Trump’s Golden Share: U.S. Government Gains Influence over U.S. Steel Operations Following Nippon Steel Acquisition
In the summer of 2021, Japanese conglomerate Nippon Steel completed its acquisition of U.S. Steel. This move has thrust the transaction into the spotlight, as it now falls under the scrutiny of the U.S. government and President Trump. Planet Money’s Erika Beras elucidates what Trump refers to as a “golden share.”
Erika Beras: Acquiring or significantly investing in an American company isn’t a straightforward process for foreign entities. Such deals that may potentially impact national security are subject to review by the Committee on Foreign Investment in the United States (CFIUS). This body serves as a gatekeeper, ensuring that any foreign investor entering the U.S. market aligns with our interests. Most of CFIUS’ work occurs behind closed doors.
Did you have to swear an oath?
Sarah Bauerle Danzman: I received top-secret security clearance.
Erika Beras: Sarah Bauerle Danzman is a political economist at Indiana University. She served as a CFIUS case officer, offering firsthand insight into the national security agreements negotiated by CFIUS. Historically, these agreements have been centered around defense-related matters. However, under both the Trump and Biden administrations, the committee has expanded its focus to review transactions involving cybersecurity, artificial intelligence, biotechnology, clean energy, and now U.S. Steel. Upon signing the agreement, a White House spokesperson stated that it would protect U.S. national and economic security. The agreement includes various stipulations. Nippon cannot rebrand U.S. Steel; they are required to invest billions of dollars in updating mills; no factory can be closed or salaries reduced without President Trump’s approval; and the agreement even bears his name.
Danzman: That’s unusual. In any other scenario, the need for Donald J. Trump’s express consent would not be included.
Erika Beras: President Trump used an unconventional term to describe this uncommon arrangement.
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PRESIDENT DONALD TRUMP: We have a golden stock. We have a golden share, which I control or a president controls. Now…
Erika Beras: Is a golden share a novel concept?
Danzman: No, it’s new to the U.S.
Erika Beras: Imagine a company with one hundred shares. Generally, the more shares you hold, the more power you wield; however, some shares carry additional powers.
Danzman: A golden share is a unique class of shares that allows a government to own a minuscule percentage of a company but possess disproportionate voting rights.
Erika Beras: Essentially, they function as a super-powered shareholder.
Erika Beras: The concept originates from the United Kingdom in the 1980s when the country privatized state-owned industries and employed golden shares as a means to ease into a more liberalized market. Since then, other nations have adopted golden shares – China, Russia, Brazil. However, what Trump is doing with U.S. Steel represents an uncommon application.
Danzman: It doesn’t seem to be a typical golden share…
Erika Beras: At least not in the traditional sense.
Danzman: …Because the U.S. government does not appear to actually hold an equity stake in U.S. Steel.
Erika Beras: What does that mean?
Danzman: It means that what the U.S. government has is extraordinary governance rights.
Erika Beras: Sarah explains it as a symbolic golden share. When we asked the White House why they refer to it as a golden share, they responded, “The Golden National Security Agreement Outlining Certain Provisions and Stipulations Governing Nippon Steel’s Acquisition of U.S. Steel” didn’t have quite the same ring, nor did “metallic gray share.” Regardless, it signifies an unprecedented level of government involvement in corporate decision-making. I’m Erika Beras, NPR News.
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