Trump declares war on Nippon Steel’s U.S. Steel takeover, sparking stock market tumble

The escalating battle over Nippon Steel’s proposed $14 billion acquisition of United States Steel Corporation (U.S. Steel) reached a critical juncture as Donald Trump vowed to block the deal. The former president, in a fiery statement on his social media platform, reiterated his opposition to what he described as a threat to national security and the domestic steel industry. The announcement triggered a sharp 7% drop in U.S. Steel’s stock during premarket trading, deepening investor concerns over the Nippon Steel acquisition.

Trump’s stance aligns with his “America First” policy, prioritizing domestic manufacturing capabilities and the ownership of critical industries. He emphasized his intent to use executive measures, including tariffs and tax incentives, to bolster U.S. Steel without foreign intervention. This echoes sentiments previously raised by the Biden administration, which extended the federal security review of the Nippon Steel acquisition through the Committee on Foreign Investment in the United States (CFIUS). While the committee’s verdict remains pending, the political and regulatory scrutiny has intensified, casting uncertainty over the transaction.

The deal has stirred debate among stakeholders. Labour advocates, including the United Steelworkers union, have voiced apprehension over foreign ownership, arguing that it could jeopardize unionized steelworkers jobs and weaken established labor agreements. At the same time, U.S. Steel’s leadership, led by CEO David Burritt, has warned that rejecting the acquisition could have dire consequences, including plant closures and potential relocation of the company’s Pittsburgh headquarters.

Economic analysts highlight the precarious state of the American steel industry. U.S. Steel has faced mounting challenges amid global competition, with its stock declining over 15% this year. Nippon Steel, Japan’s largest steel producer, has proposed a $2.7 billion investment to modernize U.S. Steel’s unionized facilities and pledged to safeguard existing jobs. The company argued that the acquisition could strengthen U.S. manufacturing capabilities and bolster national security through enhanced domestic production.

Despite these assurances, Trump and his allies remain unconvinced. Experts suggest his opposition is rooted in broader concerns about foreign investment risks and influence over critical sectors of the economy. A trade policy analyst indicated that Trump’s rhetoric is designed to appeal to his political base, which often perceives foreign acquisitions as a threat to U.S. sovereignty.

The ramifications of this deal extend beyond the American steel industry. Analysts warn that blocking the acquisition could discourage foreign investment in the United States, a move that may have unintended economic consequences. Meanwhile, proponents argue that preserving domestic manufacturing capabilities is essential for safeguarding strategic assets.

Nippon Steel has expressed a desire to finalize the deal before Trump potentially returns to office. However, the ongoing CFIUS review and political opposition suggest that the timeline remains uncertain. Market observers will closely monitor developments as the outcome will likely set a precedent for future foreign acquisitions in the United States.