One of the president’s more memorable lines in the last 10 years has been that we’ll win so much we “may even get tired of winning.”
I can confirm that while the first is proving true, the second never will.
In true Art of the Deal form this week, President Trump announced that the Committee on Foreign Investment in the United States (CFIUS) will be re-opening its review of the merger between U.S. Steel and Nippon Steel. The previous review under the Biden administration was plagued with political maneuvering before the 2024 election and conflicts of interests by the sole objector of the deal – Biden’s trade representative.
This is a sign of hope that the deal could still go through and we might be seeing a massive investment in the vital domestic steel industry.
Almost two years ago now, Tokyo-based Nippon Steel made an offer of $15 billion to buy Pennsylvania-based U.S. Steel. This was more than double the offer made by rival Cleveland-Cliffs Steel, based in neighboring Ohio. The deal languished under the Biden administration, which had directed CFIUS to reject the deal as part of an unsuccessful 11th hour bid to win swing voters in Pennsylvania.
Although Trump had made similar rumblings on the campaign trail about the deal, he has shown himself to be much more open to a marriage with the Japanese company than a (shudder) President Harris would have been. In March, the administration extended deadlines in a lawsuit to allow the two companies time to negotiate. After the CFIUS announcement Monday, the administration asked the appeals court to pause the entire litigation until June while CFIUS conducts their review.
On the news of the president’s announcement, shares in U.S. Steel stock shot up nearly 14 percent – though given this week’s volatility, short-term gains or losses shouldn’t be factored into long-term planning.
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What should be factored into long-term planning is the fundamentals of a merger between Nippon and U.S. Steel. In 2024, Nippon Steel was ranked the No. 4 largest producer, with an output of almost 44 million tons whereas U.S. Steel was a distant No. 24 with almost 16 million. Combine the two and you get 60 million tons, which would surpass China’s Ansteel Group, which currently sits in the No. 3 spot at 56 million tons annually.
If the goal is to outperform China financially, then helping Japan accomplishes this. Our No. 6 trade partner in the world, Japan, is the only regional rival who can compete with China in any meaningful way. Virtually everyone in East Asia would rather deal with America than a corrupt, hostile, and demographically doomed China. If the Trump administration blesses this deal, it will be a strong sign that America is open for business with not just Japan but Korea, Vietnam, Thailand, Malaysia, Singapore, and so on.
The way to outmaneuver China is to leverage regional rivalries. It’s the same thing Henry Kissinger did 50 years ago to outmaneuver Russia, sparking the old Vulcan Proverb, “Only Nixon could go to China.”
Following the announcement of a new review, left-wing activist investor group Ancora announced they were backing down on their campaign against the proposed deal.
Before backing down, Ancora’s campaign against the deal had been criticized for some blatant conflicts of interest. In addition to its weak financial return offer to shareholders, they demanded new board seats for people with direct ties to their competitor Cleveland Cliffs, and ordered the end of what they called “vengeful and frivolous litigation” against the backdoor deals that have slowed the better deal.
Now while we’re not wizards of high finance here, one doesn’t have to be to see that the offer from Nippon Steel – which has put twice as much on the table as Cleveland-Cliffs – is better for U.S. Steel, its employees, stakeholders, the country, and the world.
This confidence has been on display from both Republican and Democrat leaders in Pennsylvania. Even though the Keystone State isn’t in the national spotlight as much now that the presidential election is over, its enduring economic health is of vital importance to the people who live there. And once the market starts to stabilize after this week’s aforementioned volatility, a deal between U.S. Steel and Nippon Steel will do the most good for both sides.
And we can all remain un-tired of winning.
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