Trump order allows Japan-based Nippon to invest in US Steel despite security concerns

President Donald Trump has paved the way for Japan-based Nippon Steel to invest in U.S. steel, reversing his own opposition to the deal. 

Trump signed an executive order Friday allowing for a Nippon-U.S. Steel "partnership," as long as Nippon adheres to a "national security agreement" from the federal government. 

Nippon-U.S. Steel ‘partnership’

What we know:

U.S. Steel and Nippon Steel said in a joint statement that the agreement stipulates that approximately $11 billion in new investments will be made by 2028 and includes giving the U.S. government a "golden share" — essentially veto power to ensure the country's national security interests are protected.

The companies have completed a U.S. Department of Justice review and received all necessary regulatory approvals, the statement from both companies said. 

What we don't know:

Trump's order didn’t outline the terms of the national security agreement, and the companies offered few details on how the golden share would work and what investments would be made.

What they're saying:

"We thank President Trump and his Administration for their bold leadership and strong support for our historic partnership," the two companies said. "This partnership will bring a massive investment that will support our communities and families for generations to come. We look forward to putting our commitments into action to make American steelmaking and manufacturing great again."

The United States Steel Corp. Clairton Coke Works facility in Clairton, Pennsylvania, US, on Monday, Sept. 9, 2024. Photographer: Justin Merriman/Bloomberg via Getty Images

Trump said Thursday that he would as president have "total control" of what U.S. Steel did as part of the investment.

"We have a golden share, which I control," said Trump, although it was unclear what he meant by suggesting that the federal government would determine what U.S. Steel does as a company.

Trump said then that the deal would preserve "51% ownership by Americans."

Biden opposed Nippon-US Steel merger

The backstory:

The Japan-based steelmaker had been offering nearly $15 billion to purchase the Pittsburgh-based U.S. Steel in a merger that had been delayed on national security concerns starting during Joe Biden’s presidency. Trump opposed the purchase while campaigning for the White House, yet he expressed optimism in working out an arrangement once in office.

The proposed merger had been under review by the Committee on Foreign Investment in the United States, or CFIUS, during the Trump and Biden administrations.

National security concerns

Dig deeper:

The order signed Friday by Trump said the CFIUS review provided "credible evidence" that Nippon Steel "might take action that threatens to impair the national security of the United States," but such risks might be "adequately mitigated" by approving the proposed national security agreement.

The order doesn't detail the perceived national security risk and only provides a timeline for the national security agreement. The White House declined to provide details on the terms of the agreement.

What's next:

Trump reserves the authority to issue further actions regarding the investment as part of the order he signed on Friday.

The Source: This report includes information from The Associated Press. 

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