Fixing U.S. Steel Requires a Plan. Does Trump Have One?

Welcome to The Corner. In this issue, we discuss how Biden blocked Nippon Steel’s takeover of U.S. Steel. Now the Trump team has to figure out how to save the tottering corporation, and America’s broader steel industry.

Saving U.S. Steel — and America’s Steel Industry — Requires an Actual Strategy.

Garphil Julien

As one of his last acts in office, President Biden blocked [[link removed]] the acquisition of U.S. Steel (USS) by Japan’s Nippon Steel, citing the importance of “a strong domestically owned and operated steel industry” to create resilient supply chains. Although this decision assuaged fears that a foreign owner might offshore key U.S. steelmaking capacity and threaten both national security and jobs, it did not resolve how to save USS and its plants from further decline or bankruptcy.

Although the Biden administration’s ambitious industrial strategy was likely to increase demand for rare earth minerals and some metals, it did not include any coherent policy designed to incentivize demand for critical goods that use steel and other metals. Unfortunately President Trump’s policies thus far — especially his rejection [[link removed]] of the prior administration’s industrial policies related to decarbonization [[link removed]] — are likely to make the challenge only more difficult.

The USS saga reads like a history of what has gone wrong with U.S. manufacturing since the 1970s. Until then the U.S. led [[link removed]] the world in producing steel, aluminum, copper, ferroalloys, and rare earths and was also a leader in metals such as tungsten, titanium, and zinc. As recently as 1975 [[link removed]], USS itself was the world's largest steel producer. But today the corporation doesn’t even rank [[link removed]] in the top 20.

Many of the challenges USS faces stem from falling behind in technological upgrades. USS produces steel mainly through blast furnace technology and has been slow to adopt electric arc furnace (EAF) technology, which utilizes scrap (recycled) steel and makes the steel-making process more productive, less carbon-intensive, and cheaper.

The problem intensified in the 1980s and 1990s, when a new crop of mini mills designed to use EAF entered the sheet steel market, driving down U.S. Steel’s market share. Present market leader Nucor, for instance, launched [[link removed]]its first EAF facility in 1989. During these years USS responded by cutting over 100,000 jobs, spinning off subsidiaries, and closing more than 100 facilities. Since 2000, the problem has only worsened, as the share of U.S. steel made through EAF rose from 47% of total production [[link removed](BOF)%20steelmaking%20method.] to 70% today.

During this time, USS shied away from investing in the new technology, instead relying on cost-cutting measures to continue to serve investors. Even as its share of the market declined, the corporation continued to offer stock buybacks and increase executive compensation. In 2022, for example, USS spent [[link removed]] nearly $1 billion on stock buybacks and $19 million on CEO salary. The current CEO David Burritt stood to receive a $70 million payout [[link removed]] had the merger with Nippon Steel been approved.

In 2023, U.S. Steel began to court [[link removed]] merger partners to raise capital to retrofit [[link removed]] existing equipment and invest in new competitive technologies. The failure of Nippon’s acquisition bid leaves USS with few good options. An alternative merger proposal with Cleveland-Cliffs, its American competitor, was endorsed by United Steelworkers. But many steel consumers, including major automotive trade groups, have opposed the merger since it would dramatically concentrate the market [[link removed]] for steel products.

Acquisition, however, should not be the only solution to the structural problems plaguing USS—and the nation’s broader steel production crisis. This outcome is often presented as the only means of allowing U.S. corporations to gain the efficiency and economies of scale needed to compete against producers in countries such as China, whose overcapacity [[link removed]] is driving global prices downwards.

Rather, the incoming Trump Administration should be implementing policies that incentivize more domestic steel-making capacity. U.S. consumption of steel has been declining for decades. In 1978 over 100 million tons of steel was produced but by 1982 the total had dropped [[link removed].] to 60 million, a point from which demand never [[link removed]] truly recovered.

United Steelworkers President David McCall recently argued as much in his call [[link removed]] for a resurgence in U.S. shipbuilding and a section 301 investigation into China’s shipbuilding industry. Thus far, however, the Trump administration’s industrial policy seems nothing more than a very blunt instrument. The main components are blanket tariffs [[link removed]], deregulation, and tax cuts [[link removed]], which both individually and in combination have repeatedly failed to deliver any proven resurgence in manufacturing.

It’s critical that the administration understand the importance of decarbonization efforts to industrial productivity [[link removed]]. The administration should aim to build on, not destroy, the Inflation Reduction Act and Bipartisan Infrastructure Bill to bolster demand from automakers [[link removed]] and even wind power developers.

📝 WHAT WE'VE BEEN UP TO:

Center for Journalism & Liberty director Dr. Courtney Radsch published an article that appeared in both Brookings [[link removed]] and Tech Policy Press [[link removed]] arguing that AI companies should use an opt-in rather than opt-out approach when obtaining consent from rights holders to use their content for training AI models. “By requiring explicit opt-in consent from rights holders for AI training, such standards would align more closely with foundational principles of copyright and reinforce the principle that content creators have ultimate authority over how their work is used, particularly in the context of AI training and data mining,” Dr. Radsch wrote.

Open Markets Institute’s Europe director Max von Thun coauthored an op-ed in EU Observer [[link removed]] urging the EU to stay the course on its investigations into Big Tech companies like Meta, Apple, and Google despite the threat of tariffs from President Trump. “As Big Tech becomes increasingly intertwined with the Trump administration, the last thing the EU should do is water down enforcement in the vain hopes of placating Trump and his tech ‘broligarchy,” von Thun wrote. The op-ed was reprinted in EPC [[link removed]].

Von Thun and EU tech policy fellow Michelle Nie coauthored a piece for Tech Policy Press [[link removed]]urging participants at France’s AI Action Summit, to be held next month, to address Big Tech's control over AI infrastructure to ensure AI aligns with the public interest. “The summit will fail to achieve this goal unless it tackles the elephant in the room — Big Tech’s growing dominance over the AI ecosystem and its creeping capture of AI governance, now increasingly backed by the might of the United States government,” von Thun and Nie wrote.

Senior Open Markets fellow Garphil Julien published an article in Washington Monthly [[link removed]] urging President Trump to adopt a more focused trade policy designed to support specific domestic industries like medicines rather than simply imposing indiscriminate tariffs. “The pandemic may have receded, but medicine remains a critical industry that would be affected by Trump’s blunderbuss tariffs in a second term — with alarming results,” Julien wrote, noting that the U.S. imports a large supply of penicillin and common painkillers ibuprofen and acetaminophen from China.

Open Markets transportation analyst Arnav Rao wrote a statement [[link removed]] calling on the U.S. to bolster its maritime sector after a recent investigation by the Office of the U.S. Trade Representative (USTR) found that China uses unfair policies and practices to dominate the global maritime, logistics, and shipbuilding sectors. Rebuilding America’s maritime capacity “will take a holistic, integrated-systems approach that includes economic regulation of the shipping industry, robust public support for U.S. shipping and shipbuilding capacity, and rapid public investment in merchant mariner training,” he wrote. Rao’s statement was cited in Sourcing Journal [[link removed]] and gCaptain [[link removed]].

In The Guardian [[link removed]], Open Markets executive director Barry Lynn described outgoing Federal Trade Commission Chair Lina Khan as "the most consequential FTC chair in at least half a century." Beginning her career as an intern at Open Markets Institute, Khan was appointed FTC Chair in 2021 and helped drive a reinvigoration of antitrust policy after decades of neglect.

After the Supreme Court upheld Congress’s decision to force China’s ByteDance to sell TikTok, senior legal analyst Daniel Hanley released a statement [[link removed]] lauding the Court for reaffirming Congress’s legislative authority to regulate corporations. He also urged Congress to more actively regulate harmful platform business models, regardless of whether they’re foreign. “Congress must get serious about ending business models dependent on prolific surveillance and psychological manipulation that facilitate illegal discrimination, invade our right to privacy, and spread disinformation and discord,” Hanley said. His statement received coverage in The Verge [[link removed]].

Europe director Max von Thun commented in The Guardian [[link removed]]on the decision to appoint a former Amazon executive as chair of the UK's Competition and Markets Authority, calling it a "strategic blunder" that threatens economic growth and innovation, especially as U.S. tech monopolies increasingly dominate the AI sector.

🔊 ANTI-MONOPOLY RISING:

The UK’s Competition and Markets Authority issued a provisional finding declaring that Microsoft and Amazon have anti-competitive control over the cloud services market. The finding opens the door for the regulatory body to launch a full investigation over the corporations’ practices under the country’s new Digital Markets, Competition, and Consumers Act (DMCC). ( Wall Street Journal [[link removed]])

The Competition and Markets Authority, in a separate enforcement act under the new DMCC, launched two parallel probes into Apple and Google’s app stores, browsers, and mobile operating systems to determine how the two corporations’ dominance in mobile ecosystems is impacting digital markets. ( CNBC [[link removed]])

Minnesota-based pharmacy benefit manager Prime Therapeutics was ordered to pay $10 million in damages after being found guilty in federal arbitration for engaging in an HIV/AIDS drug price-fixing scheme with competitor Express Scripts in violation of Minnesota antitrust law. ( Policy & Medicine [[link removed]])

We appreciate your readership. Please consider making a contribution to support the continued publication of this newsletter.

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Order Sandeep Vaheesan’s new book:

Sandeep Vaheesan, the legal director at the Open Markets Institute, published his first book Democracy in Power: A History of Electrification in the United States [[link removed]] on December 3. Vaheesan examines the history—and presents a possible future—of the people of the United States wresting control of the power sector from Wall Street, including through institutions like the Tennessee Valley Authority and rural electric cooperatives.

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Written and edited by: Barry Lynn, Michelle Nie, Austin Ahlman, and Anita Jain.

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