Trump Declares 'No Majority Stake in US Steel'—Will Nippon Steel Alter Acquisition Plans?

 

Trump's Firm Stance Could Reshape Nippon Steel's Strategy

In a bold declaration that has sent ripples through the global steel industry, U.S. President Donald Trump announced that no entity will be allowed to acquire more than 50% of shares in U.S. Steel. This announcement puts Nippon Steel's ambitious plan to acquire U.S. Steel in a precarious position, potentially forcing the Japanese steel giant to reconsider its strategic approach.

Speaking aboard Air Force One en route to New Orleans on February 9, Trump asserted that while foreign companies, including Nippon Steel, are welcome to invest in U.S. Steel, no single entity would be permitted to hold a controlling stake. "No one can have a majority stake in U.S. Steel," Trump emphasized, signaling a protective stance toward American industrial assets.

This pronouncement came shortly after Trump’s first summit with Japanese Prime Minister Shigeru Ishiba at the White House on February 7. Both leaders highlighted the term "investment" rather than "acquisition," suggesting a shift in the narrative surrounding Nippon Steel’s involvement. Ishiba echoed this sentiment during an appearance on NHK TV, stressing that the move is "not a simple acquisition" but rather an investment that ensures U.S. Steel remains fundamentally an American company.

The ambiguity surrounding the term "investment" has left industry analysts speculating about Nippon Steel's next move. With Trump drawing a firm line against majority foreign ownership, Nippon Steel’s plan to transform U.S. Steel into a wholly-owned subsidiary seems increasingly unlikely. In response, Japanese Chief Cabinet Secretary Yoshimasa Hayashi hinted at a strategic pivot during a press conference on February 10. "We are considering bold proposals that go beyond simple acquisition to create a win-win scenario for both Japan and the U.S.," Hayashi stated.

Nippon Steel has yet to receive direct communication from Trump’s camp, and no official meetings have been scheduled. The company initially proposed a $14.1 billion acquisition deal in December 2023, which received approval from U.S. Steel shareholders. However, strong opposition from the United Steelworkers union and certain American political figures led to a rejection of the deal by former President Joe Biden.

NHK reports suggest that Nippon Steel may need to revise its strategy significantly, possibly reducing its stake to below 50% to gain Trump’s approval. However, this raises concerns about the company's ability to manage U.S. Steel effectively, with some analysts warning that insufficient control could result in U.S. Steel merely leveraging Nippon Steel’s advanced technologies without fostering genuine operational integration.

Kyodo News echoed these sentiments, suggesting that while a reduced stake might satisfy Trump’s conditions, it could undermine Nippon Steel's long-term objectives. "Without sufficient managerial control, there’s a risk that U.S. Steel could simply benefit from the technology without contributing to Nippon Steel’s strategic growth," the report noted.

Adding another layer of complexity, Trump recently proposed imposing a 25% tariff on all steel and aluminum imports to the U.S. Hayashi responded cautiously, stating that Japan would "thoroughly investigate the potential impacts and respond appropriately."

The U.S.-Japan summit also addressed other geopolitical issues, notably the abduction of Japanese citizens by North Korea. Ishiba secured Trump's full support for immediate resolution efforts, marking a significant diplomatic achievement. The joint statement reaffirmed Japan’s commitment to resolving the abduction issue, with the U.S. pledging its backing.

As the situation unfolds, all eyes are on Nippon Steel to see how it will navigate these new geopolitical and economic hurdles. The company’s next steps could set a precedent for future foreign investments in strategic U.S. industries, highlighting the delicate balance between economic globalization and national security interests.