President Joe Biden’s decision to block Nippon Steel’s acquisition of U.S. Steel on national security grounds will have disastrous consequences for some Pennsylvania steel workers, who will lose their jobs and won’t be able to pay mortgages and support their families. The decision should be reconsidered.

The decision was made on national security grounds, and copied from a decision on blocking a Chinese acquisition of an American firm. The original title of the order, before the White House corrected it, was “Regarding the Acquisition of Certain Real Property of Cheyenne Leads by Mineone Cloud Computing Investment I L.P.” Being wrong is unfortunate, being incompetent is a crime.

It’s one thing to confront an enemy, and quite another to stab a friend in the back. Unlike China, Japan is one of America’s strongest allies. To say that “There is credible evidence that leads me to believe that (1) Nippon Steel…might take action that threatens to impair the national security of the United States” is not believable.

Japan is not only an ally but the largest foreign employer and investor in the United States. Japanese companies in the U.S. employ about a million Americans — half in manufacturing. Japan’s direct investment in America is over $700 billion. Americans are happy to drive Toyotas and Hondas made in America.

Just as Japanese companies Toyota and Honda are creating jobs, Nippon can do the same in the steel industry. Japan will keep U.S. Steel running, so America will continue to have steel production. The U.S. government needs to stand by our own workers in Pennsylvania and our ally, Japan.

A letter from 20 Pennsylvania local mayors to Biden supports the deal because Nippon Steel will increase investment in U.S. Steel, resulting in the creation of thousands more jobs.

With free trade, as in other economic policies, the key is looking at what contributes to our economic strength. Our current trade policies with China do not contribute to our economic strength. There is no reciprocity in trade with China, because American companies are not permitted to own 100 percent of Chinese companies, to list on the Chinese stock markets, or to operate social media companies in China.

But Japan is our friend and our closest trading partner. The Nippon deal would help the United States and would strengthen our economic positions. The U.S. needs foreign investors to expand its manufacturing base. Hence, Biden’s Secretary of the Navy, Carlos Del Toro, has called for Japan and Korea to invest in U.S. shipbuilding. With the steel decision, Biden has contradicted his Navy Secretary.

The process of this politically motivated decision was riddled with flaws.

The president has authority to block such acquisitions upon “credible evidence” of a national security threat upon recommendation by the Committee on Foreign Investment in the United States (CFIUS). The Nippon deal was being examined by the CFIUS at the behest of Biden until last month, when the committee stated that it was divided on the deal.

But employing CFIUS in such acquisitions is rare. It has occurred only once prior to 2012, twice under President Obama, and four times under President Trump. All but one of these blocked acquisitions by CFIUS involved Chinese investors.

It is even more unusual for a president to preemptively ask for a CFIUS investigation as Biden did shortly after the Nippon-U.S. Steel announcement. Justifiable concerns arise with foreign direct investments (FDI) from hostile non-market economies, but Japan is the opposite.

In a joint statement, Nippon Steel and U.S. Steel decried the decision and the corruption of the CFIUS process. Nippon had offered CFIUS veto power over any potential cuts to U.S. Steel production capacity for 10 years.

The actual political dynamics are more nuanced than they might appear. The United Steelworkers union and Biden oppose the deal. Although Biden has the support of union leadership, the recent election shows that union workers voted for Donald Trump. Biden’s decision will cost workers their livelihoods, just as his decision to mandate and subsidize electric vehicles has led to layoffs at GM, Ford, and Stellantis.

This decision shows the folly of stupidity masked in the cloak of national security. It is a sign of sclerotic thinking as well as a corrupt and politically motivated process. Let’s hope that this decision will be litigated and reversed.

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Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, directs the Center for Energy, Climate, and Environment at The Heritage Foundation. Andrew Hale is Heritage’s Jay Van Andel Senior Trade Policy Analyst.

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