Trump shocks with US Steel-Nippon approval but details elusive

[NEW YORK] US President Donald Trump on Friday (May 23) announced a partnership between United States Steel and Japan’s Nippon Steel, shocking markets with an agreement he said would keep the once-iconic American firm in the US but otherwise providing no specifics.

He stopped short of explicitly endorsing Nippon Steel’s earlier proposed US$14.1 billion takeover of US Steel, but shares of the company surged as much as 26 per cent in late Friday trading – signalling optimism over the deal’s prospects.

“I am proud to announce that, after much consideration and negotiation, US Steel will REMAIN in America, and keep its Headquarters in the Great City of Pittsburgh,” Trump said on his Truth Social platform. “My Tariff Policies will ensure that Steel will once again be, forever, MADE IN AMERICA.”

Statements from both companies on Friday, as well as from Governor Josh Shapiro of US Steel’s home state of Pennsylvania, praised the agreement but were otherwise devoid of specifics.

Trump said the partnership would create at least 70,000 jobs and add US$14 billion to the US economy, with the bulk of the investment occurring in the next 14 months. He also said he would appear at an event on May 30 in Pittsburgh.

About 85,000 people now work in US steel mills, according to the Bureau of Labor Statistics.

“US Steel will remain American, and we will grow bigger and stronger through a partnership with Nippon Steel that brings massive investment, new technologies and thousands of jobs over the next four years,” the company said in a statement.

“The partnership between Nippon Steel and US Steel is a game changer – for US Steel and all of its stakeholders, including the American steel industry, and the broader American manufacturing base,” the Japanese company said in its own statement.

Both used “bold” to describe Trump.

While the White House declined to provide further details, Japanese media including Nikkei and Kyodo News reported that a buyout had been approved, citing US sources they did not identify.

The unexpected announcement via social media came shortly after the White House confirmed Trump had received a recommendation from the Committee on Foreign Investment in the US, which reviewed the proposed takeover.

Trump had repeatedly said there must be an investment, not an outright ownership as was originally agreed by the two companies in 2023. In January, then-president Joe Biden blocked the deal, citing national security concerns.

Advocates for a merger argued Nippon Steel would revitalise the once-struggling American company through significant repairs to ageing assets, investment to boost capacity and technology sharing.

However, the deal faced opposition from the influential United Steelworkers (USW) union, which operates US Steel’s integrated mills across the American Rust Belt. USW president David McCall assailed it for failing to get union input. McCall and the union did not immediately respond to a request for comment on Friday evening.

Trump, Biden and the 2024 Democratic nominee, Kamala Harris all opposed the deal and insisted that the company remain in American hands.

US Steel shares in New York ended the day up 21 per cent at US$52.01. The company in December 2023 agreed to sell itself to Nippon Steel for US$55 per share in an all-cash deal.

The stunning reversal comes as the US and Japan are also engaged in trade negotiations over Trump’s wider series of tariffs.

Japan’s top trade negotiator, Ryosei Akazawa, met with Commerce Secretary Howard Lutnick and US Trade Representative Jamieson Greer in Washington as part of a third round of tariff talks. That followed a telephone call between Trump and Japanese Prime Minister Shigeru Ishiba, in which they agreed to an in-person meeting in Canada next month at a Group of Seven leaders’ summit.

Akazawa on Friday declined to comment on the steel issue, deferring until an official announcement is released. As for the tariff talks, he said negotiators were mindful of the June meeting between the leaders, but added it was unwise to rush any agreement.

Japan faces a 25 per cent US levy on cars, steel and aluminium, as well a 10 per cent duty on all goods that’s set to jump to 24 per cent in early July after a 90-day pause lapses if no trade deal is reached.

Japanese carmakers including Toyota Motor Corp. have already reported expected profit losses in the billions of dollars because of the tariffs. Given that his economy already contracted last quarter, Ishiba faces the possibility of Japan tipping into a recession if the trade pressures do not abate.

Akazawa will continue shuttling between capitals into next week, as he’s expected to meet Treasury Secretary Scott Bessent, a key player at the previous two rounds of tariff talks, in Washington, also on May 30.

Trump’s blessing could bring about a new era for the US steelmaker, which once held the title of the world’s largest company. But Nippon Steel will have to justify to its shareholders why it would keep the ageing, less-efficient and higher-cost integrated assets running.

The USW’s McCall has repeatedly said investments in the mills would make them the most efficient plants in the world, and that they would remain competitive for decades to come. He has remained unconvinced, however, of Nippon Steel’s promises since US Steel announced the sale.

“Their ‘promise’ is always made with exceptions to back out of the statements,” McCall said earlier this week in a text message. “Nothing makes me think this one is anything but another desperate attempt.” BLOOMBERG