Colby Cosh: How Donald Trump nationalized U.S. Steel
Last week, Nippon Steel Corp. of Japan formally completed a takeover of U.S. Steel (USS), the venerable but diminished American industrial giant created by J.P. Morgan in 1901. The Japanese company originally placed its bid for USS in late 2023, but it ran into immediate trouble with the Biden administration. U.S. Steel, once widely regarded as an overmighty pollution-spewing relic of Gilded Age cartelization, had magically evolved to become a vulnerable 'national champion' of morally superior things-making industries; and the company still has a powerful unionized workforce in U.S. rust-belt states that are electorally pivotal. Pennsylvania-born President Joe Biden wasn't going to let a corporate brand virtually synonymous with the city of Pittsburgh be raffled off without a tussle.
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Government foreign-investment approvals necessarily have this sort of personal-rule character wherever they happen, which is pretty much everywhere. If you want to sell a bundle of industrial assets in Country X to folks from Country Y, you had better have approval from the top political boss of X, whether that approval be tacit or explicit.
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Still, Biden did go through the motions of being head of a government of laws rather than men. He had a U.S. Treasury Department panel, the Committee on Foreign Investment in the United States (CFIUS), whack together an indecisive but fact-based report on the potential costs and benefits of the proposed takeover. Only at that point, with mere days remaining in his term of office, did Biden (or whoever was wielding his executive autopen) fully and officially block the Nippon Steel deal.
Biden's successor had already been re-elected, and nobody could imagine that Donald Trump would be any less of an unruly economic nationalist — but the thing that is nearest and dearest to Trump's heart is deal-making, and Nippon Steel found a way to get the takeover done. The Japanese company had already promised to preserve U.S. Steel's Pittsburgh national head office and to honour existing collective-bargaining agreements with the unions. Trump extracted further concessions on investments and hiring, along with a means of enforcing them, namely a 'golden share' controlled by the U.S. government.
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A 'golden share' is a special kind of equity that gives its holder veto power over specified corporate decisions. It is often used in privatizations to give governments some vestige of control over corporate entities originally created by the state (or, in Canada, the Crown) for public purposes. In this unusual case, the U.S. government is magically gaining a golden share in exchange for permitting the sale of one private company to another. The government will be given the right to choose some U.S. Steel board directors, to forbid any name change, and to veto factory closures, offshoring, acquisitions and other moves.
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As the Cato Institute immediately pointed out, this is a de facto nationalization of U.S. Steel — the sort of thing that would have had Cold War conservatives climbing the walls and hooting about socialism. But at least socialism professes to be social! Yesterday a lefty energy reporter named Robinson Meyer was nosing around in the revised corporate charter for the newly-acquired U.S. Steel, and he discovered a remarkable detail that the Cato folks had missed: the decision powers of the golden share have been legally assigned to Donald Trump in person and by name for the duration of his presidency. Only after Trump has left the White House do those golden-share powers revert to actual U.S. government departments (Treasury and Commerce).
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