Issues of national security and the reliability of the supply chain – in a high-risk situation due to the Gaza war – have put President Joe Biden's Administration on alert after the announcement of the purchase of the century-old US Steel steel mill for a Japanese company. The transaction, for 14 billion dollars, already provoked heated reactions on Monday from unions, who fear a worsening of working conditions under the new management of the company. But this Thursday it was the White House itself that raised its voice, in line with the criticism also expressed by prominent Democrats.
Through a statement, Lael Brainard, Biden's national economic advisor, called for “serious scrutiny” of the agreement between US Steel and the Japanese company Nippon Steel for several reasons: the defense of its workers, the historical trajectory of US Steel, which was key during the Second World War. World War; the importance of the national industry as the main support for the middle class and the need to guarantee the strategic autonomy of the country. More or less, the same claims of the campaign that brought Biden to the White House in 2020. A president today in low hours, according to voting intention polls, less than a year before the new appointment with the polls.
The statement signed by Brainard details everything that is at stake. “The President believes that US Steel was an integral part of our democratic arsenal in World War II and remains a basic component of overall 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 iconic American-owned company by a foreign entity – even a close ally [como Japón]– deserves serious scrutiny for its potential impact on national security and supply chain reliability,” Brainard explains. The transaction, he points out, will be submitted to the consideration of the intergovernmental committee on Foreign Investment, supported by Congress, and “the Administration will act if appropriate.”
Approval by the committee is one of the conditions of the operation, according to a document filed with the Securities and Exchange Commission (SEC; US stock regulator).
The statement from the highest economic advisor in the White House shows how much Biden has at stake if his Administration, through the aforementioned committee, blocks the agreement for reasons of national security, since this would send a negative signal to the rest of the world about the opening the US economy to foreign investment. In addition to the unions, and especially the powerful United Steelworkers, with a strong presence in the steel industry, several politicians from the Rust Belt (rust belt, the name given to the vast region in the center and northeast of the country that was once industrialized and, since the 1970s, abandoned) have called for a review of the agreement. US Steel's headquarters are in Pennsylvania, one of the states that runs along the Rust Belt.
Pennsylvania's two senators, both Democrats, wrote to Treasury Secretary Janet Yellen, who is leading the committee's scrutiny process, saying the deal should be voided. United Steelworkers has urged regulators to review the operation to determine if it benefits workers and serves the national security interests of the United States, its president, David McCall, explained in a statement, who this Thursday applauded Brainard's words. Biden is the most union-friendly president in US history, and he doesn't seem willing to snub them.
Brainard's statement is a repeated declaration of intentions, practically identical to the electoral promises of the then Democratic candidate in 2020, 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 jobs have been created in the manufacturing sector,” emphasizes the national economic advisor. Brainard recalls, in a markedly electoral tone, that thanks to the president's policies, “factories are coming home, jobs are coming home, American companies are making things in the United States again” after decades of relocation.
Betting on the national industry is the spirit and purpose of Biden's program Made in America, but that same objective also animates the bipartisan Infrastructure law, 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 government program “President Biden has taken measures to protect American steel companies from the unfair and market-distorting trade practices in China and other countries,” Brainard emphasizes. 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 insistently in factory areas affected by relocation that in 2016 had voted massively for Donald Trump. US Steel, its former strength and subsequent decline, is a symbol of that rust belt, the region of the Northeast and Midwest of the country that has suffered a marked process of decline since the seventies of the last century. Deindustrialization, accompanied by high rates of unemployment and poverty – and aggravated by the impact of the opioid crisis – threw broad layers of what was once the white middle class, embodied by the Republicans, into the arms of the Republican. blue necklaces (workers), to which Biden practically dedicated his campaign in 2020.
That 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, the conditions of abandonment, neglect and lack of expectations that since the nineties have reduced the life expectancy of the white middle class as a result of the three “diseases of hopelessness”, as defined by experts: alcoholism, drugs -including opioid addiction- and suicide.
The same rough and unpleasant scenario, between the rural and the polluting chimneys of the factories, portrayed in the book that broke sales records in 2016 (a year after Deaton and Case's essay): Hillbilly, a rural elegy, of the current Republican congressman J. D Vance, who made the leap into politics precisely thanks to success. Territories where the ideal of the American dream faded decades ago, due to the effect of globalization and the flight of companies to countries with cheap labor and fierce deregulation. In 2016 that region surrendered to the populist siren song; In 2020, Biden's promises were believed, and that is the added pressure now on the Democrat.
All these factors come together in the ghost of US Steel, which decades ago ceased to be the leading company it was at the beginning of the 20th century and during World War II, and in its strategic sale. Another item, with two wars underway, the one in Ukraine and the one in Gaza, there is another additional element to scrutinize the sale with a magnifying glass. The Department of Defense requires a range of steel products for weapons and related defense systems. The Donald Trump Administration estimated that demand at about 3% of total U.S. steel production and considered that level large enough to justify imposing a 25% tariff on steel imports from around the world.
US Steel and Nippon Steel have already said they await a committee review before finalizing the acquisition, which would open up 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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