Swallowing America’s Pride Would Be Worth It in Japanese Company’s Deal To Buy United States Steel

“Countries have no friends … only interests” — or so goes the paraphrased version of Lord Palmerston’s statement.So 19th-century British Empire. Maybe Palmerston was right, though. Japan’s largest steel company, Nippon Steel, wants to acquire U.S. Steel — once a symbol of American industrial and technological prowess. President Biden opposes the deal — only two months after telling Japan’s prime minister the America-Japan relationship is rock solid.President Trump and Senator Vance also oppose the deal.It’s said that “foreigners” getting ahold of U.S. Steel is a national security risk.A country should watch its key industries — and who owns them. Only maybe the U.S. Steel deal’s biggest problem is that it’s embarrassing. People are tribal. Everyone wants the “home team” to succeed — and on its own. It’s also embarrassing that America’s elites shipped much of our country’s manufacturing overseas in past decades.A little embarrassment is sometimes restorative, though.Swallowing our pride is worth it here.For one thing, the Japanese are our friends. And Nippon Steel’s proposal is not unprecedented.Mitsubishi UFJ Financial Group wrote a $9 billion check to save Morgan Stanley, the American financial icon, in 2008 when it was soon to collapse. The deal worked out well for both sides. Nowadays nobody even knows Morgan Stanley is Japanese-owned.The Japanese could have let the Wall Street firms collapse — and stepped in to profit. They didn’t.Does letting foreign entities own an American company put us at risk, though? That depends on which foreigners and/or the particular deal. In this case, Japan is a longtime ally — and both nations benefit. Tokyo knows its existence as an independent country depends on America and its military.Investing in U.S. Steel and modernizing it secures a strategic asset America has neglected that serves as an insurance policy for Japan’s survival. Opponents haven’t produced a believable scenario where Nippon Steel would, or could, shut down American steel production — and endanger the essential America-Japan relationship and defense coverage.As importantly, Japanese investment benefits America. Toyota, Nissan, and Honda are just the most well-known Japanese companies in America that support more than 450,000 American manufacturing jobs Japan is the top foreign investor in America — to include huge R&D operations.And Americans want to work for Japanese companies.Does anyone remember the 1980s when Japan and its companies were demonized on Capitol Hill and elsewhere? Detroit was finished. We were destined to become Japan’s subjects as it took over our economy — and our country. Not hardly. The Japanese in effect helped Detroit to get its act together.Now it’s similar scare stories of “the Japanese” taking over U.S. Steel. Lose jobs, pensions, everything. Less publicized is that U.S. Steel employees support Nippon Steel’s investment in their company.What about ties to Communist China?Deal opponents seem to think Nippon Steel is a proxy for the Chinese Communist Party.Nippon Steel does business in the PRC.These should be assessed for real security risks — and not shaded to keep United Steelworkers union bosses happy.If necessary, require Nippon Steel to modify or even terminate China operations. And do the same for Boeing, General Electric, Ford, GM, Tesla, and the hundreds of other American companies in the China market — that have done far more than Nippon Steel to build up China’s economy and military.Is racism a part of opposition to the deal?Probably.One doubts we’d be having this debate if Nippon Steel was British.And there is an air of “yellow peril” in some of the commentary.Yet the racism angle is a wash in this case.A few years ago when Renault was angling to take over Nissan, company executives and Japanese government officials took a Nissan chairman, Carlos Ghosn, hostage — charging corporate misconduct — along with a senior executive, Greg Kelly, an American.Both America and Japan need to remember why they are friends and focus on defending themselves.Damage done?Japan is irked by Nippon Steel’s treatment and won’t be mollified by: “This is just politics.”Someday soon when things get rough with China, we will need each other. And that requires real trust. The alliance won’t collapse if the Nippon Steel deal collapses, but it will leave a scar, instead of strengthening the America-Japan relationship.The writer’s grandfather, Michal Hlohinecz, worked in a U.S. Steel coal mine many years ago. What would he think about all this? I don’t know. Only he might have taken some offense at the idea that “foreigners” are the problem.And in the Nippon Steel deal, the Japanese are not the problem.An extended version of this article ran earlier in Japan Forward.

Swallowing America’s Pride Would Be Worth It in Japanese Company’s Deal To Buy United States Steel

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