Nippon Steel says tariffs boost importance of U.S. Steel deal
Subscriber Benefit
As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe Now
Nippon Steel’s $14.1 billion bid for United States Steel Corp. is more important than ever as tariffs and rising Chinese exports reshape the global market for the metal, according to a top executive at the Japanese firm.
Vice Chairman Takahiro Mori said that owning U.S. Steel would allow Nippon Steel to become an “insider” in the world’s most valuable market for high-grade steel, shielding it from tariffs and unlocking long-term growth tied to the U.S. population and economic expansion.
Nippon Steel is holding out hope the deal can be rescued after former President Joe Biden blocked it in the final days of his administration, following a review by the Committee on Foreign Investment in the US. His successor Donald Trump has stated his opposition to U.S. Steel being acquired by a foreign company and his administration is poised to make a final decision within the next few weeks.
“The return on investment is increasingly compelling,” Mori said in an interview, dismissing concerns that Nippon Steel is overpaying for the US company. “We don’t make unprofitable investments.”
In the event that Trump approves the proposed deal, Nippon Steel has bolstered its pledge to invest in the U.S. The committee that’s reviewing the deal is expected to make its recommendation this week. Nippon Steel told investors on a call last week that they didn’t expect any formal announcement from the White House until the June 5 statutory deadline for Trump to make a decision.
Meanwhile, Japan’s chief negotiator Ryosei Akazawa is preparing for a third round of talks on US tariffs in Washington this week, with little sign of progress from the first two meetings.
Global steelmakers are grappling with a surge in Chinese exports amid weakening demand and consistent production, creating what Mori described as structural overcapacity. Approximately 30 trillion yen ($207 billion) in profits have already “evaporated” across the steel industry as Chinese exports lowered profit margins, according to Mori. He warned things could even get worse as a declining population will cut China’s domestic demand further.