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Overview



For the three months ended March 31, 2022, the Company delivered record first
quarter performance. The Flat-rolled segment's performance reflected the impact
of fixed price contracts that reset significantly higher for 2022 which offset
lower sales volumes. In addition, the Company commenced construction of a pig
iron facility at Gary Works during the three months ended March 31, 2022. The
Mini Mill segment continues to deliver significant gross margin performance. In
the U. S. Steel Europe segment, strong performance was primarily the result of
favorable pricing partially offset by unfavorable raw material and energy costs.
In Tubular, we are well-positioned to profitably serve the U.S. energy market
resurgence. Our Electric Arc Furnace (EAF) and Tubular operations in Fairfield
as well as our suite of proprietary connections offer comprehensive solutions
for our customers.

In February 2022, Russia invaded Ukraine and active conflict continues in the
country. The war in Ukraine will likely continue to cause disruption and
instability in Russia, Ukraine, and the markets in which we operate. The Company
is constantly monitoring the situation for impacts and risks to the business and
is implementing risk mitigating strategies where possible.

As a result of the invasion, governments around the world, including the European Union (EU) and the United States, have enacted sanctions against Russia and Russian interests. We are complying with all applicable sanctions that impact our business.



United States Steel Europe (USSE) purchases certain raw materials from sources
that procure supply from Russia, including natural gas, iron ore and coal. Since
the onset of the war, and before, USSE has been building its inventory of iron
ore and coal and procuring them through alternate sources. Current levels of
iron ore and coal are sufficient to serve customer demand in the second quarter.

With the EU prohibiting purchases of coal from suppliers in Russia, new
purchases of coal originating from Russia have stopped. The Company has built up
sufficient inventory on site or in-transit to meet current customer demand.
Efforts to secure alternate sources of supply are underway to continue meeting
demand.

Additionally, in response to sanctions, Russia has cut off supply of natural gas
to certain countries, including Poland and Bulgaria. We understand that the
country of Slovakia has natural gas storage levels that are sufficient to cover
Slovakia's consumption through the near term and expects additional shipments
from Russian sources of natural gas in the quarter. While not expected, if a
natural gas crisis is declared in Slovakia, operations at our USSE business
could be materially adversely impacted.

Future sanctions and responsive actions in the region remain uncertain, but we
continue to engage with various governmental authorities and suppliers as we
navigate the volatile situation. Our team in USSE has been engaged in
humanitarian efforts related to the war, and we continue to operate to support
the region's people and economy.

RESULTS OF OPERATIONS
U. S. Steel's results in the three months ended March 31, 2022 compared to the
same period in 2021 benefited from significantly improved business conditions in
each of the Company's four reportable segments:

•North American Flat-Rolled (Flat-Rolled): Flat-Rolled results improved
primarily due to higher steel prices across most consumer and manufacturing
industries, with both spot and contract prices higher than pricing in the prior
year period. The benefit of pricing was partially offset by lower volumes and
increased raw material costs.

•Mini Mill: Mini Mill results improved primarily due to higher steel prices
across most customer and manufacturing industries and from a full current
quarter of results compared to a partial prior quarter with the acquisition of
Big River Steel occurring on January 15, 2021. The benefit of higher net sales
was partially offset by higher costs, primarily related to raw materials.

•U. S. Steel Europe (USSE): USSE results improved primarily due to higher steel prices and stronger demand, which were partially offset by increased raw materials and energy costs.



•Tubular Products (Tubular): Tubular results improved primarily due to higher
steel demand and prices from the steady increase of drilling activity. These
benefits were partially offset by higher raw materials, operating costs and
continued high levels of imports.

Net sales by segment for the three months ended March 31, 2022 and 2021 are set forth in the following table:


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                                                            Three Months Ended March 31,
(Dollars in millions, excluding intersegment sales)          2022                     2021            % Change
Flat-Rolled Products (Flat-Rolled)                  $             2,954          $      2,272                 30  %
Mini Mill (a)                                                       718                   450                 60  %
U. S. Steel Europe (USSE)                                         1,251                   798                 57  %
Tubular Products (Tubular)                                          309                   134                131  %
   Total sales from reportable segments                           5,232                 3,654                 43  %
Other                                                                 2                    10                (80) %
Net sales                                           $             5,234          $      3,664                 43  %

(a) Mini Mill segment added after January 15, 2021 with the purchase of the remaining equity interest in Big River Steel.





Management's analysis of the percentage change in net sales for U. S. Steel's
reportable business segments for the three months ended March 31, 2022 versus
the three months ended March 31, 2021 is set forth in the following table:

                                                            Steel Products (a)
                                                                                                                                           Net
                               Volume           Price           Mix       Acquisition Variance       FX (b)           Other (c)           Change
Flat-Rolled                         (15) %           41  %           -  %                   n/a             -  %                3  %            29  %
Mini Mill (d)                        (8) %           41  %           -  %                 26  %             -  %                1  %            60  %
USSE                                  7  %           58  %           -  %                   n/a            (8) %                -  %            57  %
Tubular                              40  %           96  %          (3) %                   n/a             -  %               (2) %           131  %
(a) Excludes intersegment sales.
(b) Foreign currency translation effects.
(c) Primarily of sales of raw materials and coke making by-products.
(d) Mini Mill segment added after January 15, 2021 with the purchase of the remaining equity interest in Big River Steel.



Net sales for the three months ended March 31, 2022 compared to the same period
in 2021 were $5,234 million and $3,664 million, respectively.
•For the Flat-Rolled segment the increase in sales primarily resulted from
higher average realized prices ($480 per ton) across products, partially offset
by decreased shipments (385 thousand tons) across most products.
•For the Mini Mill segment the increase in sales primarily resulted from higher
realized prices ($405 per ton) across all products and increased shipments (60
thousand tons) as a result of the partial period of the Company's controlling
interest in Big River Steel in Q1 2021.
•For the USSE segment the increase in sales primarily resulted from higher
average realized prices ($361 per ton) across all products and increased
shipments (67 thousand tons) across most products.
•For the Tubular segment the increase in sales primarily resulted from higher
average realized prices ($977 per net ton) and increased shipments (39 thousand
tons).

Selling, general and administrative expenses



Selling, general and administrative expenses were $117 million in the three
months ended March 31, 2022 compared to $102 million in the three months ended
March 31, 2021. The increase in expenses in the three months ended March 31,
2022 versus the same period in 2021 primarily in our Mini Mill and USSE segments
from higher profit, variable or incentive based costs.

Restructuring and other charges

During the three months ended March 31, 2022 and March 31, 2021 the Company recorded restructuring and other charges of $17 million and $6 million. See Note 20 to the Condensed Consolidated Financial Statements for further details.

Operating configuration adjustments



The Company also adjusted its operating configuration in response to global
overcapacity, unfair trade practices and increases in domestic demand as a
result of tariffs on imports by indefinitely and temporarily idling and then
re-starting production at certain of its facilities. U. S. Steel will continue
to adjust its operating configuration in order to maximize its strategy of
providing Best for All profitable steel solutions for all stakeholders.

Idled Operations


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In December 2019, U. S. Steel announced that it would indefinitely idle a significant portion of Great Lakes Works due to market conditions including continued high levels of imports. The Company began idling the iron and steelmaking facilities in March 2020 and the hot strip mill rolling facility in June 2020.



In 2020, we took actions to adjust our footprint by idling certain operations to
better align production with customer demand and respond to the impacts from the
COVID-19 pandemic. The operations that were initially idled in 2020 and remained
idle as of March 31, 2022 included:

•Blast Furnace A at Granite City Works
•Lone Star Tubular Operations
•Lorain Tubular Operations
•Wheeling Machine Products coupling production facility at Hughes Springs, Texas

As of March 31, 2022 the carrying value of the idled fixed assets for facilities noted above was: Granite City Works Blast Furnace A, $60 million; Lone Star Tubular Operations, $5 million; Lorain Tubular Operations, $65 million and Wheeling Machine Product's production facility, immaterial.



In December 2021, the Company permanently idled the steelmaking operations at
its Great Lakes Works facility. The coil finishing process continues to operate
and the iron making process at Great Lakes Works remains idled for an indefinite
period of time. The carrying value of the remaining Great Lakes Works
indefinitely idled facilities was approximately $155 million as of March 31,
2022. In addition, in March 2022, the Company permanently idled the finishing
facilities at its East Chicago Tin operations, which had been idled on an
indefinite basis during 2019.

Earnings (loss) before interest and income taxes by segment is set forth in the following table:



                                                                          Three months ended March 31,              %
(Dollars in millions)                                                         2022                2021           Change
Flat-Rolled                                                          $                513    $        146             251  %
Mini Mill (a)                                                                         278             132             111  %
USSE                                                                                  264             105             151  %
Tubular                                                                                77             (29)            366  %
                  Total earnings from reportable segments                           1,132             354             220  %
Other                                                                                   7               8             (13) %
                  Segment earnings before interest and income taxes                 1,139             362             215  %

Items not allocated to segments:


                  Restructuring and other charges                                     (17)             (6)
                  Other charges, net                                                   (4)            (42)
                  Gains on asset sold and previously held
                  investments                                                           -             111

Total earnings before interest and income taxes                      $              1,118    $        425             163  %

(a) Mini Mill segment added after January 15, 2021 with the purchase of the remaining equity interest in Big River Steel.

Segment results for Flat-Rolled



                                                         Three months ended March 31,             %
                                                            2022               2021            Change

Earnings before interest and taxes ($ millions) $ 513 $ 

        146              251  %
Gross margin                                                     23   %             15   %            8  %
Raw steel production (mnt)                                    2,205              2,581              (15) %
Capability utilization                                           68   %             62   %            6  %
Steel shipments (mnt)                                         1,947              2,332              (17) %
Average realized steel price per ton                 $        1,368     $          888               54  %



The increase in Flat-Rolled results for the three months ended March 31, 2022
compared to the same period in 2021 was primarily due to:
•increased average realized prices, including mix (approximately $955 million)
•increased coke, iron ore and other non-steel sales (approximately $35 million)
•favorable equity investees income (approximately $30 million),
                                      -25-
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these changes were partially offset by:
•decreased shipments (approximately $95 million)
•higher raw material costs (approximately $165 million)
•higher energy costs (approximately $75 million)
•increased operating costs (approximately $185 million)
•higher other costs predominantly variable compensation (approximately $135
million).

Gross margin for the three months ended March 31, 2022 compared to the same period in 2021 increased primarily as a result of higher average realized prices.

Segment results for Mini Mill (a)



                                                           Three Months Ended March 31,                %
                                                             2022                 2021               Change
Earnings before interest and taxes ($ millions)      $           278                  132                  111  %
Gross margin                                                      46    %              36    %              10  %
Raw steel production (mnt)                                       601                  510                   18  %
Capability utilization                                            74    %              75    %              (1) %
Steel shipments (mnt)                                            507                  447                   13  %
Average realized steel price per ton                 $         1,372      $           967                   42  %

(a) Mini Mill segment added after January 15, 2021 with the purchase of the remaining equity interest in Big River Steel.




The increase in Mini Mill results for the three months ended March 31, 2022
compared to the same period in 2021 was primarily due to:
•increased average realized prices, including mix (approximately $245 million)
•increased shipments (approximately $25 million) as a result of the partial
period of the Company's controlling interest in Big River Steel in Q1 2021.
these changes were partially offset by:
•higher raw material costs (approximately $75 million)
•increased operating costs (approximately $15 million)
•higher energy costs (approximately $5 million)
•higher other costs, primarily variable compensation (approximately $30
million).

Gross margin for the three months ended March 31, 2022 compared to the same
period in 2021 increased primarily as a result of higher average realized
prices.

Segment results for USSE

                                                         Three Months Ended March 31,             %
                                                            2022               2021            Change

Earnings before interest and taxes ($ millions) $ 264 $ 

        105              151  %
Gross margin                                                     24   %             17   %            7  %
Raw steel production (mnt)                                    1,088              1,197               (9) %
Capability utilization                                           88   %             97   %           (9) %
Steel shipments (mnt)                                         1,110              1,043                6  %
Average realized steel price per ($/ton)             $        1,109     $          748               48  %
Average realized steel price per (€/ton)             €          988     €          620               59  %



The increase in USSE results for the three months ended March 31, 2022 compared
to the same period in 2021 was primarily due to:
•increased average realized prices, including mix (approximately $450 million)
•increased shipments (approximately $15 million),
these changes were partially offset by:
•higher raw material costs (approximately $145 million)
•increased operating costs (approximately $40 million)
•higher energy costs ($70 million)
•weakening of the Euro versus the U.S. dollar (approximately $20 million)
•higher other costs, primarily variable compensation (approximately $30
million).

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Gross margin for the three months ended March 31, 2022 compared to the same
period in 2021 increased primarily as a result of higher average realized prices
and sales volume.

Segment results for Tubular

                                                           Three Months Ended March 31,            %
                                                              2022              2021            Change
Earnings/(loss) before interest and taxes ($ millions) $           77     $          (29)            366  %
Gross margin                                                       29   %            (11) %           40  %
Raw steel production (mnt)                                        156                 93              68  %
Capability utilization                                             70   %             42  %           28  %
Steel shipments (mnt)                                             128                 89              44  %
Average realized steel price per ton                   $        2,349     $        1,372              71  %



The increase in Tubular results for the three months ended March 31, 2022 as
compared to the same period in 2021 occurred despite continued high levels of
imports and was primarily due to:
•increased average realized prices, including mix (approximately $100 million)
•increased shipments, including volume efficiencies (approximately $15 million)
•lower other costs (approximately $5 million),
these changes were partially offset by:
•higher raw material costs (approximately $5 million)
•increased operating costs (approximately $10 million).

Gross margin for the three months ended March 31, 2022 compared to the same periods in 2021 increased primarily as a result of higher average realized prices and sales volume, partially offset by increased raw material costs.

Net interest and other financial costs



                                                          Three Months Ended March 31,            %
(Dollars in millions)                                         2022              2021            Change
Interest expense                                       $            50    $          92               46  %
Interest income                                                     (1)              (1)               -  %
Loss on debt extinguishment                                          -              255              100  %
Other financial benefits                                             2               18              (89) %
Net periodic benefit income                                        (61)             (31)              97  %
Total net interest and other financial (benefits)
costs                                                  $           (10)   $         333              103  %



Net interest and other financial (benefits) costs improved in the three months
ended March 31, 2022 as compared to the same period last year from the absence
of current year debt retirement losses, reduced interest expense from a reduced
level of debt and an increase in net periodic benefit income, primarily due to
lower amortization of actuarial losses.

Income taxes



Income tax expense was $246 million in the three months ended March 31, 2022
compared to $1 million in the three months ended March 31, 2021, primarily
because the tax provision for the three months ended March 31, 2021 included a
full valuation allowance on domestic deferred tax assets.

Net earnings



Net earnings attributable to United States Steel Corporation were $882 million
in the three months ended March 31, 2022 compared to net earnings of $91 million
three months ended March 31, 2021. The changes primarily reflect the factors
discussed above.
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LIQUIDITY AND CAPITAL RESOURCES

Net Cash Provided by Operating Activities



Net cash provided by operating activities was $771 million for the three months
ended March 31, 2022 compared to net cash provided by operating activities of
$111 million in the same period in 2021. The period over period increase in cash
from operations was primarily due to stronger financial results and increased
taxes payable, partially offset by changes in working capital. Changes in
working capital can vary significantly depending on factors such as the timing
of inventory production and purchases, which is affected by the length of our
business cycles as well as our captive raw materials position, customer payments
of accounts receivable and payments to vendors in the regular course of
business.

As shown below our cash conversion cycle for the first quarter of 2022 increased
by five days as compared to the fourth quarter of 2021 primarily from increased
inventory days due to increase in raw material inventory.

Cash Conversion Cycle                                      First Quarter of 2022                Fourth Quarter of 2021
                                                        $ millions            Days            $ millions            Days
Accounts receivable, net (a)                              $2,415               39               $2,089               37

+ Inventories (b)                                         $2,663               57               $2,210               51

- Accounts Payable and Other Accrued Liabilities
(c)                                                       $3,122               68               $2,684               65
= Cash Conversion Cycle (d)                                                    28                                    23


(a) Calculated as Average Accounts Receivable, net divided by total Net Sales
multiplied by the number of days in the period.
(b) Calculated as Average Inventory divided by total Cost of Sales multiplied by
the number of days in the period.
(c) Calculated as Average Accounts Payable and Other Accrued Liabilities less
bank checks outstanding and other current liabilities divided by total Cost of
Sales multiplied by the number of days in the period.
(d) Calculated as Accounts Receivable Days plus Inventory Days less Accounts
Payable Days.

The cash conversion cycle is a non-generally accepted accounting principles
(non-GAAP) financial measure. We believe the cash conversion cycle is a useful
measure in providing investors with information regarding our cash management
performance and is a widely accepted measure of working capital management
efficiency. The cash conversion cycle should not be considered in isolation or
as an alternative to other GAAP metrics as an indicator of performance.

The last-in, first-out (LIFO) inventory method is the predominant method of inventory costing for our Flat-Rolled and Tubular segments. Based on the Company's latest internal forecasts and its inventory requirements, management does not believe there will be significant permanent LIFO liquidations that would impact earnings for the remainder of 2022.

Net Cash Used in Investing Activities



Net cash used in investing activities was $352 million or the three months ended
March 31, 2022 compared to net cash used in investing activities of $762 million
in the same period in 2021 primarily due to capital expenditures (as discussed
below).

Capital expenditures for the three months ended March 31, 2022, were $349
million, compared with $136 million in the same period in 2021. Flat-Rolled
capital expenditures were $117 million which includes spending for the
construction of a pig iron facility at Gary Works, hot strip mill upgrades at
Gary Works, mining equipment and other infrastructure, environmental, and
strategic projects. Mini Mill capital expenditures were $211 million and
included spending for continuous galvanizing line 2 and a non-grain oriented
line. Mini Mill segment capital expenditures also included $138 million of
capital expenditures for a new mill under construction in Osceola, Arkansas
(Mini Mill #2). USSE capital expenditures were $17 million and included spending
for blast furnace stove and rail bridge upgrades and various other projects.
Tubular capital expenditures were $4 million and included spending for Fairfield
EAF projects, ASU Plant and various other infrastructure, and environmental
projects.

Net Cash Used in Financing Activities



Net cash used in financing activities was $71 million for the three months ended
March 31, 2022 compared to net cash used in financing activities of $573 million
in the same period last year. The period over period increase in cash from
financing activities was primarily due to the absence of significant current
year debt repayments and current year proceeds from government grants, partially
offset by the absence of current year common stock issuances and the current
year repurchase of common stock.

Debt Financing



Certain of our credit facilities, including the Credit Facility Agreement, the
Big River Steel ABL Facility, the USSK Credit Agreement and the Export Credit
Agreement, contain standard terms and conditions including customary material
adverse
                                      -28-
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change clauses. If a material adverse change was to occur, our ability to fund future operating and capital requirements could be negatively impacted.



We may from time to time seek to retire or repurchase our outstanding long-term
debt through open market purchases, privately negotiated transactions, exchange
transactions, redemptions or otherwise. Such purchases or exchanges, if any,
will depend on prevailing market conditions, our liquidity requirements, and
other factors and may be commenced or suspended at any time. The amounts
involved may be material. See Note 15 to the Condensed Consolidated Financial
Statements for further details regarding U. S. Steel's debt.

We use surety bonds, trusts and letters of credit to provide financial assurance
for certain transactions and business activities. The use of some forms of
financial assurance and cash collateral have a negative impact on liquidity. U.
S. Steel has committed approximately $295 million of liquidity sources for
financial assurance purposes as of March 31, 2022. Increases in certain of these
commitments which use collateral are reflected within cash, cash equivalents and
restricted cash on the Condensed Consolidated Statement of Cash Flows.

Share Repurchases



Common stock repurchased under our common stock repurchase program that was
approved in October 2021 and increased in January 2022 totaled 5,031,970 shares
and approximately $123 million in the three months ended March 31, 2022. See
Note 22 to the Condensed Consolidated Financial Statements for further details.

Capital Requirements

U. S. Steel's contractual commitments to acquire property, plant and equipment at March 31, 2022, totaled $1.875 billion.

Liquidity



The following table summarizes U. S. Steel's liquidity as of March 31, 2022:

  (Dollars in millions)
  Cash and cash equivalents                                               $ 2,866
  Amount available under Credit Facility Agreement

1,746


  Amount available under Big River Steel - Revolving Line of Credit           350
  Amount available under USSK Credit Agreement and USSK Credit Facility       347
  Total estimated liquidity                                               $ 5,309



In the first quarter of 2022, we received $82 million in proceeds from
government incentives for Mini Mill #2 from the sale of tax credits under the
State of Arkansas's Recycling Tax Credit program. The Company is contingently
liable for certain repayment penalties if it fails to meet certain employment
requirements. See Note 21 to the Condensed Consolidated Financial Statements for
further details.

We finished the first quarter of 2022 with $2,866 million of cash and cash
equivalents and $5,309 million of total liquidity. Available cash is left on
deposit with financial institutions or invested in highly liquid securities with
parties we believe to be creditworthy. Substantially all of the liquidity
attributable to our foreign subsidiaries can be accessed without the imposition
of income taxes as a result of a prior election to liquidate for U.S. income tax
purposes a foreign subsidiary that holds most of our international operations.

We expect that our estimated liquidity requirements will consist primarily of
the remaining portion of our 2022 planned strategic and sustaining capital
expenditures, working capital requirements, interest expense, and operating
costs and employee benefits for our operations after taking into account the
footprint actions and cost reductions at our plants and headquarters. Our
available liquidity at March 31, 2022 consists principally of our cash and cash
equivalents and available borrowings under the Credit Facility Agreement, Big
River Steel ABL Facility, USSK Credit Agreement and the USSK Credit Facility.
Management continues to evaluate market conditions in our industry and our
global liquidity position, and may consider additional actions to further
strengthen our balance sheet and optimize liquidity, including but not limited
to the repayment or refinancing of outstanding debt and the incurrence of
additional debt to opportunistically finance strategic projects. The company may
also return excess liquidity to shareholders through share repurchases and
dividends from time to time if deemed appropriate by management.

U. S. Steel management believes that our liquidity will be adequate to fund our
requirements based on our current assumptions with respect to our results of
operations and financial condition.
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Environmental Matters, Litigation and Contingencies



Some of U. S. Steel's facilities were in operation before 1900. Although the
Company believes that its environmental practices have either led the industry
or at least been consistent with prevailing industry practices, hazardous
materials have been and may continue to be released at current or former
operating sites or delivered to sites operated by third parties.

Our U.S. facilities are subject to environmental laws applicable in the U.S.,
including the Clean Air Act (the CAA), the Clean Water Act (CWA), the Resource
Conservation and Recovery Act (RCRA) and the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA), as well as state and local
laws and regulations.

U. S. Steel has incurred and will continue to incur substantial capital, operating, and maintenance and remediation expenditures as a result of environmental laws and regulations, related to release of hazardous materials, which in recent years have been mainly for process changes to meet the CAA obligations and similar obligations in Europe.

EU Environmental Requirements and Slovak Operations



Phase IV of the EU Emissions Trading System (EU ETS) commenced on January 1,
2021, and will finish on December 31, 2030. The European Commission issued final
approval of the Slovak National Allocation table in July 2021. The Slovak
Ministry of Environment, after consent of the European Commission, allocated the
full amount of 2021 free allowances to USSE in December 2021. In addition, a
portion of the 2022 expected free allowances were received by USSE in February
2022. In the fourth quarter of 2020, USSE started purchasing EUA for the Phase
IV period. As of March 31, 2022, we have pre-purchased approximately 3.8 million
EUA totaling €168 million (approximately $186 million).

The EU's Industrial Emissions Directive requires implementation of EU determined
best available techniques (BAT) for Iron and Steel production, to reduce
environmental impacts as well as compliance with BAT associated emission levels.
Total capital expenditures for projects to comply with or go beyond BAT
requirements were €138 million (approximately $153 million) over the actual
program period. These costs were partially offset by the EU funding received and
may be mitigated over the next measurement periods if USSK complies with certain
financial covenants, which are assessed annually. USSK complied with these
covenants as of March 31, 2022. If we are unable to meet these covenants in the
future, USSK might be required to provide additional collateral (e.g., bank
guarantee) to secure 50 percent of the EU funding received.

For further discussion of laws applicable in Slovakia and the EU and their impact on USSE, see Note 21 to the Condensed Consolidated Financial Statements, "Contingencies and Commitments - Environmental Matters, EU Environmental Requirements."

New and Emerging Environmental Regulations

United States and European Greenhouse Gas Emissions Regulations



Future compliance with CO2 emission requirements may include substantial costs
for emission allowances, restriction of production and higher prices for coking
coal, natural gas and electricity generated by carbon-based systems. Because we
cannot predict what requirements ultimately will be imposed in the U.S. and
Europe, it is difficult to estimate the likely impact on U. S. Steel, but it
could be substantial. On March 28, 2017, President Trump signed Executive Order
13783 instructing the United States Environmental Protection Agency (the U.S.
EPA) to review the Clean Power Plan (the CPP). As a result, in June 2019, the
U.S. EPA published a final rule, the "Affordable Clean Energy (ACE) Rule" that
replaced the CPP. Twenty-three states, the District of Columbia, and seven
municipalities are challenging the CPP repeal and ACE rule in the U.S. Court of
Appeals for the District of Columbia (the D.C.) Circuit. A coalition of 21
states has intervened in the litigation in support of the U.S. EPA. Various
other public interest organizations, industry groups, and members of Congress
are also participating in the litigation. On January 19, 2021, the D.C. Circuit
vacated and remanded the ACE to the U.S. EPA, while the CPP remains stayed. On
October 19, 2021, the United States Supreme Court granted petitions for
certiorari filed by the State of West Virginia and others. Oral arguments
regarding the petitions were held before the U.S. Supreme Court on February 28,
2022. Because U.S. EPA has not re-instated the Obama-era Clean Power Plan and it
is unclear on how the U.S. Supreme Court will decide the case, impacts to our
operations as a result of any future greenhouse gas regulations are not
estimable at this time since the matter is unsettled.

The Phase IV EU ETS period spans 2021-2030 and began on January 1, 2021.The
Phase IV period is divided into two sub periods (2021-2025 and 2026-2030), rules
for the first subperiod are finalized, however we expect that rules for the
second subperiod may be more stringent than those for the first one. Currently,
the overall EU target is a 40 percent reduction of 1990 emissions by 2030. Free
allocation of CO2 allowances is based on reduced benchmark values which have
been published in the first quarter of 2021 and historical levels of production
from 2014-2018. Allocations to individual installations may be adjusted annually
to reflect relevant increases and decreases in production. The threshold for
adjustments is set at 15 percent and will be assessed on the basis of a rolling
average of two precedent years. Production data verified by an external auditor
shows that USSE missed the 15 percent threshold in 2019-20; therefore, the free
allocation for 2021 was decreased. Additionally, lower production in 2019 and
2020 will have an impact on the future free allocation for 2026-2030, where the
historical production average for years 2019-2023 will be assessed. Once
approved, the rules may impact subperiod 2026-2030.

In order to achieve the EU political goal of carbon emissions neutrality by 2050, on July 14, 2021, the European Commission released a package of legislative proposals called Fit for 55. The proposals contain significant changes to current EU ETS


                                      -30-
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functions and requirements, including: a new carbon border adjustment mechanism
to impose carbon fees on EU imports, further reduction of free CO2 allowance
allocation to heavy industry and measures to strengthen the supply of carbon
allowances. The proposals are subject to the EU legislative process, and we
cannot predict their future impact.

United States - Air



The CAA imposes stringent limits on air emissions with a federally mandated
operating permit program and civil and criminal enforcement sanctions. The CAA
requires, among other things, the regulation of hazardous air pollutants through
the development and promulgation of National Emission Standards for Hazardous
Air Pollutants (NESHAP) and Maximum Achievable Control Technology (MACT)
Standards. The U.S. EPA has developed various industry-specific MACT standards
pursuant to this requirement. The CAA requires the U.S. EPA to promulgate
regulations establishing emission standards for each category of Hazardous Air
Pollutants. The U.S. EPA also must conduct risk assessments on each source
category that is already subject to MACT standards and determine if additional
standards are needed to reduce residual risks.

While our operations are subject to several different categories of NESHAP and
MACT standards, the principal impact of these standards on U. S. Steel's
operations includes those that are specific to coke making, iron making, steel
making and iron ore processing.

On July 13, 2020, the U.S. EPA published a Residual Risk and Technology Review
rule for the Integrated Iron and Steel MACT category in the Federal Register.
Based on the results of the U.S. EPA's risk review, the agency determined that
risks due to emissions of air toxics from the Integrated Iron and Steel category
are acceptable and that the current regulations provided an ample margin of
safety to protect public health. Under the technology review, the U.S. EPA
determined that there are no developments in practices, processes or control
technologies that necessitate revision of the standards. In September 2020,
several petitions for review of the rule, including those filed by the Company,
the American Iron and Steel Institute (the AISI), Clean Air Council and others,
were filed with the United States Court of Appeals for the D.C. Circuit. The
cases were consolidated and are being held in abeyance until the U.S. EPA
reviews and responds to administrative petitions for review. U.S. EPA is
required by court order to issue a final rule by October 26, 2023. Because U.S.
EPA has yet to propose a revised iron and steel rule, any impacts are
inestimable at this time.

For the Taconite Iron Ore Processing category, based on the results of the U.S.
EPA's risk review, the agency promulgated a final rule on July 28, 2020, in
which the U.S. EPA determined that risks from emissions of air toxics from this
source category are acceptable and that the existing standards provide an ample
margin of safety. Furthermore, under the technology review, the agency
identified no cost-effective developments in controls, practices, or processes
to achieve further emissions reductions. Petitions for review of the rule were
filed in the United States Court of Appeals for the D.C. Circuit, in which the
Company and the AISI intervened. U.S. EPA is required by court order to issue a
final rule by November 16, 2023. Because U.S. EPA has yet to propose a revised
taconite rule, any impacts are inestimable at this time.

U.S. EPA is in the process of conducting its statutorily obligated residual risk
and technology review of coke oven standards. Because the U.S. EPA has not
completed its review of the Coke MACT regulations, any impacts related to the
U.S. EPA's review of the coke standards cannot be estimated at this time.

In response to Court orders that invalidated prior U. S. EPA determinations
regarding ozone attainment interference, on April 6, 2022, U.S. EPA proposed a
Federal Implementation Plan (that would replace several pending or disapproved
State Implementation Plans) for Regional Ozone Transport for the 2015 Ozone
National Ambient Air Quality Standard. The proposed rule would affect electric
generating units (EGUs) in 26 states and certain non-EGU industries, including,
among several others, coke ovens, taconite production kilns, boilers, blast
furnaces, basic oxygen furnaces, reheating furnaces, and annealing furnaces in
23 states, including those where U. S. Steel has operations. Based upon the
Company's initial review, the impacts of the rule, if promulgated as proposed,
could be material.

The CAA also requires the U.S. EPA to develop and implement NAAQS for criteria
pollutants, which include, among others, particulate matter (PM) - consisting of
PM10 and PM2.5, lead, carbon monoxide, nitrogen dioxide, sulfur dioxide (SO2),
and ozone.

In October 2015, the U.S. EPA lowered the NAAQS for ozone from 75 parts per
billion (ppb) to 70 ppb. On November 6, 2017, the U.S. EPA designated most areas
in which we operate as attainment with the 2015 standard. In a separate ruling,
on June 4, 2018, the U.S. EPA designated other areas in which we operate as
"marginal nonattainment" with the 2015 ozone standard. On December 6, 2018, the
U.S. EPA published a final rule regarding implementation of the 2015 ozone
standard. Because no state regulatory or permitting actions to bring the ozone
nonattainment areas into attainment have yet to be proposed or developed for U.
S. Steel facilities, the operational and financial impact of the ozone NAAQS
cannot be reasonably estimated at this time. On December 31, 2020, the U.S. EPA
published a final rule pursuant to its statutorily required review of NAAQS that
retains the ozone NAAQS at 70 ppb. In January 2021, New York, along with several
states and non-governmental organizations filed petitions for judicial review of
the action with the United States Court of Appeals for the D.C. Circuit. Several
other states and industry trade groups intervened in support of the U. S. EPA's
action. The case remains in abeyance before the court until December 15, 2023,
as the U.S. EPA voluntarily reconsiders the ozone NAAQS. Because the U.S. EPA
has yet to complete its reconsideration and propose a revised ozone NAAQS, any
impacts are inestimable at this time.

On December 14, 2012, the U.S. EPA lowered the annual standard for PM2.5 from 15
micrograms per cubic meter (ug/m3) to 12 ug/m3 and retained the PM2.5 24-hour
and PM10 NAAQS rules. In December 2014, the U.S. EPA designated some areas in
which
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U. S. Steel operates as nonattainment with the 2012 annual PM2.5 standard. On
April 6, 2018, the U.S. EPA published a notice that Pennsylvania, California and
Idaho failed to submit a State Implementation Plan (an SIP) to demonstrate
attainment with the 2012 fine particulate standard by the deadline established
by the CAA. As a result of the notice, Pennsylvania, a state in which we
operate, was required to submit an SIP to the U.S. EPA no later than November 7,
2019 to avoid sanctions. On April 29, 2019, the Allegheny County Health
Department (ACHD) published a draft SIP for the Allegheny County nonattainment
area which demonstrates that all of Allegheny County will meet its reasonable
further progress requirements and be in attainment with the 2012 PM2.5 annual
and 24-hour NAAQS by December 31, 2021, with the existing controls that are in
place. On September 12, 2019, the Allegheny County Board of Health unanimously
approved the draft SIP. The draft SIP was then sent to the Pennsylvania
Department of Environmental Protection (PADEP). PADEP submitted the SIP to the
U.S. EPA for approval on November 1, 2019. To date, the U.S. EPA has not taken
action on PADEP's submittal. On December 18, 2020, the U.S. EPA published a
final rule pursuant to its statutorily required review of NAAQS that retains the
existing PM2.5 standards without revision. In early 2021, several states and
non-governmental organizations filed petitions for judicial review of the action
with the United States Court of Appeals for the D.C. Circuit. Several industry
trade groups intervened in support of the U.S. EPA's action. The case remains in
abeyance before the court until March 1, 2023, as U.S. EPA voluntarily
reconsiders the PM2.5 NAAQS. In court filings, U.S. EPA advised the Court that
it intends to complete its reconsideration process by proposing a rule in Summer
2022 and promulgating a final rule in Spring 2023. Because U.S. EPA has yet to
complete its reconsideration and propose a revised PM2.5 NAAQS, any impacts are
inestimable at this time.

On January 26, 2021, ACHD announced that for the first time in history all eight
air quality monitors in Allegheny County met the federal air quality standards
including, in particular sulfur dioxide and particulate matter (PM2.5 and PM10).
Preliminary data from 2021 indicates that all eight air quality monitors
continue to meet the standards. On March 16, 2022, U.S. EPA published a final
rule, a clean data determination, showing that Allegheny County has attained the
2012 annual PM2.5 NAAQS based on the 2018 - 2020 ambient air quality data. Based
on these data, ACHD is in the process of seeking EPA approval to redesignate the
area as attainment with the 2012 annual PM2.5 NAAQS.

For further discussion of relevant environmental matters, including environmental remediation obligations, see "Item 1. Legal Proceedings - Environmental Proceedings."

OFF-BALANCE SHEET ARRANGEMENTS

U. S. Steel did not enter into any new material off-balance sheet arrangements during the first quarter of 2022.

INTERNATIONAL TRADE



U. S. Steel continues to face import competition, much of which is unfairly
traded and fueled by massive global steel overcapacity, currently estimated to
be over 500 million metric tons per year-more than five times the entire U.S.
steel market and over seventeen times total U.S. steel imports. These imports
and overcapacity negatively impact the Company's operational and financial
performance. U. S. Steel continues to lead efforts to address these challenges
that threaten the Company, our workers, our stockholders, and our country's
national and economic security.

As of the date of this filing, pursuant to a series of Presidential
Proclamations issued in accordance with Section 232 of the Trade Expansion Act
of 1962, U.S. imports of certain steel products are subject to a 25 percent
tariff, except: (1) imports from Argentina, Brazil, and South Korea, which are
subject to restrictive quotas; (2) imports from the European Union (EU) and
Japan that are melted and poured in the EU/Japan, within quarterly tariff-rate
quota (TRQ) limits; (3) imports from Canada and Mexico, which are not subject to
tariffs or quotas, but tariffs could be re-imposed on surging product groups
after consultations; and (4) imports from Australia, which are not subject to
tariffs, quotas, or an anti-surge mechanism. In February 2022, the United States
and Japan agreed to Section 232 TRQs that went into effect on April 1, 2022. In
March 2022, the United States and the United Kingdom (UK) announced Section 232
TRQs that will go into effect on June 1, 2022.

The U.S. Department of Commerce (DOC) is managing a process in which U.S. companies may request and/or oppose temporary product exclusions from the Section 232 tariffs and quotas. U. S. Steel opposes exclusion requests for imported products that are the same as, or substitutes for, products manufactured by U. S. Steel.



Multiple legal challenges to the Section 232 action continue before the U.S.
Court of International Trade (CIT) and the U.S. Court of Appeals for the Federal
Circuit (CAFC), the latter which has consistently rejected constitutional and
statutory challenges to the Section 232 action.

Since its implementation in March 2018, the Section 232 action has supported the
U.S. steel industry's and U. S. Steel's investments in advanced steel production
capabilities, technology, and skills, strengthening U.S. national and economic
security. The Company continues to actively defend the Section 232 action.

In February 2019, the European Commission (EC) implemented a definitive safeguard on global steel imports in the form of TRQs that impose 25 percent tariffs on steel imports that exceed the TRQ limit, effective through June 2024.



Antidumping duties (AD) and countervailing duties (CVD or antisubsidy duties)
apply in addition to the Section 232 tariffs, quotas, TRQs and the EC's
safeguard, and AD/CVD orders may continue beyond the Section 232 action and the
EC's safeguard. U. S.
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Steel continues to actively defend and maintain the 60 U.S. AD/CVD orders and 10
EU AD/CVD orders covering U. S. Steel products in multiple proceedings before
the DOC, U.S. International Trade Commission (ITC), CIT, CAFC, the EC and
European courts, and the WTO.

DOC is conducting new AD/CVD investigations on imports of OCTG from Argentina,
Mexico, Korea, and Russia that are expected to conclude in the second half of
2022. The ITC is conducting five-year "sunset" reviews of AD/CVD orders on
hot-rolled steel, cold-rolled steel, and corrosion-resistant steel from twelve
countries, with decisions expected in the second half of 2022.

In April, the United States suspended normal trade relations with Russia and
Belarus, resulting in higher normal tariffs on imports from Russia and Belarus,
including steel and raw materials.

Additional tariffs of 7.5 to 25 percent continue to apply to certain U.S. imports from China, including certain raw materials used in steel production, semi-finished and finished steel products and downstream steel products, pursuant to Section 301 of the Trade Act of 1974.

The United States and EU are currently negotiating a global arrangement on steel
overcapacity and carbon intensity that is targeted for completion by the end of
2023.The Global Forum on Steel Excess Capacity, the Organisation for Economic
Co-operation and Development Steel Committee, and trilateral negotiations
between the United States, EU and Japan continue to address steel overcapacity.

U. S. Steel will continue to execute a broad, global strategy to maximize opportunities and navigate challenges presented by imports, global steel overcapacity, and international trade law and policy developments.

NEW ACCOUNTING STANDARDS

See Notes 2 and 3 to the Condensed Consolidated Financial Statements in Part I

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