The contrasting tales of TikTok and Nippon Steel

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Deglobalisation seems to be moving up a gear. The US House of Representatives last week passed a bill that would in effect ban TikTok in America unless its Chinese owner sells the video-sharing app. Barely 24 hours later, President Joe Biden signalled his opposition to the proposed $14.9bn takeover of US Steel by Nippon Steel of Japan, saying it was vital for America’s third-largest steelmaker to remain “domestically owned and operated”. Both moves have been portrayed, in broad terms, as linked to national security. One looks more like crude electoral politics.

There is at least a plausible case that a Chinese-owned TikTok poses a threat to US security. US officials have long feared Beijing could subvert the app to spy on, or spread propaganda or misinformation to, its 170mn American users. ByteDance, the app’s Chinese owner, has failed to convince Washington that its move to secure US user data on American-based Oracle servers is watertight.

Other potential solutions exist on data: the US could, given the legislative will, enact a ban on all tech companies, domestic and foreign, from transferring data to foreign countries. The propaganda concern is harder to deal with. About a third of US adults under 30 now regularly get news on TikTok, according to Pew Research. The sheer volume of TikTok content, and the personalised experiences its algorithm serves up, make it complex to track. US regulators have long restricted foreign-owned companies from holding TV broadcast licences; updating this rule, in effect, for social media has some logic.

Japanese ownership of US Steel, by contrast, does not pose a national security threat by any stretch. Japan is a long-standing ally, with whom the US has a shared interest in curbing Chinese influence. Steel has none of the sensitivities of high-tech social media; US Steel is not a direct supplier to the military.

In raising concerns over the deal Biden did not refer to national security, speaking only of the need to maintain “strong American steel companies powered by American steel workers”. But as president he has sought to extend the security concept to safeguarding the US industrial base. Nippon’s takeover is no threat to the US economy, but could enhance it.

The Japanese steelmaker has said it will pump investment into US Steel and update its technology. Though cross-border acquirers do not always keep their word, Nippon has pledged not to shift production or US jobs overseas, and to honour bargaining agreements with the United Steelworkers union.

The union, however, favoured an earlier, lower, bid from another US steelmaker, Cleveland-Cliffs, which it views as more union-friendly. US Steel is headquartered in Pennsylvania, a vital swing state in November’s presidential election. Donald Trump has said he would block the Nippon deal — posing a dilemma for Biden.

Strikingly, by saying he would sign into law the TikTok bill if it passes Congress, Biden has shown himself potentially ready to antagonise millions of US TikTok users, and businesses that rely on it — perhaps because the bill has drawn bipartisan support. Yet with Nippon Steel the president appears to have put short-term electoral considerations ahead of real economic interests.

Even if, as some suspect, the White House is merely trying to delay the Nippon deal until after November, such meddling could deter vital foreign investment. The Biden administration, moreover, has touted “friendshoring”, or focusing supply chains on allies. Friendshoring ought to go both ways. The best means to protect America’s economic future is not a broad retreat from globalisation. It is to use judicious security safeguards against rivals when it has to — but to continue to allow deeper integration with its friends.