WASHINGTON—President Trump said he supported what he described as an emerging agreement that would allow Nippon Steel to invest in—but not fully own—U.S. Steel, potentially opening up a new path for the Japanese company to enter the American steel market.

A group of U.S. consumers have sued Nippon Steel to block its proposed $14.9 billion purchase of U.S. Steel , saying the deal threatens to reduce competition and drive up prices for many products.