President Donald Trump has said he will be doubling tariffs on imported steel and aluminum to 50% starting June 4, 2025. Most steel-related stocks have surged, but U.S. Steel (NYSE:X) is yet to join in. In fact, it is down 0.9% as of writing.
This company has been at the center of a lot of drama since Japan’s Nippon Steel has been trying to buy it, but that purchase was blocked by the Biden administration. Even Trump wasn’t for it, but he has changed his stance significantly in recent weeks. The deal is now expected to pass through.
Trump called it a “blockbuster” deal as Nippon Steel will be investing $14 billion on top of the purchase price as part of the deal. Rust Belt Republicans lobbied hard for that flip because their districts rely on mill jobs and iron ore supply chains.
Regardless, there’s a lot going on in the background. An Axios piece came out recently that implies negotiations are still ongoing and points out that Trump said that he was yet to fully make up his mind, the same day he called it a blockbuster deal. Until everything is concrete, investors will treat the $55 offered by Nippon Steel as tentative.
It is more likely than not that the deal will go through. It has Trump’s blessings, and there’s quite a lot of support behind it.
If you buy X stock now and the deal goes through, you will make about $1.65 per share. However, I don’t think that’s worth it. If there’s a sudden last-minute change or delay, X stock could easily shave off 5% to 10% of its value within hours.
A full position only makes sense for investors who specialize in merger spreads and who are comfortable betting on both political timing and trade litigation. Everyone else should wait for clarity on the Nippon review or a dip that prices in a broken deal and lower tariffs.
