Just when U.S. Steel thought the ink had dried on its new future with Japan\u2019s Nippon Steel, the company ran into a political reality check: President Donald Trump\u2019s administration and its new \u201cgolden share\u201d authority.<\/p>\n
The golden share\u2014essentially a veto power over certain corporate moves\u2014was a condition for White House approval of Nippon Steel\u2019s $14.1 billion acquisition<\/a> of U.S. Steel in June. The president used this power to halt a planned plant shutdown in Granite City, Ill., The Wall Street Journal first reported<\/a> on Friday.\u00a0<\/p>\n Two weeks ago, U.S. Steel notified the Granite City plant and its 800 workers that operations would cease in November. The company planned to pay the employees, despite closing steel production.\u00a0<\/p>\n But Commerce Secretary Howard Lutnick learned of the plan and called U.S. Steel Chief Executive Dave Burritt, telling the exec he wouldn\u2019t allow operations to cease, sources told the Journal. Lutnick added that Trump would use his golden share authority.<\/p>\n Lutnick described U.S. Steel\u2019s plan to pay employees despite the plant not operating as \u201cnonsense,\u201d in a recent CNBC interview<\/a>.<\/p>\n Within days, the steelmaker reversed course, telling the Journal \u201cOur goal was to maintain flexibility, and we are pleased to have found a solution to continue to slab consumption at Granite City.\u201d<\/p>\n The White House, Commerce Department, and U.S. Steel did not immediately respond to Fortune for comment.<\/p>\n Union leaders opposed Nippon Steel\u2019s acquisition, warning that the company would close domestic plants and instead import foreign-made steel from other locations. But Trump\u2019s corporate intervention prevented this.<\/p>\n A national security agreement between the government and Nippon Steel gives Trump authority over a suite of changes, from factory closures and relocations to salary modifications and big-ticket operational shifts.<\/p>\n It marked another development in the government\u2019s control over private industrial decisions.<\/p>\n Nvidia<\/a> and AMD agreed to pay the administration 15% of their sales<\/a> from chips sold to China. Other examples include Trump\u2019s $8.9 billion stock deal with Intel<\/a>, making the federal government the chipmaker\u2019s top shareholder, and a deal with MP Materials that makes Defense Department the principal shareholder in America\u2019s leading rare earth miner.<\/p>\n Some analysts warn<\/a> that investors may now have to factor in political risk ranging from regulatory intervention to executive overrides.\u00a0<\/p>\n But the golden share concept isn\u2019t completely new.\u00a0Governments in the U.K.<\/a>, Brazil<\/a>, and China have long used similar arrangements to retain influence in privatized sectors, such as defense, aviation, and infrastructure.\u00a0<\/p>\n But the U.S. move is notable for the sheer scope: while the Committee on Foreign Investment in the United States previously imposed security conditions on mergers, Trump\u2019s agreement goes further, granting presidential oversight of broad operational decisions.<\/p>\n The Granite City intervention may serve as a temporary reprieve to employees and the local economy.<\/p>\n \u201cWe need a future,\u201d Craig McKey, president of United Steelworkers Local 1899 at Granite City, told The Wall Street Journal. \u201cWhatever they give us, we\u2019re willing to do the work.\u201d\n<\/p>\n