U.S. President Joe Biden formally blocked Nippon Steel’s proposed $14 billion takeover of U.S. Steel in a presidential order today. Biden said he made the decision on national security grounds, arguing that Japanese ownership of the U.S. company could weaken the domestic steel industry. (Washington Post)
This move is in many ways the perfect encapsulation of the contradictions between Biden’s foreign policy and economic policies on display over the past four years. On one hand, Biden has taken a conventional approach to U.S. alliances and partnerships, ringing in his presidency with the declaration that “America is back.” In terms of security and diplomacy, he broadly followed through, consistently sending aid to Ukraine, shoring up alliances in East Asia and—more controversially—offering unwavering support to Israel in its war in Gaza against Hamas.
On the other hand, though, Biden also further entrenched the protectionist trade and economic policies introduced by President-elect Donald Trump during his first term. To be sure, the two used very different tools. While Trump championed tariffs in pursuit of reducing U.S. trade deficits, Biden used subsidies to promote investment in U.S. manufacturing industries as an important part of his broader “foreign policy for the middle class,” designed to win back blue-collar voters who supported Trump in the 2016 and 2020 presidential elections.
But despite the differing logics, both Trump and Biden ultimately pursued similar goals, including an ongoing trade war with China, attempts to “friend-shore” supply chains and growing protections for domestic industries. Indeed, Biden even initially maintained tariffs on foreign steel that were introduced during Trump’s first term.
If the inherent contradiction between Biden’s foreign policy and economic policy remained somewhat hidden from view, it was because the two generally operated on parallel tracks. The only noticeable exception so far has been the lack of trade deals for partners in Southeast Asia, which undermined efforts to woo them to Washington’s side in the competition with China. Now, though, the contradiction is on full display: Nippon Steel is a company based in a major U.S. treaty ally that made significant concessions to assuage security concerns about its takeover of U.S. Steel, only for the deal to be blocked anyway.
The reasoning is obvious: electoral politics. U.S. Steel is based in the electorally important state of Pennsylvania, and the potential takeover had become a key talking point ahead of the U.S. presidential election in November. The company also in many ways symbolizes a bygone era of U.S. manufacturing prowess, and in turn the blue-collar workforce that once fueled support for Biden’s Democratic Party.
Still, if Biden’s “foreign policy for the middle class” was meant to win back blue-collar support from Trump, the outcome of the 2024 election suggests that it failed. That is likely because it is based on a nostalgic vision that no longer accurately reflects the nature of the U.S. working class, which is now more concentrated in the service and care economies than in the manufacturing industries. Blocking this deal is unlikely to change that.