Trump Greenlights U.S. Steel and Nippon Steel Merger Amid National Security Agreement
In a significant move on Friday, President Donald Trump authorized the merger between U.S. Steel and Japan’s Nippon Steel, following the companies’ signing of a national security agreement with the U.S. government. This approval clears the path for the companies to finalize their partnership promptly.
National Security Agreement: What It Means
The agreement grants the U.S. government a so-called "golden share", a special stake conferring certain controls over governance, domestic production, and trade activities tied to the merged entity. While the companies have not detailed the extent of the government's powers with this golden share, it underscores Washington’s intent to safeguard national interests amid foreign investment.
Under the terms of the agreement, Nippon Steel has committed to invest $11 billion by 2028, including work on a greenfield project that will extend beyond that date.
Background: From Opposition to Approval
Earlier, President Trump expressed skepticism toward the deal, especially in the lead-up to the 2024 presidential election, aligning with bipartisan concerns about protecting U.S. industrial assets from foreign acquisition.
However, after taking office, Trump softened his stance and formally endorsed the merger in April. This was notable given that outgoing President Joe Biden had previously blocked the acquisition, citing national security risks, despite Japan being a key ally.
A Controlled Partnership Under U.S. Steel’s Roof
Trump chose to describe the transaction not as an acquisition, but as a "partnership". He emphasized that U.S. Steel would remain under American control, reassuring workers during a May 30 event at a steel plant near Pittsburgh.
Nevertheless, official filings with the Securities and Exchange Commission clarify that U.S. Steel will become a wholly owned subsidiary of Nippon North America, fueling some confusion among investors and labor unions.
Commitments to U.S. Steelworkers and the Domestic Industry
- Nippon Steel has agreed to operate U.S. Steel’s blast furnaces at full capacity for at least 10 years.
- The merger is expected to preserve jobs with no layoffs or outsourcing.
- Employees will receive a $5,000 bonus as part of the deal.
Addressing steelworkers, Trump called Nippon a “great partner” and highlighted ongoing trade discussions between the U.S. and Japan, which investors hope will eventually reduce tariffs and bolster bilateral cooperation.
Tougher Tariffs to Support Domestic Steel
In addition to approving the merger, Trump announced the doubling of tariffs on steel imports from 25% to 50%, effective June 4. This move aims to shield the American steel industry from foreign competition and reinforce domestic production.
With all regulatory hurdles cleared and investments pledged, the merger between U.S. Steel and Nippon Steel marks a pivotal moment in the steel sector, balancing international collaboration with American economic interests.
