The social media post by President-elect Donald Trump. He claimed he would "block" Nippon Steel's acquisition of US Steel (from Trump's social media).
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Nippon Steel and the Japanese government are intensifying efforts to gain the United States' approval to acquire US Steel. Failure to secure the deal could strip Japan of opportunities to expand its business in the American market. Moreover, it could also potentially benefit China's steel industry.
By emphasizing the benefits, such as enhancing corporate competitiveness and maintaining jobs, they aim to expedite approval from American authorities by year-end. Negotiations with President-elect Donald Trump to strike a potential deal are also on the table.
Response to Trump's Stance
On December 3, following President-elect Trump's opposition to the acquisition, Nippon Steel issued a statement highlighting the significance of the deal. "We aim to grow US Steel while bolstering US national security," it declared. The company also pledged to invest over $2.7 billion USD (approximately ¥400 billion JPY) in US Steel's facilities. Nippon Steel also reaffirmed its commitment to preserving US jobs.
At the December 3 Lower House session, Prime Minister Shigeru Ishiba avoided directly addressing Trump's opposition to the deal. However, he stressed the importance of strengthening Japan-US economic ties, including expanding mutual investment.
Thus far, Nippon Steel has focused on mitigating political risks that surfaced during the US presidential election. The company withdrew and resubmitted its application to the Committee on Foreign Investment in the United States, widely known as CFIUS. This move extended the review deadline from September to December post-election.
Approval Before 2025?
Initially taking a cautious stance, the Japanese government became proactive after Trump's victory. According to Reuters, Ishiba sent a letter to President Joe Biden on November 20. In it, he cited strong Japan-US relations in urging approval of the acquisition.
At a December 3 press conference, Keidanren Chairman Masakazu Tokura also addressed the issue. "We expect a resolution to come under the Biden administration," he stated. Japan is eager to finalize the deal before Mr Trump's inauguration.
There is a risk of the deal falling apart if it is not approved before Mr Trump takes office on January 20. If the acquisition fails, Nippon Steel could lose its chance to secure a foothold in the US market. This could weaken efforts to counter China's growing influence in the global steel industry. Additionally, it could undermine Japan-US economic security cooperation in sectors like semiconductors despite concerns about China.
Mr Trump, known to strike deals based on how he sees the value of competing interests, might still consider a compromise. A Japanese government official remarked, "If we persistently highlight the advantages to the US, he might come around."
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Author: Tomotaka Nakamura
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