As the US presidential election nears, Europe watches on with dread. Whether Donald Trump or Kamala Harris emerges victorious, if events around a crucial manufacturing merger are anything to go by, the new administration looks set to disrupt economic activity. Nippon Steel, a Japanese firm, is in the process of taking over the US Steel Corporation – that is, if politicians and bureaucrats don’t get in the way. Many want to block the merger. If they do, that will be a worrying sign for Europe.
Beneath the election’s flashy media stories and political polarisation lies a worrying economic reality. The US is slipping away from free-market economics and into big-state interventionism. If the American economy becomes weaker, Europe will suffer. While electoral theatre soaks up the news cycle, several commercial and economic battles are taking place out of the limelight. Many will have substantial consequences for their industries, and some could help define the future direction of American policymaking.
The US Steel merger is one of those. It ought to be uncontroversial good news. Nippon, a company based in Japan, a free democracy and close US ally, wants to pour $14.9 billion into the American manufacturing industry, supporting thousands of jobs in the process. Unfortunately, politicisation has taken hold. Loud voices on all sides of politics have sought to weaponise the merger for their own ends. As a result, the current Biden administration sounds ready to block the deal, with Harris likely to follow suit, while Trump has also vowed to kill it ‘on day one.’
Europe needs America to be strong and successful. If it continues on its current trajectory of drowning everything in sight in red tape, the American economy may prove fallible. For Europe, that would be nothing less than a disaster. Both politically and economically, Europe relies on the US. If it becomes clear confected concerns about national security and workers’ rights can ward off enormous investment in US industry, that’s a bad omen for the economic prospects of the free world.
Steel is the archetype of an industry in need of investment. As companies globalise and technology modernises, it seems almost inevitable that the manufacturing industries which once propped up western economies should begin to fade away. To tech-savvy Gen Z, the idea of American steelmaking almost sounds quaint and old-fashioned. In practical terms, if the US wants its steel industry to survive and thrive, it should welcome with open arms any outside investment, especially from a friendly country like Japan.
If lobbyists and agitators succeed in blocking the merger, they will set a precedent politicising federal institutions in the US. A recent statement from a raft of business groups to Treasury Secretary Janet Yellen drew attention to those using Nippon Steel to apply political pressure where it does not belong. Those campaigning against the deal have “political agendas” which “are outside the committee’s purview,” they wrote.
The brutal truth is that Europe has little to no economic growth it can count on in the years and decades ahead. The US has become the engine in the free world’s economic machine while Europe lags behind. That means Europe relies on the US to be the frontline against China, Iran and Russia, and the driving force for economic liberty and prosperity in the world.
Botched mergers because of undue political meddling are the antithesis to that. If the US loses its free-market shine, there will be no one else for the Old World to turn to. Europe will be left isolated, in an impossible position of inevitable decline. While Trump’s campaign is more aggressive in voicing its desire to isolate the US economically, the Democrats under Biden Harris are not much different in policy terms. The Nippon Steel merger has become about more than American manufacturing. Now, the future of the global economy is at stake.
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