Japan Faces Trump 2.0 / Trump: No Majority Stake in U.S. Steel for Nippon Steel; Deal May Hinge on Right Terminology for ‘Acquisition’

The Yomiuri Shimbun

2:00 JST, February 12, 2025

This is the second installment in a series of articles that will explore the background of the recent Japan-U.S. summit meeting and the future of the two countries’ relations.

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In his meeting with U.S. President Donald Trump last week, Prime Minister Shigeru Ishiba presented a new approach for Nippon Steel Corp.’s plan to acquire U.S. Steel Corp., saying it would not be an acquisition but an investment.

“[Nippon Steel] is considering a bold proposal that is completely different from anything in the past, something that would create a win-win situation for Japan and the United States,” Chief Cabinet Secretary Yoshimasa Hayashi told reporters on Monday.

Nippon Steel planned to acquire all shares of U.S. Steel and make it a wholly owned subsidy. But the administration of former U.S. President Joe Biden banned the acquisition plan. According to informed sources, the parties concerned started work in January to materialize a proposal in an effort to break the impasse at the meeting between Ishiba and Trump. The Economy, Trade and Industry Ministry and the Foreign Ministry reportedly played roles in coordinating the proposal.

It is believed that the move to avoid using the term “acquisition” as much as possible gradually formed between the government and Nippon Steel as the issue became certain to be a topic at the summit meeting.

Nippon Steel had dropped a hint. At a press conference on the firm’s latest earnings, Vice Chairman Takahiro Mori, who was in charge of negotiations in the United States, said, “There is no option of changing the scheme.” But in answering questions concerning the acquisition plan, he used the term “merger” (“gappei” in Japanese) instead of “acquisition” (“baishu” in Japanese).

“Since the start of this year, the word ‘baishu’ disappeared from internal company documents,” said a source close to Nippon Steel. “The step was taken to smoothly advance negotiations by showing that Nippon Steel and U.S. Steel are on equal terms.”

Yet, a government source said that what “investment” would actually mean is “still fluid.”

Meanwhile, Trump said Sunday that Nippon Steel will not acquire a majority stake in U.S. Steel. Prime Minister Ishiba also said in an interview with The Yomiuri Shimbun that the government has “no intention of interfering” in the private company’s business. He added, however, that it is possible that the company will review its plan of making U.S. Steel a wholly owned subsidiary.

“We find it significant that President Trump, who has consistently rejected the acquisition plan, did not express an objection,” said a government source. “Nippon Steel will make an approach that is different from the ones it has taken in previous acquisitions.” Nippon Steel may be asked to invest a significantly larger amount and lower its stake in the firm at the same time.

But if Nippon Steel cannot have a majority stake in U.S. Steel, it cannot acquire management rights, meaning that it will become unable to make investments as it wishes and there will be concerns that Nippon Steel’s technology could be leaked outside.

Trump has indicated his intention to meet Nippon Steel management in person. From Nippon Steel, Chairman Eiji Hashimoto is expected to attend the meeting, and Vice Chairman Mori plans to travel to the United States as early as this week to coordinate the unusual meeting between a Japanese firm’s top executive and a U.S. president.