President Joe Biden officially blocked Japan’s Nippon Steel from buying U.S. Steel.
In his statement, Biden cited national security and authority given to him under the Defense Protection Act of 1950 as to why he blocked the $14.1 billion deal:
We need major U.S. companies representing the major share of US steelmaking capacity to keep leading the fight on behalf of America’s national interests. As a committee of national security and trade experts across the executive branch determined, this acquisition would place one of America’s largest steel producers under foreign control and create risk for our national security and our critical supply chains.So, that is why I am taking action to block this deal. It is my solemn responsibility as President to ensure that, now and long into the future, America has a strong domestically owned and operated steel industry that can continue to power our national sources of strength at home and abroad; and it is a fulfillment of that responsibility to block foreign ownership of this vital American company. U.S. Steel will remain a proud American company – one that’s American-owned, American-operated, by American union steelworkers – the best in the world.Today’s action reflects my unflinching commitment to utilize all authorities available to me as President to defend U.S. national security, including by ensuring that American companies continue to play a central role in sectors that are critical for our national security. As I have made clear since day one: I will never hesitate to act to protect the security of this nation and its infrastructure as well as the resilience of its supply chains.
Ah, yes. National Security. Ol’ reliable!
The Committee of Foreign Investment in the United States (CFIUS), which examines national security implications of foreign investments, had national security concerns when reviewing the deal.
However, CFIUS did not take a stand on whether the deal should happen. That meant Biden could do what he wanted, so he deferred to an act influenced by the Cold War…the Red Scare:
The President is authorized (1) to require that performance under contracts or orders (other than contracts of employment) which he deems necessary or appropriate to promote the national defense shall take priority over performance under any other contract or order, and, for the purpose of assuring such priority, to require acceptance and performance of such contracts or orders in preference to other contracts or orders by any person he finds to be capable of their performance, and (2) to allocate materials, services, and facilities in such manner, upon such conditions, and to such extent as he shall deem necessary or appropriate to promote the national defense.
Let’s discuss this because this situation between Nippon Steel and U.S. Steel reminds me of Wall Street, one of my favorite movies.
This from CNBC made me think of the movie:
U.S. Steel and Nippon have said the deal is the best way to keep the company competitive, revitalize communities in the American rust belt, and strengthen national security. U.S. Steel CEO David Burritt has previously warned that the company will likely close plants if the deal falls apart.
The movie has one of my favorite lines: “Greed, for the lack of a better word, is good.”
Greed is right.Greed works.Greed clarifies, cuts through, and captures the essence of the evolutionary spirit.Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.And greed — you mark my words — will not only save Teldar Paper, but that other malfunctioning corporation called the USA.
The merger saved jobs, as in the merger concerning Bluestar Airlines earlier in the movie. Without the merger, everyone would have lost their jobs. I got so mad when BP bought Amoco, causing my dad to lose his job. However, the merger opened up other opportunities for him, and he found a job at BP Amoco.
So, it will be interesting to see how U.S. Steel continues without Nippon Steel. I hope Burritt is wrong, but it sounds like U.S. Steel might not survive, which means everyone would be out of a job.
The unions are thrilled. But how thrilled will they be when people lose their jobs, plants close, and jobs move to lower-cost facilities?
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