steel have already said they are awaiting committee review before completing the takeover that would open the world’s second-largest steelmaker: another thorn in the side of Biden and his attempts to crack down on massive mergers.
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