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Trump holds rally at U.S. Steel plant in political swing

state

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President has until next week to formally approve merger

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Tie-up with Japanese company faced headwinds

(Adds steel tariff hike and Trump quote, paragraphs 7-9)

By Jeff Mason, Alexandra Alper and Trevor Hunnicutt

WEST MIFFLIN, Pennsylvania, May 30 (Reuters) - U.S.

President Donald Trump on Friday lauded an "agreement" between

Nippon Steel ( NISTF ) and U.S. Steel at a political rally

but stopped short of clarifying whether he planned to approve

the companies' diplomatically sensitive merger.

On a Pittsburgh, Pennsylvania-area stage decorated with

signs celebrating "American steel," Trump declared the American

steel company would remain American, while extolling its new

Japanese partner. It is unclear whether he approves of a deal

giving Nippon ownership, as sought by the firms, or whether he

had formally given the merger the green light.

"We're here today to celebrate a blockbuster agreement

that will ensure this storied American company stays an American

company," Trump told more than 1,600 people, including hard

hat-wearing workers. "You're going to stay an American company,

you know that, right? But we're going to have a great partner."

The Japanese firm's planned acquisition of U.S. Steel,

initially floated in 2023, divided the politically important

state of Pennsylvania and its heavily unionized blue-collar

workforce, and introduced tension into the normally friendly

relations between Tokyo and Washington.

Proponents of the transaction had hoped Trump's visit

would end a tumultuous 18-month effort by Nippon Steel ( NISTF )

to buy the iconic American company, beset by opposition from

union leadership and two national security reviews.

Trump said the company would be "controlled by the USA,"

that no layoffs or outsourcing would occur, and that Nippon

would invest billions of dollars to modernize U.S. steel mills

to increase production.

He also announced a plan, set to be implemented next

week,

to hike tariffs

on imported steel from 25% to 50%.

But Trump's remarks on Friday shed no further light on the

contours of a deal that he would approve or whether a formal

green light was in the offing.

"I have to tell you about Nippon, they kept asking me

over and I kept rejecting - no way," Trump said, adding "I'm

going to be watching over it, that it's going to be great."

The White House and the companies have not responded to

requests for comment on the status of deal talks.

Trump announced the rally and appeared to endorse the merger

last Friday in a social media post, sending U.S. Steel's share

price up over 20% as investors bet he would soon give it the go

ahead.

On Sunday, he sowed doubt, describing the deal to reporters

not as the full takeover Nippon is seeking but as an investment

with "partial ownership," and control residing in the United

States.

U.S. Steel is headquartered in Pennsylvania, which

symbolized both the one-time strength and the decline of U.S.

manufacturing power as the Rust Belt's steel plants and

factories lost business to international rivals.

The closely contested state is a major prize in presidential

elections.

"We would not be here today without President Trump, who has

secured the company's future by approving our partnership," said

Nippon Vice-Chair Takahiro Mori, who spoke before Trump.

But in a sign of the many open questions that remain,

Japan's top trade negotiator, Ryosei Akazawa, told reporters on

Friday he could not yet comment on the tie-up.

"I am aware of the various reports and posts by President

Trump on social media. However, there has not yet been an

official announcement from the U.S. government," Akazawa, in

Washington for tariff negotiations, said at a briefing at the

Japanese Embassy in Washington.

Trump technically has until Thursday to decide whether to

formally approve or scuttle the deal, after the Committee on

Foreign Investment in the U.S. last week completed a second

review of the merger. But the timeline could slip.

The road to Friday's rally has been a bumpy one.

Nippon Steel ( NISTF ) offered $14.9 billion for U.S. Steel in

December 2023, seeking to capitalize on an expected ramp up in

steel purchases, thanks to the bipartisan infrastructure law.

But the tie-up faced headwinds from the start, with both

then-President Joe Biden and Trump asserting U.S. Steel should

remain American-owned as they sought to woo voters in

Pennsylvania ahead of the November presidential elections.

Following the previous review, Biden blocked the deal in

January on national security grounds. The companies sued,

arguing they did not receive a fair review process, a charge the

Biden White House disputed.

The steel giants saw a new opportunity in the Trump

administration, which opened a fresh 45-day national security

review into the proposed merger last month.

But Trump's public comments, ranging from welcoming a simple

"investment" in U.S. Steel by the Japanese firm to suggesting a

minority stake for Nippon Steel ( NISTF ), did little to shore up investor

confidence.

Reuters reported last week that Nippon Steel ( NISTF ) had floated

plans to invest $14 billion in U.S. Steel's operations including

up to $4 billion in a new steel mill if the Trump administration

green lights its merger bid.