STEVE INSKEEP, HOST:
The United States is supporting a Japanese company's plan to buy U.S. Steel in exchange for a share of power. It's called a golden share, making the U.S. a shareholder in the company - only a little more so. Nippon Steel had to make that concession, which will allow the Trump administration to enforce other promises that Nippon made, like investing $14 billion in U.S. Steel. Industrial policy expert Todd Tucker says there are precedents for this arrangement.
TODD TUCKER: A golden share is a mechanism that governments around the world have used to ensure national ownership and control over strategically important industries. So, you know, there's companies like Volkswagen in Germany, entities like the Heathrow Airport in the U.K., where the government retains a golden share, which means that they have a say-so over any attempt to sell the company or sort of fundamentally reorganize what the company is trying to do.
INSKEEP: OK. So first, you have told me that this is not a name that was developed by the Trump administration, where a lot of things are named after gold - the gold card, and the gold decorations in the White House and so forth. This is, like, a normal term that people have used elsewhere in the world.
TUCKER: This is a normal term. And in fact, sort of the contemporary usage goes back to the United Kingdom, where during the Thatcher period, she instituted a policy of privatizing a lot of the publicly held companies. And sort of the compromise that she worked out was leaving the government with a golden share.
INSKEEP: The way you're describing it, it sounds like veto power, as opposed to power to affirmatively tell a company to do something.
TUCKER: It's a little more than that. The company will need to be consulting the government on a range of strategically important decisions, whether that's closing a plant, whether that's changing the nature of the investment that they're going to be undertaking. So, you know, this will be a lot like other board seats.
INSKEEP: I'm particularly interested in the $14 billion because I believe that investment is supposed to be over a number of years. And of course, you always wonder if the investment in the out-years will materialize.
TUCKER: Yeah. And so this was the big sticking point during the Biden administration years, which is that this is a company - U.S. Steel and Nippon - that had a bit of a trust deficit with the public, with their workforce. They had made promises in the past that they hadn't lived up to. You know, steel is too important of an industry. We only have a handful of virgin steel facilities left in the U.S., and U.S. Steel controls about half of them. And the Biden administration just didn't think there would be a way to trust that the commitment that the company made today would stay true, you know, in the years ahead. And so this is actually an ingenious solution to that problem, which is to sort of say, OK - if we don't trust that you're going to do the right thing, we're going to sit on the board and make sure that you do the right thing.
INSKEEP: Suppose Nippon doesn't do something that they have agreed to do. What would the United States be able to do to punish them, using this golden share?
TUCKER: Well, I think, you know, what the U.S. is showing that it can do with a golden share is basically engage in a partial nationalization of the company. If the company just says, you know what? The private markets aren't smiling on our $14 billion investment - the U.S. government could say, OK. Well, then we're going to run this more fully as a public company than even we did with this sort of intermediate step of the golden share.
INSKEEP: So there's that implied threat of even more control.
TUCKER: That's right.
INSKEEP: Does somebody at Nippon Steel - or, for that matter, somebody at U.S. Steel - have to worry now about governmental mission creep? This president or a future president says, you know, I have this influence over your company. I sure think it'd be a great idea if you put all your assets into cryptocurrency - my memecoin - just hypothetically.
TUCKER: Yes, absolutely. I mean, you know, this is a risk. Any company that seeks the approval of the government for this kind of action does run the risk that the government wants to get more involved. So, you know, Nippon opened up this possibility by seeking the merger in the first place, so now absolutely. You know, there's maybe a good version of this, which is that you could imagine a future administration pushing the steel industry into doing green steel. That would be, from my point of view, a great thing. However, on the other hand, it also means that there's going to be folks that Trump appoints that can be, you know, dictating various aspects of the company's investment portfolio and other business decisions. And so, yeah, that could also run the risk of some corruption.
INSKEEP: Todd Tucker, thanks so much for your time.
TUCKER: Glad to be with you. Thanks.
INSKEEP: He's director of industrial policy and trade at the Roosevelt Institute. Transcript provided by NPR, Copyright NPR.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.
