The "Japan-U.S. Steel Alliance"? The Battle Over Steel Heats Up

In the 1960s, U.S. Steel was once the world's largest steel manufacturer, until it was surpassed in the early 1970s by the then-new Nippon Steel. Entering the 21st century, Nippon Steel (formed through the merger of Nippon Steel and Sumitomo Metal Industries) was overtaken by Chinese enterprises. Japanese media report that Japan and the U.S. are now seeking to revitalize their industrial might through a "Japan-U.S. Steel Alliance," with Nippon Steel aiming to return to the ranks of the world’s top manufacturers.

Nippon Steel states that the U.S. annual steel demand stands at approximately 89 million tons, but its self-sufficiency rate is only 55%, leaving significant room for growth in this market. *Nikkei Asia* notes that on the one hand, the U.S. is a promising market with strong demand for high-performance steel in automobiles, where Nippon Steel’s technological edge can secure profit margins. On the other hand, the U.S. recently raised steel import tariffs from 25% to 50%, further incentivizing localized production.

However, analysts point out that the U.S. decision to impose 50% tariffs on steel and aluminum imports from all partners except the U.K., while protecting domestic steelmakers, may fuel inflation, suppress construction investment and new car sales, and could ultimately lead to a collapse in U.S. steel demand.

Building a "Steel Triangle"  

"With the acquisition complete, Nippon Steel has finally placed the last piece in its global expansion strategy," *Nikkei Asia* stated. Nippon Steel seeks to build a "steel triangle" growth system encompassing Japan, India, and the U.S., targeting demand for high-end products in these markets. Previously, it advanced blast furnace construction in western India and acquired land in southern India for a plant with 7 million tons of annual capacity. This localized production model aims to circumvent tariff risks and maintain price competitiveness. Acquiring U.S. Steel completes CEO Eiji Hashimoto’s vision for a "new-era global network." According to Kyodo News, since U.S. Steel owns expandable steel plants in Slovakia, Nippon Steel’s international supply chain will take shape rapidly.

Steel as a Geopolitical Asset

"Steel is not just a material; it is a cornerstone of national security, infrastructure, and economic sovereignty," noted Italy’s Eunews. Nippon Steel’s acquisition of U.S. Steel signals a shift toward deeper industrial cooperation between allies, potentially forging a new force in the steel industry.

According to World Steel Association estimates, Nippon Steel’s 2024 crude steel output was 43.64 million tons (4th globally), while U.S. Steel produced 14.18 million tons (29th globally). Combined, their output approaches that of China’s Ansteel Group, the world’s third-largest producer.

Liang Huaixin, a researcher at the Institute of National Security and Governance at the University of International Business and Economics, told reporters: "On one hand, the acquisition helps Nippon Steel enhance the completeness of its steel industry chain, especially by leveraging U.S. Steel to penetrate U.S. and European markets. On the other, this could be seen as an attempt by Japan and the U.S. to build a steel alliance, further promoting ‘de-Sinicization’ of the steel supply chain."   

Japanese media reported that Eiji Hashimoto stated on the 19th: "From the perspective of counterbalancing China, Nippon Steel shares the same goals as the U.S. government, which seeks to revitalize manufacturing."

Eunews added that China’s dominance in global steel production "is no accident. China accounts for over half of the world’s steel output. This gives it enormous influence in the industry, affecting not only supply chains but also rules, standards, and industrial norms."

China’s Enduring Influence

Zuo Geng, Chief Expert at China Minmetals’ China Metal Mining Economy Research Institute, recently stated in a report that Japan’s steel industry, represented by Nippon Steel, is seeking new directions to counter challenges posed by China’s steel exports. "The global steel landscape will undergo significant changes amid major-power rivalry. Though steel may be cold, the games unfolding around it are white-hot." The report added, "There is reason to believe that for a considerable time to come, China’s steel industry will continue to lead global development."

Japanese media analysis suggests that whether Nippon Steel can regain its former stature while maintaining a degree of "management autonomy" will be key to measuring the value of the "Japan-U.S. Steel Alliance."