Description: US President Donald Trump has ordered another national security review on Japanese Nippon Steel’s ambitions to merge with US Steel. The review would undertake previous and current merger options and possible risks on US national security as US Steel is one of the most important industrial assets in the country. News regarding the review broke shortly after Trump finished a phone call with Japanese Prime Minister Shigeru Ishiba, where they allegedly talked about the potential merger. US Steel and Nippon’s merger was initially blocked by former President Joe Biden who cited national security concerns, while Trump reconfirmed his predecessor’s decision. The development could unlock one of the largest business mergers in industrial modern history and would facilitate closer economic and trade ties between the US and Japan, which has reiterated its position and willingness to renegotiate the tariff issue.
Impact: The merger saga between US and Nippon Steel could be revitalized, as the final decision now lays with the Committee on Foreign Investment in the US (CFIUS). Nippon became the first company to be blocked by CFIUS from acquiring American assets in a period of time when the US was in a political transition. Potential merger between the industrial giants could provide easement of relations between the US and Japan which could further facilitate cooperation on the tariff issue. In volatile market and economic conditions, such transaction has geopolitical ramifications as it could be used by Japan to gain some strategic advantage and bring the US to the negotiating fold. Closer ties between the countries are also essential for countering China in the Indo – Pacific as Japan is under constant threat of Chinese military posturing in the region.