The United Steelworkers union has been the most outspoken opponent of foreign investment in American steel — at least up until two weeks ago.
The saga started in 2023, when U.S. Steel began to court a purchase offer from Tokyo-based Nippon Steel. United Steelworkers sided with U.S. Steel’s competitor, Cleveland-Cliffs, which had put in its own bid to buy U.S. Steel for $35 per share.
The open market is the best option for everyone — especially with the 25% tariff Trump has imposed on steel.
By comparison, Nippon’s initial $14.9 billion offer valued U.S. Steel at $55 per share. Yet Cleveland-Cliffs and United Steelworkers argued that a domestic purchase of U.S. Steel would be better for national security and American jobs, increasing domestic steel production capacity and reducing emissions.
In spite of their efforts to torpedo the deal, President Donald Trump signed off on Nippon’s purchase in May, with a total value above $25 billion.
It didn’t take long for Cleveland-Cliffs to learn its lesson. At the end of July, Cleveland-Cliffs announced its plans to use the Nippon deal as leverage to win some foreign investors of its own. CEO Lourenco Goncalves has said the company may sell three idled plants that could be used for data centers and willalso consider overseas investments in core assets.
The decision is little wonder. The company is carrying $7.7 billion in debt and reported a $483 million loss in the first quarter of this year. Its financial woes have necessitated massive cuts to operations, including idling several plants, ceasing production of a transformer plant in West Virginia, and laying off more than 1,500 workers.
Cleveland-Cliffs needs cash, and it’s running out of options.
Where are the United Steelworkers’ outraged press releases now? Probably hiding with the free-market principles that took me years to learn in a master’s program that the union somehow seemed to have learned in just a few weeks.
Who can blame the union? Nippon’s purchase paid a 40% premium on U.S. Steel’s shares, bringing billions of dollars into the U.S. economy. It strengthens our position in the global steel market against China and preserves more than 11,000 jobs — with the potential to create at least 14,000 more.
Even in the short term, the deal put cash in workers’ pockets. Nippon paid out $5,000 bonuses to employees upon purchase. The gains will continue in the long term, as Nippon plans to build at least one manufacturing training facility in Western Pennsylvania.
As a free-market economist, I stand with Cleveland-Cliffs and the U.S. Steelworkers union circa summer 2025. The open market is the best option for everyone — especially with the 25% tariff Trump has imposed on steel.
This tariff hits small businesses and auto manufacturers especially hard, driving up prices that ultimately hurt consumers. To put this in perspective, the average middle-class American family will pay close to $1,700 per year on all the tariffs Trump has imposed during his first year in office.
The other reason I support Cleveland-Cliffs finding similar opportunities is that it creates domestic and global competition. Nationalist posturing creates good headlines, but the best way to score points against a business rival is to prove value.
Of course, that may be the real reason the United Steelworkers union opposed Nippon’s purchase — it was trying to bury the fact that many union workers supported the purchase. They recognized the economic opportunity, and union leaders couldn’t have that!
Cleveland-Cliffs and the United Steelworkers spent over a year noisily sowing fear and confusion about Nippon’s acquisition of U.S. Steel. It’s clear that their arguments didn’t sway public opinion or change how workers understood the economic realities. If that were the case, Trump wouldn’t have approved the acquisition.
And good for them. Now that their self-interest seems ordered toward foreign investment, they’ve seen the free-market light.
