Trump Orders CFIUS to Reassess U.S. Steel Acquisition by Nippon Steel

On Monday, former U.S. President Donald Trump directed the Committee on Foreign Investment in the United States (CFIUS) to re-examine the proposed acquisition of U.S. Steel by Japan's Nippon Steel. This directive comes after the deal was previously halted by the administration of then-President Joe Biden, who cited concerns over national security and the potential threat to critical supply chains posed by foreign control of one of the largest steel producers in the U.S.

According to a statement released by the White House, Trump instructed CFIUS to reassess the acquisition proposal. The committee has been given 45 days to submit recommendations on whether the measures proposed by U.S. Steel and Nippon Steel are sufficient to mitigate any national security risks associated with the deal. This re-evaluation is seen as a significant development, as it could potentially pave the way for the acquisition to proceed, despite the previous administration's objections.

Trump's decision to reopen the review process has been met with optimism by some market participants, who view it as a potential indication that the deal may be approved. This optimism is based on the belief that the new review could result in a different outcome compared to the previous administration's decision to block the transaction. The market's reaction highlights the importance of regulatory approvals in shaping the future of corporate transactions, particularly those involving strategic assets and national security concerns.

It is worth noting that Trump had previously expressed opposition to the deal, but his stance appeared to soften during a meeting with Japanese Prime Minister Fumio Kishida in February. During that meeting, Trump indicated that Japan would make significant investments in U.S. Steel rather than acquiring the company outright. This shift in Trump's position may have contributed to the decision to re-evaluate the acquisition proposal, as it suggests a willingness to consider alternative arrangements that could address national security concerns while still allowing for Japanese investment in the U.S. steel industry.

Biden's administration had blocked the $14.9 billion deal in January, citing concerns that foreign control of a major U.S. steel producer could pose a threat to national security. The administration argued that the deal could disrupt critical supply chains and potentially compromise the country's ability to respond to national security threats. The decision to block the deal was seen as a significant setback for Nippon Steel, which had been seeking to expand its presence in the U.S. market through the acquisition of U.S. Steel.

The re-evaluation of the acquisition proposal by CFIUS is expected to be a thorough and comprehensive process, as the committee will need to carefully consider the potential implications of the deal for national security and the U.S. steel industry. The outcome of the review will depend on a range of factors, including the measures proposed by U.S. Steel and Nippon Steel to address national security concerns, as well as the broader geopolitical context in which the deal is being considered. Regardless of the outcome, the re-evaluation process is likely to have significant implications for the future of the U.S. steel industry and the broader relationship between the U.S. and Japan.