Former Treasury Secretary Larry Summers has defended the proposed takeover of United States Steel Corp. X by Japan’s Nippon Steel Corp. NISTF despite the Biden administration’s national security apprehensions.
What Happened: As reported by Bloomberg, Summers dismissed any “remotely plausible national-security rationale” for questioning the Nippon-US Steel deal, emphasizing Japan’s status as a “staunch ally.”
The $14.1 billion agreement is currently under review by US officials, a process that may extend into 2025. The Biden administration’s top economic adviser, Lael Brainard, argued in December that such transactions should be scrutinized for national security and supply chain resilience.
Summers, a Harvard University professor, warned against “protectionist pandering to traditional industries — with no genuine national security rationale.” He also highlighted the deal’s benefits, including the creation of the world’s second-largest steelmaker.
“This is a test for the Biden administration.”
He also pointed out that the deal would lead to a capital infusion into the US steel industry, potentially lowering steel prices. Industries that use steel employ 100 times as many American workers as the steel industry itself, Summers added.
Why It Matters: The White House has voiced apprehensions over the proposed acquisition, pointing towards potential national security implications and supply chain effects.
U.S. Steel and Nippon Steel have publicly declared that they will willingly participate in the CFIUS review process. U.S. Steel, headquartered with several plants in Pennsylvania, referred to Nippon Steel as “a respected and trusted company” dedicated to its workforce, consumers, and local communities.
The Committee on Foreign Investment in the United States (CFIUS) is closely examining the deal for potential threats to national security.
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