Trump Grants U.S. Government Golden Share in U.S. Steel Acquisition

U.S. President Donald Trump has employed a rarely used mechanism, the “golden share,” to ensure that a Japanese-owned U.S. Steel does not pose a threat to national security. Nippon Steel, the soon-to-be owner of U.S. Steel, has granted Washington special authority over the company’s operations, although the extent of these powers remains unclear.

While this practice is almost unheard of in the U.S., the “golden share” has been used in other economies to ensure government oversight or control over a company’s operations. On June 13, Trump issued an executive order clearing Nippon Steel’s takeover of U.S. Steel, which had been in limbo since the deal was first announced in 2023. Both the preceding Biden administration and the Trump administration had expressed concerns about foreign investment and ownership of a key U.S. industry.

To address these concerns, the order states that both Nippon Steel and U.S. Steel have agreed to enter into a National Security Agreement. This agreement gives the U.S. government a perpetual “golden share” in the newly acquired company. In a late May interview, U.S. Senator Dave McCormick (R-Penn.) stated that a Nippon Steel-owned U.S. Steel would have a U.S. CEO and a U.S. majority board. The government would also have to approve major structural changes to the company, such as changes to production levels or factory locations.

Nippon Steel confirmed on Wednesday that it had granted the U.S. a “golden share” and said it also granted Washington the power to block production and jobs from being transferred outside the U.S. The full terms of the National Security Agreement have not been released to the public. A golden share does not amount to “total control,” as Trump advertised to reporters last week. However, it does give the holder—the government or another entity—the ability to outweigh all other shareholders in certain circumstances.

McCormick noted in his May interview that the Nippon Steel control structure would be “somewhat unique.” The U.S. government has not historically taken ownership interest in private companies outside of moments of financial crisis. Even then, the arrangements have been temporary, such as in 2008, when Washington took a controlling share in major auto companies as part of its emergency bailouts.

The term “golden share” first appeared in the 1980s when the Thatcher administration began a campaign to privatize many of its state-owned enterprises. The share was meant to be a compromise solution, allowing the U.K. government a continued say in how these newly privatized companies were to be run. As the privatization bug spread to mainland Europe, many European governments also took special governance rights to retain state influence in previously nationalized companies.

However, the European Court of Justice struck down several of these arrangements in the early 2000s, ruling that golden shares constituted unjustified “restrictions on the free movement of capital,” contravening the Maastricht Treaty, the European Union’s founding document. In 2003, the UK was ordered to give up its golden share in the British Airports Authority. Spain relinquished its governance rights over an array of businesses in telecoms, banking, and tobacco. And in 2007, Germany sold its golden share in Volkswagen.

Still, the UK has retained golden shares in its defense sector, namely in Rolls-Royce, BAE Systems, and two Babcock dockyards. Westminster may be considering the practice once again, recently acquiring a golden share in Royal Mail as a condition of its sale to the Czech EP Group finalized this April.

China embraced something similar to the “golden share” in the early 2010s to exert some state oversight over the country’s budding tech sector. So-called special management shares granted state-backed entities authority over key decisions without requiring full state ownership. The Chinese government has taken small stakes in companies like Sina Weibo, which offers an X-like microblogging service, and Kuaishou, a livestreaming platform. It’s also reportedly taken small stakes of units in Chinese tech giants like e-commerce giant Alibaba, gaming publisher Tencent, and TikTok parent ByteDance.

Russia has also welcomed the golden share, which again arose during a domestic privatization drive. In 2019, Yandex, the most popular search engine in Russia, granted its golden share to a “Public Interest Foundation,” which outside observers view as a proxy for government oversight. The Foundation has the authority to temporarily replace Yandex’s management.

In his late May interview, McCormick suggested that the Nippon Steel arrangement could “be a model for transactions that really affect our national security.” Industrial policy is quickly becoming a bipartisan issue in the U.S., with both Democrats and Republicans supporting measures to protect U.S. manufacturing. Both sides of the political divide criticized Nippon Steel’s original bid for U.S. Steel as a threat to national security.

Other economists have suggested golden shares could be a way to maintain oversight of sectors that pose a systemic risk to the U.S. economy. In 2023, amid concerns that troubles at Silicon Valley Bank could spiral into a broader financial crisis, Saule Omarova, a onetime Biden nominee for a senior Treasury position, suggested that the U.S. government consider a golden share in systemically important banks.

U.S. Steel’s new owner isn’t too worried about how Washington’s special powers will affect the business. “We retain sufficient managerial freedom,” Nippon Steel Eiji Hashimoto said on Thursday, and added that the “golden share” was his company’s idea. “We won’t be constrained in pursuing anything we do.”