Koko Kato 
US Steel plant in Pennsylvania, USA. October 2024 (©AP/Kyodo)
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On May 21, the Committee on Foreign Investment in the United States (CFIUS) submitted its reevaluation of Nippon Steel's planned acquisition of US Steel. Following the review, President Donald Trump approved a revised agreement on May 23, framing the deal as a "planned partnership" rather than a full acquisition.
Under the new terms, it appears that US Steel will retain its headquarters in Pittsburgh and remain under American control. Nippon Steel will invest $14 billion into US operations, including $4 billion for a new steel mill. The deal, expected to create at least 70,000 jobs, is being closely watched as a model for balancing foreign investment with national industrial strategy.
Political Roadblocks and Legal Pushback
Trump had previously expressed opposition to the deal. However, during the US-Japan summit in February, he refrained from calling it an acquisition, referring to it instead as an "investment." Nippon Steel had not abandoned its goal of fully acquiring US Steel as a wholly owned subsidiary and continues to lobby the Trump administration behind the scenes.
In 2024, amid a heated election season, the deal became mired in politics. In particular, there was fierce opposition from rival Cleveland-Cliffs and the United Steelworkers (USW) union. Under pressure, CFIUS could not reach a consensus on national security concerns and ultimately left the decision to then-President Joe Biden.
In January 2025, Biden issued an order blocking the deal. Responding jointly, Nippon Steel and US Steel issued a joint statement declaring they "will never give up" on doing business in the US. Together, they also filed a lawsuit seeking to overturn the executive order.
Pressures on Both Sides
US Steel reported a loss of $116 million for the first quarter of 2024, making it increasingly urgent to strengthen its management. Nippon Steel is also facing a harsh business climate. In fiscal 2023, it saw a year-on-year decline in both revenue and profit, with net income falling 36.2% to ¥350.2 billion ($2.23 billion USD).
Projections for fiscal 2024 anticipate an additional 42.9% drop to ¥200 billion ($1.40 billion). Weakened demand in China and slumping US auto sales, due in part to Trump-era tariffs, are squeezing profits.
US Steel has stated that if the merger fails, it will move its headquarters to Arkansas and be forced to close factories and lay off workers in Pennsylvania.
Contributing to US Manufacturing Revival
Meanwhile, Trump has imposed 24% reciprocal tariffs on Japan, along with 25% additional tariffs on cars, steel, aluminum, and auto parts. US-Japan negotiations on those are ongoing.
The White House's broader intent is to use tariffs as economic leverage, eliminate trade deficits, attract foreign manufacturers to set up domestic production, and revive American industry. High-quality steel sheets are essential to making good cars. Strengthening the domestic steel industry, "the mother of industry," is vital to restoring the US as a global automotive manufacturing power.
Nippon Steel, which possesses the world's best technology in high-grade steel, plans to strengthen production capacity within America alongside US Steel. If successful, this would create a powerful steelmaker with the world's third-largest crude steel output, helping drive forward the revitalization of US manufacturing. Producing high-quality steel domestically would also give America greater leverage in competing with China.
Terms of the Deal and Local Impact
To acquire US Steel, Nippon Steel has offered $14.1 billion — a 40% premium over the share price at the time of the agreement. The company has pledged not to change US Steel's name, lay off workers, or cut bonuses. It also committed to capital investments in the hot rolling mill in Mon Valley, Pennsylvania, and the blast furnace in Gary, Indiana.
The deal, which offers exceptionally favorable terms, won 98% shareholder approval. Locally, there are high hopes that Nippon Steel will preserve jobs. Executives from US Steel's production team have already visited Japan and confirmed compatibility with Nippon Steel's operations.
Trump, known as a "job nationalist," should understand that this acquisition contributes to employment, economic security, and national defense, all key pillars of his "America First" policy. What remains is largely a matter of national pride: the reluctance to see a historic American company sold to a Japanese firm.
A Strategic Move for Japan's Growth
For Nippon Steel, acquiring US Steel is a strategic investment for global market expansion. The US economy is growing, energy costs are low, and environmental regulations are lax following America's withdrawal from the Paris Climate Agreement.
Affected local governments in the US have also welcomed the deal. Producing within the US would reduce tariff exposure. If the acquisition succeeds, Japanese production facilities would serve as "mother mills" to support growing overseas markets. However, this could mean reduced crude steel output in Japan, impacting a wide range of domestic industries.
The Cost of Policy Blindness
If Japan's auto sector relocates production to the US to avoid tariffs, further hollowing out of the domestic industry is inevitable. America and China both desire Japan's advanced technologies in automobile and steel production. Yet the Japanese government seems unaware of its own strategic value. On the contrary, it is pursuing policies that push key industries overseas.
Japan's industrial policy prioritizes climate change and CO2 reduction ideology over real economic needs. Regulations such as emissions trading and carbon pricing are marketed as pro-growth, but in reality, they shackle manufacturing output.
Japan's energy plans, with their emphasis on renewables, cannot ensure a stable power supply. To the steel industry, this effectively says: "Do not make long-term capital investments in Japan or increase production."
As Nippon Steel moves toward the US, it may be time for Japan to revisit the roots of its national industrial development and re-center its growth strategy on revitalizing domestic manufacturing.
RELATED:
- Nippon Steel Must Be Open to Compromise to Acquire US Steel
- The Evolution of Nippon Steel and Where It's Headed
- The US Steel Deal: National Security or Failed Business Deal?
(Read the article in Japanese.)
Author: Koko Kato
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