Why Nippon’s $15B U.S. Steel Takeover Is Faltering?

In a dramatic policy pivot, President Donald Trump signed an executive order on June 13, 2025, clearing the path for Nippon Steel’s acquisition of U.S. Steel. Trump’s approval, however, is conditional: the Japanese steel giant must comply with a newly drafted national security agreement (NSA) submitted by the U.S. government. The order follows months of legal and political wrangling and repositions the proposed $15 billion transaction as a model for foreign investment under strategic oversight. Trump emphasized that the deal, once finalized, would preserve American jobs, require over $11 billion in new U.S.-based investments by 2028, and ensure U.S. oversight through a special governance structure. The partnership now appears poised to close, pending final execution of the agreement.

The “Golden Share” and American Oversight

At the heart of the NSA is a rarely used governance mechanism: a “golden share” that gives the U.S. government veto power over key corporate decisions. While Nippon Steel will still acquire full ownership of U.S. Steel, the golden share will allow federal authorities to block actions they deem threatening to national security, such as plant closures, production shifts, or supply chain disruptions. This mechanism has precedent abroad but is virtually unprecedented in major U.S. industrial mergers. Trump described it as providing “total control,” even acknowledging concerns over how future administrations might wield such power. Although the fine print of the agreement remains undisclosed, stakeholders anticipate enhanced safeguards for both strategic resources and domestic employment.

Strategic Win for U.S.-Japan Relations

The approval of the deal is being widely interpreted as a geopolitical reset and a diplomatic win for U.S.–Japan relations. After months of diplomatic tension and concerns from Tokyo about rising protectionism, Trump’s decision sends a signal that allied foreign investment remains welcome, with conditions. Japanese policymakers had repeatedly voiced concern that blocking a deal from a close U.S. ally could have long-term repercussions on bilateral trade, defense, and investment cooperation. The deal also sets a powerful precedent for how foreign companies can invest in sensitive U.S. sectors like steel, shipbuilding, and semiconductors. With potential ripple effects for other strategic industries, the outcome may reshape how national security reviews are handled going forward, opening the door for carefully conditioned global partnerships.

Why the Deal Took 18 Months to Finalize

What began in December 2023 as a high-profile acquisition quickly turned into an 18-month geopolitical standoff. Delays stemmed from national security concerns, election-year politics, and legal battles. The CFIUS review stalled in late 2024, forcing President Biden to block the deal on January 3, 2025—a move critics called politically motivated due to its impact on swing-state jobs. Nippon Steel and U.S. Steel filed lawsuits, alleging the process was biased and anticompetitive. The deal remained frozen until President Trump took office in January 2025. Though initially opposed, Trump reversed course after discussions with Japanese officials, lawmakers, and unions.

He ordered a renewed CFIUS review in April. By May, the panel recommended approval, conditional on a strict national security agreement. Trump finalized the deal in June 2025, ending a prolonged and politically charged process.

From Offer to Uproar: The Beginning

In December 2023, Nippon Steel, Japan's largest steelmaker, made headlines by offering $14.9 billion to acquire U.S. Steel, one of America’s most storied industrial companies. The bid included a 40% premium on U.S. Steel’s share price and was initially seen as a potential rescue for the struggling American company. However, what began as a straightforward acquisition quickly turned into a political and economic battleground, sparking debates on national security, economic sovereignty, and the future of the global steel industry. 

Recent developments have only intensified the issue: President Biden blocked the merger last week, citing risks to national security and critical supply chains. In response, Nippon Steel and U.S. Steel have filed lawsuits alleging constitutional violations, political interference, and anticompetitive practices by the United Steelworkers union and rival bidder Cleveland-Cliffs. Japan’s Prime Minister has called the decision “incomprehensible,” warning it could harm future investments. With bipartisan opposition, falling stock prices, and thousands of U.S. jobs on the line, the dispute now threatens not only U.S.-Japan economic ties but also the future of foreign investment in critical American industries.

Latest Twist in the Nippon-US Steel Deal

The US government's recent decision to extend its national security review of Nippon Steel’s $15bn bid for US Steel has added a surprising twist to an already contentious deal. Despite opposition from both President Biden and Vice President Harris, the Committee on Foreign Investment in the US (Cfius) granted a 90-day extension, potentially pushing the final call until after the November 5th election. With US Steel based in Pennsylvania, a key battleground state, this acquisition has taken on political significance, with both Democratic and Republican candidates courting voters by pledging to keep US Steel domestically owned. Biden’s stance, backed by the United Steelworkers Union, signals a protectionist approach, while Nippon Steel’s negotiators scramble to address national security concerns raised by Cfius. With the clock ticking and political tensions running high, the deal’s fate is now entangled in both US and Japanese election dynamics, leaving the steel industry—and thousands of jobs—on edge. Now let's inspect all the relevant aspects. 

The Political Backlash

The acquisition announcement triggered immediate resistance in the U.S., fueled by concerns over national security and economic independence. The United Steelworkers (USW) union, which represents a large portion of U.S. Steel's workforce, quickly opposed the deal, warning of potential threats to American jobs and industries. The timing of the announcement, just before a critical U.S. presidential election, only added fuel to the fire. 

Political leaders from both sides voiced their disapproval. Former President Donald Trump, who had already emerged as a frontrunner for the Republican nomination, declared he would block the deal if elected. President Joe Biden, known for his close ties with labor unions, subtly indicated his opposition, which became more apparent when the USW endorsed his re-election bid in March 2024. 

The Impact of Poor Communication 

One of Nippon Steel's significant missteps was its failure to engage with USW before announcing the deal. Unlike Cleveland-Cliffs, a domestic competitor that had previously sought to acquire U.S. Steel and secured union support by consulting with union leaders, Nippon Steel proceeded without prior communication. This lack of engagement was seen as dismissive and led to immediate union resistance. 

The USW argued that the acquisition violated a pre-existing agreement with U.S. Steel, which required the union to be informed of any potential change in company control. Beyond procedural issues, the union raised concerns about the implications of a foreign corporation owning a major American steel producer, citing potential risks to national security and job stability. 

Election Dynamics 

The U.S. presidential election added another layer of complexity to the deal. Key battleground states like Pennsylvania, where the USW has considerable influence, saw the deal become a central issue, with candidates on both sides leveraging it to gain voter support. 

Meanwhile, the Committee on Foreign Investment in the United States (CFIUS), an interagency panel responsible for reviewing the national security implications of foreign investments, began examining Nippon Steel’s bid. The outcome of this review, combined with the political opposition, has placed the deal in a precarious position, with its future likely dependent on the results of the 2024 election. 

Nippon Steel’s Strategic Adjustments 

Faced with mounting opposition, Nippon Steel intensified its lobbying efforts in the U.S. The company hired former U.S. Secretary of State Mike Pompeo as an advisor to strengthen its case that the acquisition would benefit both countries. It also took steps to address regulatory concerns, including divesting from a long-standing joint venture in China, which could have raised red flags for U.S. regulators. 

Additionally, Nippon Steel committed an extra $1.4 billion investment in U.S. Steel’s facilities to demonstrate its long-term commitment to the American market. The company emphasized that the merger would create a stronger competitor against China, which currently dominates the global steel industry. Despite these efforts, the deal remains uncertain, with its fate tied to ongoing political developments in the U.S. 

The Arbitration Process: A Critical Moment 

In August 2024, the USW’s grievances against the deal were heard by an arbitration panel in Philadelphia. The panel’s decision, expected by the end of September, will play a crucial role in determining whether the deal can proceed or if further adjustments will be necessary. The union has contested several of Nippon Steel’s commitments, arguing that the promises made regarding job security and plant operations are insufficient and conditional. 

This arbitration process represents a critical juncture for both Nippon Steel and the USW. For the union, it is an opportunity to secure maximum concessions before the election, using its strong position. For Nippon Steel, it is a chance to find a way forward in what has become a politically charged environment. 

A Complex Game with Global Implications 

Nearly a year in, Nippon Steel’s bid for U.S. Steel has turned into a high-stakes battle involving politics, economics, and international relations. Initially a strategic move to expand market reach, the deal now tests U.S.-Japanese ties and the balance between business and politics. With the U.S. presidential election ahead, the outcome remains uncertain, potentially setting a new standard for future cross-border acquisitions. 

For accounting, tax, and finance professionals, this case illustrates the need to handle complex global transactions by understanding political and regulatory landscapes. Nippon Steel’s adjustments, like increased lobbying, underscore the importance of agility and strategic thinking in managing international deals amidst evolving conditions. Stay tuned for more such updates, and don't forget to subscribe to our weekly newsletter!