Earlier this month U.S. Steel
announced that it agreed to be purchased by Nippon Steel, which was the highest
bidder in a months-long sale of the company. Since the acquisition’s
announcement there have been numerous objections offered to the transaction:
Some object because they see the merger reducing the total number of jobs in
the industry, while others—like Senator J.D. Vance-insist that having a foreign company owning an iconic
U.S. manufacturer like U.S. Steel would potentially harm U.S. economic and
military security.
However, neither objection holds up to scrutiny. For starters,
worries about foreign steel companies impacting the U.S. market and costing
jobs have been around for decades. For instance, in the early 1980s the Reagan
Administration negotiated several “voluntary restraint agreements” with
Japan and other steel-producing countries to reduce imports of steel into the
U.S. to preserve jobs in the industry.
While this agreement did ultimately coincide with a (short-term)
diminution in the decline of employment of steelworkers, the jobs saved imposed
a significant cost elsewhere in the economy. Since the import restraints
effectively increased prices, industries that heavily relied on steel—such as
the auto and construction equipment industry—became less competitive globally,
and ended up reducing employment in those sectors, which is something I found
in my own previous academic research.
The agreement had a devastating effect on my hometown of
Mossville, Illinois, where the majority of the town’s residents worked in one
of the Caterpillar Tractor Company’s factories in our community. It took
decades for the town’s economy to recover from the impact it had on the local
labor market.