Fresh Review of Nippon Steel’s Acquisition Plan: Make Best Decision for Revival of U.S. Manufacturing Industry

Editorial

15:38 JST, April 9, 2025

The U.S. government’s imposition of reciprocal tariffs has sent tremors through the world’s stock markets. In the midst of this, U.S. President Donald Trump made a new move regarding a large-scale acquisition plan between Japan and the United States.

If Trump intends to seriously aim for the return of the manufacturing industry to his country, he should demonstrate the best possible judgment, regardless of what has happened so far.

Trump has ordered the U.S. government’s Committee on Foreign Investment in the United States (CFIUS) to review the planned acquisition of U.S. Steel Corp. by Nippon Steel Corp. He directed the committee to review whether it is possible to mitigate national security risks and report its findings within 45 days.

Former U.S. President Joe Biden issued an order in January prohibiting the acquisition plan. Nonetheless, it is an extremely unusual development for CFIUS to reexamine the plan. Some believe that the plan may now have a chance to move forward.

U.S. Steel can be said to be an icon of the U.S. manufacturing sector. What is desirable for its revitalization? The Trump administration should proceed with a reasonable review.

The acquisition plan is for Nippon Steel to invest about ¥2 trillion in U.S. Steel to make it a wholly owned subsidiary. The Japanese company plans to invest ¥400 billion to upgrade U.S. Steel’s aging facilities, among other purposes. After the acquisition, it is expected to emerge as the world’s third-largest producer of crude steel.

The focus of the review will probably be on the ratio of Nippon Steel’s investment in U.S. Steel and to what extent Nippon Steel will build up its investment.

Trump has so far indicated that he would approve the acquisition bid if Nippon Steel does not hold a majority stake in the U.S. company. However, Nippon Steel has not changed its policy of making the U.S. firm a wholly owned subsidiary.

Under what kind of framework would the U.S. administration accept that U.S. Steel was still a U.S. company? It is important for Nippon Steel to find a way to overcome this situation.

The Trump administration believes that delegating the production of steel, which is indispensable mainly for producing military supplies such as tanks and aircraft, to foreign manufacturers would pose a security risk.

If Nippon Steel provides its own advanced technology and increases the competitiveness of U.S. Steel, it will surely help strengthen the U.S. production base. Close cooperation with a company from Japan, a U.S. ally, would reduce security risks for the United States.

The global steel market is flooded with inexpensive products from Chinese companies. If leading Japanese and U.S. manufacturers join forces to counter Chinese companies, it would be a symbolic example of economic cooperation.

Trump is attempting to bring the manufacturing industry back home with his high tariff policy, which has created turmoil around the world. But this acquisition plan itself would be the right way to revive the U.S. manufacturing industry.

(From The Yomiuri Shimbun, April 9, 2025)