Before exiting the White House, Joe Biden blocked Japan’s Nippon Steel from acquiring U.S. Steel, citing national security concerns. This was a rare point of agreement between the Democrat and Donald Trump: While on the campaign trail last year, the Republican said he was “totally against” Nippon’s bid.
That, however, was before he returned to the White House and changed his mind. Now, as NBC News reported, the company that was once the nation’s largest is now in Japanese hands. In fact, U.S. Steel, effective Wednesday, is no longer trading on the New York Stock Exchange for the first time in generations.
President Donald Trump has insisted for weeks that the companies would form a ‘partnership’ in which U.S. Steel would remain American-owned. But the New York Stock Exchange notified the Securities and Exchange Commission on Wednesday that U.S. Steel’s shares would be removed from listing, after the company became a wholly owned subsidiary of Nippon Steel North America.
There’s been some confusion about the nature of the acquisition, generated by Trump himself: The president published an item to his social media platform nearly month ago, insisting that that there would be a “partnership” between the United States and Nippon. The Republican added soon after, “It’s an investment, and it’ll be a partial ownership (by Nippon).”
That wasn’t quite right. As The New York Times reported, the president’s rhetoric fueled “mystery on Wall Street and in Washington” over the nature of the deal, but the companies “said on Wednesday that they had ‘now completed the transaction as contemplated by their merger agreement,’ effectively a confirmation that the deal is a sale to Nippon.”
That said, there is an important detail that makes the Japanese acquisition different from most. Trump agreed to flip-flop on the issue and endorse the transaction, but not before securing a “golden share” under the terms of the agreement.
As NBC News’ report noted, U.S. Steel said that under the arrangement, the president will have veto power over:
- Changing U.S. Steel’s name or moving its headquarters from Pittsburgh
- Moving U.S. Steel outside the U.S.
- Moving production or jobs outside the U.S.
- Some decisions regarding the closure or idling of U.S. Steel’s domestic manufacturing facilities, trade, labor, and sourcing outside the U.S.
- Reductions in capital investments under the national security agreement
- Material acquisitions of competing businesses in the U.S.
For good measure, let’s also not overlook the fact that Trump will have the power to help shape the company’s board.
Or put another way, despite everything we know about Republican Party orthodoxy related to capitalism and the free market, Trump sought and received considerable control over a key private company.
The editorial board of The Washington Post marveled at the circumstances, noting that the leader of the Republican Party “has decided that the steel industry of the United States, once perhaps the most market-friendly nation on Earth, should be run by government fiat.”
Trump’s policymaking is well rooted in the past. But not America’s. This kind of thing was the norm around the world just a few decades ago. Until the 1980s, governments throughout Europe, Latin America, Africa and Asia owned not golden shares, but regular shares — most often all of the regular shares — in companies across the economy, including banks, phone companies, mining and energy firms, and, yes, steelmakers. The problem with Trump’s nostalgia is that this model was largely abandoned because it didn’t work.
The incumbent Republican president, the Post’s editorial board added, nevertheless “wants to reserve the power to decide whether U.S. Steel can close a factory or source iron from this or that supplier.”
It’s the sort of thing that would likely generate GOP howls if a Democratic president took related steps, though Republicans in Congress have said precious little about the developments of late.