The CEO of one of America’s biggest steel companies just gave a speech in which he said he wanted to “Make American Steel Great Again.”
Yes, that’s a pretty blatant adoption of Donald Trump’s MAGA pledge, to Make America Great Again…
It’s not a coincidence either.
Trump’s plan to Make America Great Again is based on preventing foreign countries and companies from taking advantage of America’s booming economy and relying on American military strength. Yes, that means other countries have to spend more on defense. But it also means foreign countries aren’t allowed to “dump” cheap goods into the U.S. economy…
China is the biggest culprit for sure. They’d love free reign to dump heavily subsidized electric vehicles (EVs), steel, and solar panels into the U.S. market. But they aren’t the only ones. Brazil, Korea, Malaysia, and even Germany have faced anti-dumping actions from the Department of Commerce.
Japan’s Nippon Steel put a creative spin on dumping when it offered up $55 a share to buy US Steel back in December of 2023.
It’s not that Nippon’s acquisition of US Steel would suddenly give Japan an outlet for dumping steel into the U.S. market. The threat that Nippon’s purchase of US Steel represents to the U.S. steel market is more subtle than that…
It’s about the US Steelworkers Union.
As a foreign company, Nippon Steel has no relationship with American labor unions. And so Nippon would not have any obligation to uphold any labor agreements between the US Steelworkers Union and US Steel. There’d be nothing to stop Nippon from firing union workers and replacing them with lower-wage workers.
That in turn, would likely mean that Nippon Steel would suddenly have a much lower cost basis for steel, and could then undercut other American steel companies on selling prices.
So, yeah, the potential for a painful blow to American steel companies and the Americans who work for them should count as a national security concern.
Free Markets Aren’t Always Free
Now I know that free market capitalism thrives on competition. And mergers and acquisitions are a critical force for competition. If a company isn’t being run efficiently, it absolutely should get taken over by a company that can run an efficient operation…
But not when those apparent “efficiencies” are actually government subsidies that offset a big chunk of a company’s costs, like the way the Chinese government operates. China subsidizes all manner of industries – of course, their products will be cheaper than those made in the U.S., without government subsidies…
That’s not a free market. That’s a rigged market.
And it would also be rigged if Nippon Steel were able to take over US Steel and simply cancel labor contracts with the US Steelworkers union.
The Biden Administration already acted to nullify the Nippon/US Steel merger and protect US Steel employees. And so, when the aforementioned CEO invoked President-elect Donald Trump’s MAGA pledge and vowed to Make American Steel Great Again, he was trying to get the incoming administration to kill the Nippon/US Steel deal for good.
But that’s not the only play this savvy CEO is running…
In a small corner of West Virginia, 35 miles west of Pittsburgh, this CEO is retrofitting an old tin-making factory. Sometime in the next 12 months, this factory will begin producing a magnetic alloy component that is critical to the surging electricity demand that AI data centers are placing on the grid. Prices for this component are up more than 80% over the last 18 months – and wait times are as much as 3 years!
This CEO is setting his company up for a surge in revenue. And probably a windfall for investors who get in early. You can learn more here.
Cheers,
Briton Ryle
Chief Investment Strategist
Outsider Club
X/Twitter: https://twitter.com/BritonRyle
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