Nippon Steel’s Acquisition of U.S. Steel: A Global Response to Chinese Competition (AI Translation)

【周刊提前读】日铁300亿美元并购美国钢铁 全球应战中企竞争

The acquisition of U.S. Steel (NYSE: X) by Japan’s largest steelmaker, Nippon Steel Corporation (Nippon Steel, TYO: 5401), represents a landmark deal in the global steel industry. After a protracted, 18-month process involving initial rejection, legal action against the U.S. government, a change in the U.S. presidency, renewed negotiations, and two national security reviews, the deal finally concluded on June 18, 2025, following the signing of a National Security Agreement (NSA) with the U.S. government. The acquisition price was $55 per share, amounting to $14.9 billion (about RMB 109.1 billion), a 40% premium over the previous closing price, with Nippon Steel paying $14.1 billion in cash and making U.S. Steel its wholly-owned subsidiary[para. 1][para. 2]. The total investment, however, approaches $30 billion, as Nippon Steel committed to a further $14 billion in new U.S. investments, $11 billion of which must be made before 2028[para. 3].

U.S. Steel, once the world’s largest steel producer and founded by Andrew Carnegie in 1901, has declined in global ranking, producing 14.18 million tons of crude steel in 2024 (29th globally), while Nippon Steel ranked fourth with 43.64 million tons. Combined, their crude steel output is 57.82 million tons, still fourth globally but close to China’s Ansteel (59.55 million tons). China dominates the steel industry, with six of the top-ten global producers by output led by Baowu Group at 130 million tons[para. 4].

Nippon Steel’s ambition, led by CEO Eiji Hashimoto, is to capitalize on America’s steel demand and population growth. Hashimoto targets annual output of 86 million tons in phase one and 100 million tons in phase two, aiming to become the world’s second-largest steelmaker[para. 5]. The deal takes advantage of U.S. protectionist policies, with Trump having raised steel and aluminum tariffs to 50% in May 2025[para. 6]. UBS Global Research highlights this as a strategic shift for Nippon Steel, emphasizing localization, high-value products, and energy-saving technology[para. 7].

Both companies faced slumping profits in 2024: Nippon Steel’s net profit fell 36% to $2.3 billion; U.S. Steel’s dropped 57% to $384 million. Nippon Steel looks to raise its business profit from under ¥700 billion to over ¥1 trillion post-acquisition[para. 8].

The deal was initially blocked by President Biden on national security grounds in January 2025, but resurrected under President Trump, who demanded—and received—a “golden share” for the U.S. government, giving it veto power over key company decisions. In exchange, Nippon Steel secured 100% control of U.S. Steel’s ordinary shares and committed to keeping its headquarters, name, and employment stable in the U.S. over the next few years, creating over 100,000 jobs with at least $11 billion in new investment by 2028[para. 12].

Resentment came mainly from the United Steelworkers union, citing threats to jobs and strategic capacity, but most stakeholders in U.S. Steel’s host states supported the deal. In April 2024, 98% of U.S. Steel shareholders approved the acquisition[para. 14][para. 15].

The strategic significance lies in securing advanced steel capacity vital for U.S. infrastructure, defense, and emerging sectors such as AI, renewable energy, and shipbuilding[para. 19]. Similar nationalist themes have played out in Europe with the U.K.’s emergency nationalization of British Steel in April 2025[para. 20].

Facing fierce global competition, particularly from Chinese and Korean producers, Nippon Steel’s overseas expansion is both a necessity and an opportunity to tap higher-margin U.S. markets and offset domestic stagnation and aging demographics[para. 22][para. 23][para. 24].

However, the financial burden is exceptional: S&P Global Ratings warns that the acquisition, funded partly by bridge loans, will raise Nippon Steel’s debt to equity ratio to 80% by March 2026. Meeting the $11 billion investment pledge by 2028 and offsetting higher U.S. production and labor costs remain serious challenges[para. 46].

In summary, Nippon Steel’s acquisition of U.S. Steel was enabled by political changes—Donald Trump’s victory in the 2024 U.S. presidential election—and conditioned on maintaining U.S. government oversight to protect national security and jobs, while affording Nippon Steel the opportunity for strategic expansion and technological synergy in a highly protected, profitable market[para. 49].