[By Guancha Net columnist Chen Hongbin]
The acquisition case of Nippon Steel Corporation purchasing US Steel Corporation has suddenly made a dramatic turn.
In January this year, the then Biden administration clearly expressed opposition to this acquisition plan. Donald Trump, who was about to return to the White House, also firmly opposed this acquisition plan. At that time, almost no one believed that this plan had any chance of reversal.
However, just over four months after Trump took office again, this matter made a 180-degree turn.
On May 23, Trump posted on his social media "Real Social", stating his support for the establishment of a new partnership between US Steel Corporation and Nippon Steel Corporation, which came as a big surprise.
Nippon Steel Corporation has been striving to bring US Steel Corporation under its umbrella in recent years, negotiating with the U.S. side for a tough deal. During this process, there were clear signs of political intervention. Although the Japanese government repeatedly interceded, it failed to persuade the U.S. government to change its mind.
In February, during Prime Minister Shinzo Abe's visit to the U.S., when he met with Trump, he proposed a revised acquisition plan. The core content was to convert the original $14.1 billion all-cash acquisition plan into a "large-scale investment" and promised a significant increase in investment. However, Trump only expressed welcome to Japanese investment and did not mention this acquisition plan at all.
Trump had clearly stated, "I am completely against" Nippon Steel Corporation's acquisition of US Steel Corporation. Photo credit: Reuters
Subsequently, the tariff war began, and the primary focus of Japan-U.S. relations shifted to tariff negotiations. Chief Cabinet Secretary Akira Trasuda from Japan visited the U.S. twice, but there was no progress in the negotiations. He is expected to visit the U.S. for the third time soon, and it is unlikely that there will be any progress. No one could have anticipated that a "dark horse" would suddenly appear halfway through. Will the White House use this opportunity to do the Japanese side a favor and force Japan to make corresponding concessions in other areas? The Japanese government naturally welcomed this development and is urgently trying to understand the true intentions of the Trump administration. A representative of Nippon Steel Corporation is about to go to the United States to finalize relevant specific details with the other party.
In his post, Trump stated: This plan between US Steel Corporation and Nippon Steel Corporation involves at least 70,000 jobs. Nippon Steel will invest $14 billion in the U.S. economy. After many rounds of negotiations and careful consideration, both parties reached an agreement, which will enable US Steel Corporation to survive. This is beneficial not only for this company but also for Pittsburgh, the steel capital, to regain its former glory. He emphasized that US Steel Corporation will continue to be headquartered in Pittsburgh, maintaining its brand and operational independence.
Due to insufficient steel production capacity in the U.S., American-made shells can only meet one-third of the demand, which strongly motivates Trump to boost U.S. steel production capacity. The introduction of Nippon Steel will help strengthen the competitiveness of the U.S. steel industry and ensure the localization of key manufacturing industries.
Although Trump did not disclose the specific plan of Nippon Steel Corporation, both American and European media believe that Trump has given it the green light. The Financial Times commented that this move indicates that Trump has "accepted" the transaction. On May 30, Pittsburgh will hold a grand gathering for this purpose.
Looking back at this acquisition case, it has been full of twists and turns. In December 2023, Nippon Steel Corporation disclosed its plan to acquire US Steel Corporation for $14.1 billion. In January, the outgoing Biden administration stated that this move "posed national security risks" and instructed the Committee on Foreign Investment in the United States (CFIUS) to review this proposal again. In February, newly re-elected Trump stated that he did not support the acquisition plan and hoped that Japan would provide investment instead.
In the first quarter of this year, US Steel Corporation once again reported losses, which is the second consecutive quarter of losses, putting thousands of employees under the threat of unemployment. On May 21, the CFIUS completed its re-review and submitted relevant recommendations to Trump.
According to Reuters, a White House official revealed that most members of the U.S. National Security Team recommended to President Trump that all risks were controllable in the related recommendations regarding Nippon Steel Corporation's acquisition plan. If the acquisition plan is approved, Nippon Steel promises to invest $14 billion in the U.S., including building a new steel plant worth $4 billion.
The report said that although opinions among various agencies are inconsistent, most views suggest that safety measures can address safety concerns. Last month, Trump ordered a review, and now he has 15 days to decide the fate of this deal.
Nippon Steel Corporation is extremely excited about this latest development. The company stated: Our plan is consistent with our commitment to the U.S. government, which is that this move will benefit American steel workers, the American steel industry, and U.S. national security. This is a major turning point for the American steel industry and the entire American manufacturing sector. The company issued a statement expressing "sincere respect" for Trump's wise decision.
Nippon Steel Corporation stated that it will complete its investment plan in the U.S. within the next 14 months and promised large-scale investments in factories in Pennsylvania and Indiana to promote employment and technological upgrades.
On the same day, US Steel Corporation also thanked President Trump for his leadership role, saying that this move is not only beneficial for thousands of steelworkers but also holds great significance for the future of this iconic American enterprise. The company praised Trump as an industrialist who understands the best ways to benefit American manufacturing. The company pointed out that with the gradual implementation of investments over the next four years, through close cooperation with Nippon Steel Corporation, not only will many new technologies be introduced, but tens of thousands of new positions will be added, leading to the rebirth of US Steel Corporation.
The market also responded positively, with the stock price of US Steel Corporation surging throughout the day, closing at $52.01, a sharp increase of 21.24% from the previous day, reaching the highest level since 2011.
Meanwhile, Michael McCarthy, president of the American Steel Workers Union, who had consistently strongly opposed the acquisition plan, also released a statement regarding the modified message on the same day: Without more detailed information, he cannot make predictions. However, he believes that this plan still poses the risk of unemployment for thousands of steelworkers, and this fact remains unchanged.
This unexpected turnaround in the acquisition plan is clearly related to the rapidly dimming economic outlook due to the imposition of tariffs. The Trump administration urgently needs to bring even a glimmer of hope to the market.
US Steel Corporation's factory in Clairton, Pennsylvania. Yomiuri Shimbun
Currently, the U.S. economy can be described as having frequent yellow lights and occasional red lights. For example, before May 12, not a single ship was docked for operations at the largest port on the west coast of the U.S., Los Angeles Port. Although表面上 Trump appears unconcerned, he is actually filled with anxiety. Without economic growth, prosperity cannot be maintained, prices continue to rise, and unemployment remains high. How can such a government gain voter support?
In the first quarter of this year, the U.S. GDP growth rate was -0.3%, while the previous expectation was 0.3%. This is the lowest value since the second quarter of 2022 and the first negative value. Trump surprisingly attributed responsibility to the previous Biden administration for this. In fact, 78% of the time in the first quarter was under Trump's administration. Such shifting of blame is obviously unjustified. Even if American consumers temporarily overlook Trump, according to current trends, the second quarter may see even worse numbers. Then Trump will have no scapegoat to blame anymore. Next year, the U.S. will hold midterm elections. If the economy does not improve, victory will be like a flower in the mirror or water in the moonlight.
Last year, during his campaign, Trump confidently promised that if he were re-elected, he would bring about "extraordinary prosperity."
However, less than two months after taking office, Trump refused to rule out the possibility of an economic recession. For someone who entered the White House using the promise of "making America affordable again" and exploiting widespread public dissatisfaction with the economy, this change in tone and message is astonishing.
At the time he made these remarks, the stock market plummeted, and business leaders were frightened by the uncertainty brought about by his tariffs. Even some Republicans who feared retaliation for opposing Trump began to express concern about his tariff policies.
By many standards, the economic situation Trump inherited was good: moderate unemployment, moderate growth, and inflation rates still higher than the Federal Reserve's expectations but significantly reduced. However, the uncertainty injected into the prospects by Trump's policies starkly contrasts with his extravagant promises during the campaign.
"We will usher in a new era of rapid income growth," Trump said at a rally last October. "Wealth will soar, millions of new jobs will be created, and a thriving middle class will emerge. We will witness unprecedented prosperity."
The vow to create economic prosperity has come into conflict with Trump's most frequently used economic tool—tariffs—at least for now. During his campaign, he also promised to impose tariffs, as economists warned, the main factor causing uncertainty in the U.S. economic outlook. Predictions from JPMorgan Chase and Goldman Sachs both indicated that due to Trump's tariffs, the likelihood of a recession occurring this year has significantly increased.
To date, the president seems to be trying to lower expectations. When Maria Bartiromo of Fox News asked Trump whether he expected an economic recession this year, he declined to answer.
"I hate predicting things like this," he said. "There will be a transition period because what we're doing is very significant. We are bringing wealth back to America. That is a big deal. And there will be a transition period, which takes a bit of time. I still think that is good for us."
Currently, the whole world is closely watching the upcoming tariff policies of the White House. As the "reciprocal tariff" moratorium period (90 days) approaches the halfway mark, the Trump administration has gone further, raising tariffs on the EU to an extremely high level of 50%, fully demonstrating Trump's frustration. His policy is to target those who dare to confront him, exerting extreme pressure on them to see who dares to follow suit! This move shocked the EU and deeply surprised the entire international community, leaving everyone unable to predict what other tricks or schemes Trump might come up with next.
In the face of domestic and foreign criticism, Trump urgently needs to find a way to improve the domestic public opinion environment. Since the Committee on Foreign Investment in the United States determined that Nippon Steel's acquisition case does not pose a risk to the U.S. supply chain, and the U.S. desperately needs genuine foreign investment, why not give this acquisition case a break? Although this may provoke opposition from the American steel union, compared to preserving this iconic American enterprise, Trump need not worry too much about these opposing voices.
As for whether this will have a positive impact on the prospects of American manufacturing, it is difficult to judge at this stage. However, this move clearly shows that the U.S. has taken an important step in attracting foreign investment and strengthening local manufacturing, opening up new prospects for industrial cooperation between the U.S. and Japan. It may also bring positive factors to the ongoing tariff negotiations with Japan, which is worth continued attention.
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Original source: https://www.toutiao.com/article/7508181510344786484/
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