Steelmaking deal aimed at better welding Japan to Washington's geopolitical strategy: China Daily editorial

The proposed purchase of US Steel by Nippon Steel has made a big splash since it was disclosed last week. Although it is unlikely to be blocked given the close US-Japan alliance, the $14.9 billion deal still faces a bumpy road ahead.

Although US Steel will keep its name, workers and its headquarters in Pittsburgh, the ailing company is still regarded as a symbol of industrialization and national pride in the US. That it will be controlled by a foreign company, even that of an ally, will be unacceptable to many in the US.

Since US President Joe Biden has cast himself as one of the most pro-union presidents by joining the picket line of striking car workers, he has no choice but try to balance the various needs. He issued a statement immediately after the deal was made public showing his care for US workers and interests in response to the predictable backlash of some lawmakers and steelworkers. "The purchase of this iconic American-owned company by a foreign entity — even one from a close ally — appears to deserve serious scrutiny", and "President Biden believes union workers are the best workers in the world," he said in the statement.

The United Steelworkers union welcomed the statement, and, as urged by lawmakers, the Committee on Foreign Investment in the US is initiating a probe into the deal, which will take about four to five months. But it is regarded as unlikely that CFIUS will block the deal by such a close US ally.

And no matter the recommendation of CFIUS, the final decision will rest with the president, who is likely to postpone the decision until after the presidential election next year. Before that, Biden will on the one hand take advantage of the deal to show his care for US workers to keep the unions happy and on the other hand do some lobby work to get concessions from the Japanese side to further sweeten the deal.

Japan will be expected to continue its all-in stance on the US' "chip alliance" and other high-tech boycotts targeting China, despite the damage doing so causes to Japanese companies. That the purchase will give birth to the largest steelmaker outside of China and further squeeze China's limited share in the high-quality special steel market will also provide the Biden administration with useful leverage to push the deal through the regulatory probe.

As such, to allow Japan to control the pearl of the US' industrial crown is more like a trade-off the Biden administration has plotted in a bid to compensate for Japan's losses in joining the US' China-containment strategy, which itself is stoked by the concerns of US workers.