U.S. Steel Stock Soars on Acquisition Hopes and Trump Optimism

U.S. Steel (X) shares surged on Wednesday, January 13, 2025, as investors reacted to news of potential acquisitions and optimism surrounding a possible Trump reelection. The stock rallied 8.2% on the day, while Cleveland Cliffs (CLF) and Steel Dynamics (STLD) also saw gains of 20.1% and 13.8%, respectively. The rally can be attributed to several factors, including potential acquisitions, optimism surrounding Trump's policies, and the ongoing review of the Nippon Steel deal.



One of the primary reasons for the surge in U.S. Steel stock was a report by CNBC indicating that Cleveland-Cliffs (CLF) is teaming up with rival Nucor (NUE) to potentially bid for U.S. Steel (X). This news has sparked optimism among investors, leading to a jump in U.S. Steel's stock price. The potential acquisition could lead to industry consolidation, increased market share for the larger players, and potentially improved operational efficiency and economies of scale.

Optimism Surrounding Trump's Reelection

Investors appear to believe that the reelection of Donald Trump will be beneficial for steel stocks due to his pro-tariff and pro-business policies. This optimism has contributed to the rally in U.S. Steel stock. Trump has long been a proponent of helping U.S.-based manufacturing industries through the use of tariffs on imports. Additionally, during this campaign, Trump also proposed lowering the corporate tax rate to 15%, down from the 21% to which it was already lowered during his last administration. The combination of even higher tariffs on steel imports could help raise prices to U.S. consumers despite the industry currently being mired in a bit of a slump. Automotive-steel demand soared during and after the pandemic, only to then fall into the current down cycle after the boom. So, tariffs could help elevate steel prices, and therefore industry profits, with a lower corporate tax rate helping, too -- as long as steel demand eventually restabilizes.

Potential Acquisition by Nippon Steel

The ongoing negotiations and potential acquisition of U.S. Steel by Nippon Steel (JP:5401) have also contributed to the stock's rally. The meeting between Pennsylvania Governor Josh Shapiro and Nippon Steel Vice President Takahiro Mori to discuss the deal's impact on U.S. Steel's Pittsburgh plants and trade unions has been seen as a positive sign by investors. Nippon Steel has promised not to import steel slabs from its overseas mills into the U.S. or reduce domestic production capabilities. In a letter to United Steelworkers (USW) members at two key U.S. Steel operations, Mori emphasized these commitments while addressing concerns raised by union leaders. The letter also promised that there would be no layoffs under Nippon Steel’s ownership, which has been the main reason why the unions have opposed the deal to begin with. In addition, he outlined plans to invest approximately $2.7 billion to upgrade U.S. Steel facilities across the United States. Mori noted that these investments are crucial in order to strengthen domestic production and improve operations.



In conclusion, the recent rally in U.S. Steel stock can be attributed to several factors, including potential acquisitions, optimism surrounding Trump's policies, and the ongoing review of the Nippon Steel deal. While the long-term financial performance of the company may still face challenges, the recent surge in stock price reflects investors' optimism about the potential benefits of these developments. As the steel industry continues to evolve, investors will need to monitor the progress of these acquisitions and the broader economic landscape to make informed decisions about their investments.