Just when U.S. Steel thought its deal with Japan’s Nippon Steel was set, the company ran into a political reality: President Donald Trump’s administration and its new “golden share” power.
The golden share—essentially a veto over certain corporate decisions—was part of the White House’s approval for Nippon Steel’s $14.1 billion purchase of U.S. Steel in June. The president used this power to stop a planned plant shutdown in Granite City, Ill., The Wall Street Journal first reported Friday.
Two weeks ago, U.S. Steel told the Granite City plant and its 800 workers that operations would stop in November. The company planned to continue paying employees even after halting steel production.
But Commerce Secretary Howard Lutnick learned about the plan and called U.S. Steel Chief Executive Dave Burritt, telling him the shutdown would not be allowed, sources told the Journal. Lutnick added that Trump would use his golden share authority.
Lutnick later called U.S. Steel’s plan to pay employees while the plant wasn’t operating “nonsense” in a CNBC interview.
Within days, U.S. Steel reversed its decision. The company told the Journal, “Our goal was to maintain flexibility, and we are pleased to have found a solution to continue to slab consumption at Granite City.”
The White House, Commerce Department, and U.S. Steel did not immediately respond to Fortune for comment.
Union leaders had opposed Nippon Steel’s acquisition, warning the company might close U.S. plants and import steel from abroad. But Trump’s intervention prevented this.
A national security agreement between the government and Nippon Steel gives Trump authority over changes such as factory closures, relocations, salary changes, and major operational shifts.
This is another example of the government influencing private industrial decisions.
Other moves include Nvidia and AMD agreeing to give the administration 15% of chip sales to China, Trump’s $8.9 billion stock deal with Intel making the federal government its top shareholder, and a deal with MP Materials giving the Defense Department control of America’s main rare earth miner.
Some experts warn investors may now have to consider political risks, from regulatory changes to executive overrides.
The golden share idea isn’t totally new. Governments in the U.K., Brazil, and China have long used similar powers to influence privatized industries like defense, aviation, and infrastructure.
But the U.S. approach is notable for its scope. While the Committee on Foreign Investment in the United States has set security conditions on mergers before, Trump’s agreement goes further, letting the president oversee major operational decisions.
The Granite City decision may give workers and the local economy a temporary relief.
“We need a future,” Craig McKey, president of United Steelworkers Local 1899 at Granite City, told The Wall Street Journal. “Whatever they give us, we’re willing to do the work.”
