Donald Trump raises steel tariffs, saying US steel will remain US-controlled

The President said the move would bolster domestic steel industry and protect US jobs, with billions in expanded investments in deal with Nippon Steel.

US President Donald Trump said he would double tariffs on imported steel, a move he said would bolster the domestic industry and protect US jobs.

Trump announced the higher duties at a rally near Pittsburgh promoting a $US14 billion ($21.8bn) deal between Tokyo-based Nippon Steel and US Steel, which the President said would ensure US control over the storied steelmaker.

“There’s never been a $US14 billion investment in the history of the steel industry in the United States,” Trump said Friday evening before several hundred steelworkers in hard hats and a backdrop of giant steel coils in a cavernous US Steel mill. “Most importantly, US Steel will continue to be controlled by the USA.”

Trump said tariffs on imported steel would increase to 50 per cent from the current 25 per cent. Global prices for steel have been falling in recent months, making it easier for steel buyers to pay the existing duty on imports and still acquire steel at a discount to domestic prices.

A US Steel plant in Pennsylvania. Picture: Justin Merriman/Bloomberg News/WSJ

The higher tariff also will give domestic steelmakers more pricing power as steel demand and prices weaken after a run-up earlier this year.

Trump has hailed the planned deal between Nippon Steel and US Steel as a “partnership”. The Tokyo-based steelmaker for the past year and a half has been pursuing a $US14 billion takeover of Pittsburgh-based US Steel, in recent months pledging additional investment in the company’s plants to help win Trump’s backing.

Many details remain unclear about a deal that could reshape the American steel sector – and could involve direct government oversight of US Steel’s operations. Since last week, Nippon Steel and US Steel have remained tight-lipped about the next steps.

On Friday, US Steel chief executive David Burritt and Nippon Steel vice chairman Takahiro Mori took the stage before Trump and said the deal wouldn’t have happened without the President’s intervention.

“You have placed your trust in us, and we will do our part in the years ahead to earn that trust,” Mori said. “Now, we will start to make the massive investments that will transform US Steel.”

“Because of him, US Steel stays mined, melted and made in America,” Burritt said.

US Steel shareholders have said they haven’t received notice of any changes to the terms of Nippon Steel’s $US14.1 billion offer, suggesting to some that the original deal approved by shareholders last April will be completed. Nippon Steel’s offer of $US55 a share for US Steel expires on June 18.

Trump hasn’t said when Nippon Steel would be able to close the purchase. US Steel, which employs 14,000 workers in North America, will keep its headquarters in Pittsburgh and retain the US Steel name, Trump has said, describing Nippon Steel as a “partial owner.” Trump said Friday that Nippon would invest $US2.2 billion in US Steel’s Mon Valley Works outside Pittsburgh, and $US7 billion on modernising operations in Indiana, Alabama, Arkansas and Minnesota. Under the deal, the company’s blast furnaces will operate for the next 10 years and workers would receive a $US5000 bonus.

For Nippon Steel, Trump’s Friday rally is set to mark a stunning reversal from January, when former President Joe Biden blocked the deal on national-security grounds. Trump too had opposed the sale of US Steel, frequently bashing the deal last year on the campaign trail.

After starting his second term, he restarted talks with Nippon Steel executives, with an emphasis on upping the company’s investment commitments beyond the $US2.7 billion it had pledged under the Biden administration. Trump ordered a new national security review of the deal in April.

Nippon Steel’s expanded investment plan, described last week by sources familiar with matter, includes major equipment upgrades at US Steel plants in Gary, Ind., and near Pittsburgh, as well as at steel mills in Alabama and Arkansas and iron ore mines in Minnesota. The bulk of the work would be completed over 14 months, according to Trump.

Nippon Steel also pledged to build a new steel mill, at a location yet to be announced.

Leadership at the United Steelworkers, the union that represents US Steel employees, has strongly opposed a sale to Nippon Steel. The union this week said it remains sceptical of Trump’s arrangement, because of a lack of details about investments and clarity on whether Nippon Steel is buying the entire company.

“Our core concerns about Nippon Steel -–a foreign-owned corporation with a documented history of violating US trade laws – remain as strong and valid today as ever,” the union said earlier this week.

Nippon Steel has said it would not interfere with US trade policies and wouldn’t import steel from its Asian mills as a substitute for US Steel-produced steel.

US Steel workers for years have fretted about diminishing investment in the company’s older mills, especially the three plants that make up Mon Valley Works near Pittsburgh. US Steel had threatened to halt production at Mon Valley if the company couldn’t sell to Nippon Steel, saying it couldn’t afford the necessary upgrades.

Kim Beveridge, 64, a US Steel mobile crane operator attending the rally, said those threats and the company’s cancellation of more than $US1 billion of planned improvements at the Mon Valley in 2021 were like a “slap in the face” to many workers. He said he welcomes Nippon Steel’s promised investments.

Beveridge said he worries about the lack of details about the deal – “Who’s going to be calling the shots?” he asked – but said he trusts Trump’s business acumen and believes the deal will benefit workers.

Chris Kelly, the mayor of West Mifflin, Pa. – home to the Irvin Works, the site of Friday’s rally – said everyone he’s talking to locally is upbeat about the news, despite not knowing the full details.

“I’m taking it as positive,” Kelly said. “They’re having a big rally. They’re not having a big rally to say we lost our jobs.”

Dow Jones Newswires