Investors understood Trump’s remarks as Nippon Steel receiving his endorsement for its acquisition of US Steel.
On Friday, following Trump’s comments on Truth Social, US Steel shares surged by 21%. Investors took Trump’s statement to mean that he approved Nippon Steel’s long-planned takeover, which represented the final major hurdle for the deal.
“This will be a partnership between United States Steel and Nippon Steel, resulting in at least 70,000 jobs and a $14 Billion addition to the US Economy,” Trump stated on Truth Social.
According to Reuters, Nippon Steel stated that if the merger is approved, they plan to invest $14 billion in US Steel’s operations, including up to $4 billion in a new steel mill. The majority of this investment will happen over the next 14 months.
Trump also announced that he would hold a rally at US Steel in Pittsburgh next Friday.
Nippon Steel praised Trump’s decision to approve the “partnership.” The White House did not immediately comment on the announcement.
Following Trump’s statement, US Steel’s stock price continued to climb, reaching $54, close to Nippon Steel’s $55-per-share offer made in late 2023. Although no specifics were disclosed, investors expressed confidence that the terms will be similar to those agreed upon in 2023 and that US Steel will no longer be publicly traded, with investors set to receive a cash payout for their shares.
Politically Controversial
The deal has been highly anticipated on Wall Street and has become politically charged, with concerns that foreign ownership could lead to job losses in Pennsylvania, where US Steel is headquartered. It played a role in the recent election that brought Trump back to the White House.
Pennsylvania Senator Dave McCormick, who referred to the deal as a “partnership,” declared it a “huge victory for America and the US Steel Corporation,” stating it will protect over 11,000 Pennsylvania jobs and support the creation of at least 14,000 more.
The agreement pieces fell into place swiftly. The Committee on Foreign Investment in the US (CFIUS), which assesses deals for national security risks, informed the White House that these risks could be mitigated, moving the decision to Trump’s desk.
Following an earlier review conducted by CFIUS, former President Joe Biden blocked the deal in January due to national security concerns.
The companies sued, arguing they did not receive a fair review process. The Biden White House refuted this claim.
The companies contended that Biden opposed the agreement to gain support from the United Steelworkers union in Pennsylvania during the reelection campaign. The Biden administration defended the review as critical for safeguarding national security, infrastructure, and supply chains.
Trump initially opposed the deal as well, insisting the company should be owned and operated in the US.
As of Thursday, the United Steelworkers were against the deal and encouraged Trump to block it, despite Nippon Steel’s pledge of $14 billion in investment.
For investors, including notable hedge funds, the news comes as a relief after over a year of awaiting a resolution. “There were lots of high-fives today,” stated a recent investor, indicating that they comprehended Donald Trump’s mindset and leveraged it to their advantage.
Investors believe that Trump gained ground after the investment commitment was increased.
“This deal guarantees that Pittsburgh will continue to be a center of steelmaking for generations,” remarked another investor.
