US Steel Shares Tumble As Trump Threatens To Block Nippon Buyout: Retail Sentiment Tanks

Shares of U.S. Steel Corp. dropped nearly 8% at Tuesday’s open after President-elect Donald Trump, yet again, voiced strong opposition to its potential buyout by Japan’s Nippon Steel.

The deal, announced in December 2023, aims for U.S. Steel to become a wholly owned subsidiary of Nippon Steel while retaining its name and headquarters in Pittsburgh, Pennsylvania.

However, the transaction has become a flashpoint in U.S. politics, drawing bipartisan scrutiny over national security and economic implications.

Trump said on Monday that his economic plan would ensure that U.S. Steel remained strong through a series of “tax incentives and tariffs” without the promised investments from Nippon Steel.

President-elect Donald Trump's tweet around U.S. Steel-Nippon buyout on Dec. 2 | Source: @realDonaldTrump/TruthSocial

Despite the political pushback, Nippon Steel remains determined to proceed with the acquisition. The company responded by saying that the merger would benefit both American and Japanese industries by strengthening supply chains and enhancing national security.

Nippon Steel insists that U.S. Steel will continue to be managed by American executives and that there will be no layoffs or plant closures due to the acquisition.

U.S. Steel's Sentiment and Message Volume on Dec 2 as of 9:40 a.m. ET | Source: Stocktwits

Retail sentiment around the stock flipped to ‘bearish’ (27/100), the lowest recorded level this year, from ‘extremely bullish’ a day ago as chatter surged to ‘extremely high’ (90/100).

The buyout took center stage during the general election with the narrative of an iconic American company in a key swing state. President Joe Biden has said U.S. Steel should remain American-owned, while Trump has said he would block the transaction if he won.

During his campaign, Trump emphasized his intent to restore U.S. Steel's strength through tax incentives and tariffs, arguing that the acquisition poses risks to national security and American jobs.

After Trump's election win last month, Nippon Steel’s top executives reportedly flew to Pennsylvania to build local support for the company’s $15 billion takeover.

Biden's administration has also expressed concerns about the deal's implications for national security, leading to a review by the Committee on Foreign Investment in the United States (CFIUS). This review is crucial as it assesses foreign acquisitions for potential threats to U.S. interests.

That decision gave the two steel makers until the end of December to convince the U.S. government that the transaction did not threaten national security, amid concerns from both Democrats and Republicans.

U.S. Steel’s stock has fallen approximately 16% year-to-date, with most of the drop occurring in March following President Biden’s announcement that he intended to block the merger.

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