Around this time last year, during a speaking visit to Pennsylvania, I found the time to go to one of the most unusual parks I have seen in my life. It is built around the sprawling remains of what was once one of the world’s largest steel plants: Bethlehem Steel.
Founded in 1857 in the city of the same name, the now-defunct Bethlehem Steel Corporation produced steel that played a major part in U.S. shipbuilding during World War II, as well as the construction of world-famous icons such as the Empire State Building, the Golden Gate Bridge, and New York’s Rockefeller Center.
Totally bereft of visitors on the day I climbed its stairs and walked its pathways, the elaborate, hulking structures that one can tour freely are now slowly rusting their way to oblivion and have the feeling of a monument left by a vanished civilization.
I have thought about the deserted Bethlehem plant a lot in recent days because steel has been in the news. Last week, media outlets reported that the Biden administration is planning to reject a nearly $15 billion bid by a Japanese company, Nippon Steel, to acquire another struggling, old-line company: U.S. Steel. The White House appears to be hiding behind national security logic to block the deal, preparing to invoke a recommendation from the interagency Committee on Foreign Investment in the United States.
This, however, strikes me as a cover for motives that are purely rooted in electoral politics. Pennsylvania is the biggest so-called swing state prize in the fast-approaching U.S. presidential election, and the pending rejection seems like an obvious bid to placate labor unions that oppose the Japanese takeover of U.S. Steel and to appeal to voters who are skeptical of globalization or harbor notions of economic nationalism.
If so, this constitutes a major foreign-policy mistake by the United States—but not one that the Biden administration’s adversaries in the Republican Party seem likely to call it out on. That is because former President Donald Trump is an aggressive critic of globalization and, like the Democrats, seeks to attract votes from economic nationalist quarters in the working class. For these reasons, he has also opposed the Japanese steel company takeover.
Trade is one of those issues on which the main U.S. political parties have long felt the need to posture along nationalist lines during presidential election seasons, often throwing good economics and sound policy aside as they do so. (U.S. relations with China is another such issue.)
In one of the most prominent recent examples, the Obama administration painstakingly promoted something called the Trans-Pacific Partnership (TPP), a trade agreement between the United States and 11 Pacific Rim economies that would have covered 40 percent of world trade, integrated members’ economies more thoroughly with the United States’, and, importantly, strengthened Washington’s hand in its economic and political competition with China. Then-President Barack Obama’s secretary of state, Hillary Clinton, publicly supported the TPP. “This TPP,” she said, “sets the gold standard in trade agreements to open free, transparent, fair trade, the kind of environment that has the rule of law and a level playing field.”
Yet after she became a presidential candidate in 2015, eventually entering into a tight contest with Trump, Clinton developed cold feet toward the TPP. Campaigning in Michigan, another major swing state, she declared, “I will stop any trade deal that kills jobs or holds down wages, including the Trans-Pacific Partnership. I oppose it now, I’ll oppose it after the election, and I’ll oppose it as president.”
There is little evidence that abandoning the TPP favored either employment or higher wages for U.S. workers. Washington’s putative partners, stranded at the altar, went ahead and formed their own successor accord, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. China, in fact, may have been the biggest beneficiary of Washington’s about-face. In 2020 it signed an agreement with 14 Indo-Pacific countries called the Regional Comprehensive Economic Partnership.
This brings us back to one of the rationales in favor of the Japanese bid to take over U.S. Steel: China leads global steel production, and Nippon Steel’s owners argue that their planned acquisition of a surviving U.S. manufacturer would constitute a bulwark against ever greater Chinese domination of steel, which remains a strategic material.
There are other compelling reasons to approve the takeover that are less directly premised on competition with China. In a world of rational policy choices—or voter preferences, for that matter—these should have prevailed. U.S. Steel has been able to survive thus far largely because of protectionist measures put in place during the Trump and Joe Biden presidencies. As the company’s own leadership has warned, its future competitiveness is in doubt unless it receives a major influx of new investment and technology. Without these, before long, the company will likely withdraw from Pittsburgh, Pennsylvania—where it’s headquartered—altogether.
Finally, this primacy of U.S. electoral politics over sound policy decisions, and the shortsightedness this produces, resonates in one other important way. One of the hallmarks of the Biden administration’s foreign policy, and indeed a campaign theme for Vice President Kamala Harris, has been its success at strengthening U.S. alliances, particularly in Asia. Under Biden, Washington has pulled Japan much closer in its embrace, greatly enhancing military cooperation between the two countries; coaxed Japan and another U.S. ally, South Korea, to reconcile; and convinced both Asian and European countries to restrict sharing advanced technologies with China.
Under the circumstances, declaring a traditional industry such as steel to be too strategic to permit Japanese ownership makes a mockery of the notion of promoting a common economic front among allies. Biden and Harris are not exactly shouting the Trump slogan, “America First,” but by behaving in a way that declares “politics first,” they are more or less saying the same thing.