The acquisition of U.S. Steel by Japan’s Nippon Steel for $14.9 billion in June 2025 represents one of the most complex and unusual international M&A transactions.
Nippon Steel: Benefits and Constraints
As a result of the deal, Nippon Steel acquired a major foreign asset, which, despite operational challenges, provides access to the American market (protected by Donald Trump’s 50% tariffs on steel imports) and advanced steel assets and technologies. When supplemented with Japanese technological developments and sound management decisions, U.S. Steel will represent a valuable addition to Nippon Steel’s portfolio. This acquisition makes the firm one of the world’s largest steel producers by capacity. Nippon Steel projects that U.S. Steel will make a substantial contribution to the firm’s profits: 80 billion yen ($543 million) in 2025, 150 billion yen ($1.02 billion) in 2026, and increasing to 250 billion yen ($1.70 billion) by 2028.
At the same time, Nippon Steel has taken on enormous financial obligations totaling approximately $26 billion (initial purchase price of $14.9 billion plus an additional $11 billion in supplementary investments through 2028). The Japanese firm must fulfill these obligations regardless of market conditions and profitability. Furthermore, the acquisition agreement contains “golden share” provisions. These provide Donald Trump (and after his term ends, the Treasury and Commerce departments) with veto power over major operational decisions (plant closures, headquarters relocation, etc.). The Trump administration’s intervention in September of this year regarding U.S. Steel’s decision to close its Granite City plant demonstrated the practical application of the “golden share” and showed that the U.S. government (at least under the Trump administration) will actively exercise its newly acquired power. All of this constrains Nippon Steel’s freedom of action and, consequently, the firm’s opportunities to enhance profitability.
U.S. Steel: Sacrificing Autonomy for Survival
U.S. Steel’s participation in this transaction was driven by existential necessity. The company faced infrastructure obsolescence and was losing in competition to smaller firms using mini-mills. The partnership with Nippon Steel provided the influx of capital and technology necessary for growth and development that domestic sources could not (and were not inclined to) provide.
However, the price of this financial lifeline was the firm’s loss of autonomy. The “golden share” agreement subjected U.S. Steel to extensive government oversight and control. Under the Trump administration, asset sales and personnel changes will be blocked, as these are matters of principle for the current president, with the Granite City plant intervention case serving as proof. This means the firm will need to spend a significant portion of its expenditures on government lobbying to contest decisions unfavorable to it. This redistribution of cash flows will negatively impact the firm’s profitability.
The Japanese Government: A Face-Saving Deal
At first glance, it appears that the Japanese government achieved a diplomatic victory by securing approval for the Nippon Steel-U.S. Steel deal, which was previously blocked by the Joe Biden administration. This acquisition became an important economic and symbolic step in Japan’s expansion into foreign markets. However, this victory, as the author of this article believes, is significant primarily because it allowed the Japanese government to save face against the backdrop of other, less favorable agreements with the U.S. president.
In July, Donald Trump and Shigeru Ishiba concluded a deal whereby the U.S. imposed 15% tariffs on goods from Japan, while Japan committed to invest $550 billion in American projects and increase purchases of American agricultural products, commercial aircraft, and military equipment. The U.S. Steel acquisition agreement was intended to induce the Japanese side to sign the deal on these listed (and extremely unfavorable) terms.
Concluding such a deal leads to strengthening Japan’s dependence on the United States. The Japanese side did not want to damage relations with its key ally, but the decision to acquiesce to Trump’s unfair demands may limit Japan’s opportunities for strategic hedging in an increasingly multipolar world. The U.S. Steel case is also important in this context because the “golden share” precedent may encourage other countries to use similar mechanisms in cases of M&A involving their firms and Japanese companies, potentially undermining Japan’s global economic expansion strategy.
The U.S. Government: Precedent for a New State Control Mechanism
From the above description, it can be seen that the Trump administration, which took control of the deal between two steel companies, won more than all other parties. Trump succeeded in attracting Japanese capital, imposing high tariffs, and strengthening Japan’s dependence on the United States. Moreover, using the protection of an important American manufacturer’s interests as a pretext, Trump strengthened control over this same manufacturer through the “golden share.”
Nevertheless, the agreement faced significant domestic opposition from those dissatisfied with foreign ownership of an iconic American company. Although Trump regulates the situation through the “golden share,” public skepticism (particularly among the United Steelworkers union) regarding Japanese ownership of U.S. Steel persists, creating political risks. There is also another camp of dissatisfied parties. Those who advocate for free trade and enterprise in the U.S. criticize the “golden share” as a precedent for government intervention that could become the norm. The U.S. government has strengthened control over firms before, especially in cases of their strategic importance to the country. However, the state typically purchased a share of the firm’s stock, i.e., incurred expenses to establish control. Trump’s measure is unprecedented for the U.S., as control is established without any government expenditure: the “golden share” is not an actual share of stock but a conventional designation for an agreement with the government. The proliferation of such a mechanism, expanding federal power, may have broader implications for free market principles and private property rights.
Conclusion
If we consider the conclusion of the U.S. Steel acquisition deal by Japan’s Nippon Steel in the context of the trade deal between Donald Trump and Shigeru Ishiba, the primary beneficiary was the U.S. government. The other players gained something as well but will now have to cope with new risks. No less important is the application of the “golden share” mechanism. It is not entirely new (it is common, for example, in Brazil and the United Kingdom), but it has not been applied in the U.S. and Japan. There is a possibility that other players will begin to use this mechanism; however, it is difficult to say how effectively and justifiably its application works. Observing the U.S. Steel and Nippon Steel case will help approach an answer to this question.
Daniil Romanenko, Japanologist, researcher from the Institute of Oriental Studies of the Russian Academy of Sciences
Follow new articles on our Telegram channel
