Give the green light for the acquisition? Trump supports the "planned cooperation" between Nippon Steel and US Steel, Japanese media reports approval

Former President Trump seems to have once again overturned the decision made by his predecessor Biden, hinting at a green light for Nippon Steel Corporation ("Nippon Steel") to acquire US Steel Corporation ("US Steel"), as he framed the deal as a so-called "partnership" to promote the revival of American manufacturing.

On Friday, May 23rd, during the late trading hours of US stocks, Trump posted on social media:

"I am proud to announce that after careful consideration and negotiation, US Steel will remain in America and will be headquartered in the great city of Pittsburgh. My tariff policy will ensure that US Steel becomes 'Made in America' once again."

"For many years, the name 'US Steel' has been synonymous with greatness, and now it will be synonymous with greatness again. This will be a planned partnership between US Steel and Nippon Steel, creating at least 70,000 jobs and contributing $14 billion to the American economy. Most of this investment will be completed within the next 14 months."

Shortly before Trump's post, the White House had just confirmed to the media that Trump received recommendations from the Committee on Foreign Investment in the United States (CFIUS). This committee, which oversees foreign investment reviews, had previously examined the proposal for Nippon Steel's acquisition. Media reports indicated that a resolution submitted to the White House by CFIUS on Thursday showed internal disagreements, with most members believing that "any risks could be mitigated."

After Trump's post, the stock price of US Steel (X), listed on the New York Stock Exchange, surged over 20% in late trading, with an intraday increase nearing 26%, closing up 21.2%, reaching a four-year high.

After US stock trading hours, Japanese media cited White House sources stating that Trump had approved Nippon Steel's proposal to acquire US Steel. US Steel later stated that the company "will remain an American company" and will grow through its partnership with Nippon Steel, expressing "great gratitude" to Trump.

After hours, US Steel's stock price further increased, rising nearly 4%.

Policy U-turn: From National Security Threat to Partnership

Although the White House has not formally responded to the aforementioned Japanese media reports, this already indicates a 180-degree shift in Trump's personal stance, potentially overturning the decision made by Biden over four months ago.

According to Xinhua News Agency, in December 2023, Nippon Steel announced plans to acquire US Steel for $14.9 billion. However, the acquisition plan faced strong opposition from the United Steelworkers Union and both Democratic and Republican parties. CFIUS reviewed the acquisition for several months on the grounds of "national security."

Xinhua reported that on January 3rd of this year, the White House issued a statement saying that then-President Biden officially blocked Nippon Steel's acquisition of US Steel, believing that the acquisition would "place one of America's largest steel producers under foreign control, posing risks to US national security and critical supply chains." The report also mentioned that Trump had previously expressed opposition to US Steel being acquired by a foreign company Reports cite Japanese media commentary stating that it is the first time the U.S. president has ordered the blocking of acquisition cases by Japanese companies. Blocking acquisitions by allied countries under the pretext of "security concerns" is rare and will negatively impact Japan-U.S. relations and Japanese investments in the U.S. Japanese researchers believe that Japan is an ally of the U.S., and the U.S. government's invocation of security risks is merely an excuse. Biden's blocking of the acquisition is focused on the midterm elections and the presidential election.

Trump's post this Friday emphasized that his policies will ensure that U.S. Steel is once again "Made in America" forever.

The timing of this statement is quite delicate, as it comes after the White House confirmed that Trump received a recommendation report from CFIUS regarding the U.S. Steel acquisition. Clearly, under the same regulatory framework, different administrations in the U.S. have reached entirely different conclusions.

Diplomatic Game: A New Bargaining Chip in Japan-U.S. Trade Negotiations

Notably, on the same day that Trump expressed support for the collaboration between Nippon Steel and U.S. Steel, Japan's chief trade negotiator, Ryosei Akazawa, met with U.S. Secretary of Commerce Gina Raimondo for about 30 minutes in Washington. This is part of the third round of tariff negotiations between Japan and the U.S. Previously, Trump also had a phone conversation with Japanese Prime Minister Shigeru Ishiba.

Commentators believe that this timing is no coincidence. Clearly, the U.S. Steel deal has become an important bargaining chip in Japan-U.S. trade negotiations. The Trump administration seems to be signaling to Japan that cooperation on tariff issues will directly affect the prospects of other economic cooperation projects.

After the U.S. stock market closed this Friday, the Japanese government stated that both Japan and the U.S. believe that reaching an agreement as soon as possible is beneficial for both sides. Ryosei Akazawa stated that he has "strongly" requested an assessment of U.S. tariff measures. In terms of Japan-U.S. trade discussions, there are still plans to arrange a meeting between Trump and Prime Minister Shigeru Ishiba during the G7 meeting in June.

Akazawa also mentioned that he would refrain from commenting on the Nippon Steel and U.S. Steel deal until there is an official announcement.

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