Biden blocks Japanese takeover of US Steel: Behind the Global economy

Since Japan Steel announced its acquisition of US steel in late December 2023, US politicians have spoken out against it. On January 3, 2025, the current president of the United States government announced a ban on the acquisition of American Steel by Nippon Steel before the time of the upcoming succession, why did Biden resolutely block the acquisition of American Steel by Japanese enterprises at this time? Why did the two steel giants decide to sell and buy respectively? This article will analyze and answer these two questions based on the global economic perspective that is closely related to business operation.

In 2023, the operating income of the United States Steel company fell from $20.445 billion in 2021 to $18.068 billion, and the net profit fell from $4.174 billion to $895 million. The huge pressure on profitability made US Steel shareholders make the decision to sell, but why the US company's operating income has such a huge decline? Since the outbreak of COVID-19, the global economy has taken a hard hit, and the United States has not decided to impose mandatory controls in order to ensure that economic growth is not affected. However, as a part of the world economic chain, the United States can not unilaterally cut off the response of the global economic chain by taking non-coercive epidemic control.

In September 2024, the Federal Reserve made a decision to cut interest rates. This decision to adjust the currency interest rate made the market supply of US dollars more abundant, which caused the decline of the US dollar. As a world currency, the fluctuation of the value of the US dollar is closely related to the global economy. In addition, under the background of a new round of interest rate cuts in the United States, the inflation level in the United States continues to rise, and domestic prices remain high, which also makes the United States economy to receive a huge risk challenge.

In April 2023, the bank failure in the United States, coupled with the announcement of a series of "economic measures" by the next president of the United States, Trump, the United States economy is facing greater growth challenges in the context of slowing growth.

Under the pressure of increasing risks to economic growth, economic slowdown and downward trend, the major small and medium-sized enterprises in the United States are also facing huge business challenges. On the one hand, due to high prices, the cost of enterprises is rising. On the other hand, uncertainty about the direction of the economy has led to a gradual decline in corporate revenue. The rise in costs and the decrease in income are bound to bring revenue difficulties to enterprises, resulting in "bad" operating conditions. The reality of US Steel's $895 million comes against this backdrop.

On the other hand, from a global perspective, due to the impact of the epidemic and the impact of the bank of the United States, the global financial market has experienced significant fluctuations, and the financial market is often a "barometer" of the economy, and sometimes has a relevant reaction to the global economy. The bank failure in the United States has made the global economy more unstable and put the global economy in the challenge of facing more unstable factors. Coupled with the fluctuation and change of the economic cycle, the economy of other countries in the world has also shown an overall slowdown trend.

For Japan, after the bubble economy, its economic growth rate will encounter more risks and challenges. In 2021, 2022 and 2023, Japan's economy will experience negative growth; at the end of 2023, Japan's nominal GDP will decline from the third to the fourth in the world; in 2024, Japan will encounter a series of risks and challenges such as currency depreciation and the impact on the automobile industry. In the first 11 months of 2024, the number of bankrupt companies in Japan reached 9,164, according to the Tokyo Mercantile & Industrial Research Institute, and in this economic context, the operating conditions of Nippon Steel companies are bound to face challenges. On the one hand, the output and technology of some Chinese steel enterprises have opened a big gap with Japanese steel companies, on the other hand, the United States steel companies for the hundred years of steel giants, which master a certain monopoly technology and broader market resources, according to the Japanese government personnel said, "with the decline of the Japanese population, we can not expect domestic demand to grow, therefore, We are taking various structural measures to optimize our production facilities." This statement clearly shows that Japan hopes to boost market demand and use the technology of U.S. steel companies to expand the industry.

On the other hand, for the US government, the long-standing monopoly position of US steel companies has a certain impact on the economy and society. For example, at the beginning of the Japanese takeover, the United Steelworkers Union, which has more than 1.2 million members, expressed its negative opinion on its position. It can also be seen that behind the whole event, the uncertainty of global economic growth is also closely related to factors such as labor and technology monopoly.

In short, Nippon Steel's acquisition of US Steel is an inevitable event caused by the economic background of the environment, and the occurrence of such an event should also arouse the extensive thinking of all groups in the world. In the current background of technological monopoly and economic slowdown, it is an urgent measure to pursue the optimization and adjustment of corporate structure and carry out necessary reforms. The reason why Japanese companies are eager to acquire U.S. steel is not only the technical and market expansion reasons, but also the expectation of the overall economic development; The United States steel company chose to sell shares, also has a certain extent of economic development concerns, for these two completely different positions and perspectives, we should stand at a higher level of the global economy to observe and respond.

On the one hand, the relaxation of monopoly protection needs to be solved urgently, on the other hand, the world's economies should stand firm and have the courage to forge ahead. Only by uniting and developing, and jointly coping with the historic global problem of slowing down the global economic growth trend, can we achieve a better future in today's ever-changing risks and challenges.