Trump puts U.S. Steel cart before the horse
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President Trump on Friday spoke for nearly an hour to workers at a U.S. Steel plant near Pittsburgh, crediting himself with saving their jobs by negotiating a "partnership" between their employer and Japan's Nippon Steel.
- Later that evening in Washington, D.C., he told reporters that he's neither seen nor approved a final deal.
Why it matters: Trump's decision to put the cart before the horse may have given Nippon some last-minute leverage.
- Neither U.S. Steel nor Nippon has made any statement about a new agreement, and the White House hasn't responded to Axios' requests for clarification.
Catch up quick: Nippon Steel in late 2023 agreed to acquire U.S. Steel for $14.9 billion. The deal was opposed by both Trump and former President Biden, who blocked it early this year on national security grounds.
- Trump ordered a new national security review by CFIUS, after which Nippon sweetened the pot by promising $14 billion of investment into U.S. Steel and agreed to let the business be led and overseen by U.S. citizens.
- CFIUS submitted its assessment to Trump on May 21, and he has until June 6 to make a final decision. The merger is scheduled to close by June 18.
Zoom in: It feels like someone is hiding the ball.
- For example, how could Trump not have seen the deal after receiving an assessment of that deal from CFIUS? If it's because negotiations are still ongoing, wouldn't that mean the CFIUS review was incomplete?
- If there is a revised deal, isn't U.S. Steel legally obligated to disclose details to shareholders? Or is it just betting that Trump's SEC won't object? Same goes for the NYSE continuing to let U.S. Steel stock continue to trade, even though there clearly is a large universe of people who have at least some knowledge of what's really going on — as evidenced by Trump's shoutouts during his speech.
Dictionary: There's also some strange rhetorical games being played. Trump noted how the U.S. would maintain "control" of U.S. Steel, but that may be different than who "owns" U.S. Steel.
- And it's the latter that really matters, because the owner ultimately controls the pursestrings.
The big picture: Nippon knows that Trump has boxed himself in with steelworkers, who are aware of U.S. Steel's warnings of layoffs were the Nippon merger to fail.
- This may be mitigated a bit by Trump's decision on Friday to double steel tariffs to 50% — thus incentivizing Nippon to have a stateside producer — but Nippon is unlikely to base significant decisions on a wildly moving target.
The bottom line: Everyone involved a deal, to the point of premature exclamation.
