Welcome to America, Where You Can Buy a Company—But Not Run It
When Nippon Steel agreed to acquire U.S. Steel for $14.9 billion, headlines centered on industrial revival and steel jobs. But buried in the deal's fine print was a potentially transformative shift in U.S. investment policy: the creation of a “golden share”—a non-economic stake that gives the U.S. president veto power over key corporate decisions, including plant closures, supply chains, and even the company’s name.
This marks a potential paradigm shift in U.S. policy toward foreign investment. The U.S. has long used temporary mechanisms resembling golden shares such as preferred shares during bailouts, or security arrangements in foreign acquisitions. However, this is the first time a standing, permanent veto right is held by the President of the United States.
U.S. Precedents for Government Control
While the Nippon–U.S. Steel golden share is unprecedented in its permanence and scope, the U.S. has previously exercised golden-share–like control through temporary or sector-specific mechanisms. These examples help contextualize the significance of the current shift.
Defense Sector Deals. In sensitive defense acquisitions, foreign buyers are often required to set up proxy boards or special security arrangements that limit foreign influence over classified technologies and operations. For instance, when BAE Systems (UK) acquired U.S. defense contractors, it operated through American-managed subsidiaries with restricted access, maintaining a firewall between U.S. national security interests and foreign corporate control.
National Security Reviews. Through CFIUS mitigation agreements, the U.S. has imposed strict oversight conditions on foreign-owned firms in critical sectors—without taking ownership. Deals involving TikTok and Grindr included requirements for U.S. citizen board members, prior notice of divestitures, data localization, and facility inspections. These measures aim to protect U.S. interests—particularly personal data and infrastructure—while preserving foreign ownership.
Crisis-Era Intervention. During the 2008–2010 financial crisis, the U.S. Treasury injected capital into struggling institutions like GM and Chrysler, acquiring preferred shares with veto rights over executive pay, dividends, and board decisions. These rights were explicitly temporary and dissolved once the companies repaid the government and stabilized.
How the Nippon Deal Is Different
The golden share in the Nippon Steel–U.S. Steel agreement marks a departure from these temporary or sector-specific precedents in several critical ways:
It is permanent, with no sunset provision.
It vests unilateral veto power in the President of the United States, rather than a multi-agency committee like CFIUS.
It extends beyond national security to cover a wide range of corporate decisions, including:
Reductions in committed capital investment
Changes to the company’s name or headquarters
Relocation of U.S. Steel outside the United States
Acquisitions of competing U.S. businesses
Plant closures and decisions about labor or supply chains
This isn’t oversight—it’s non-economic control with legal teeth. For the first time, a foreign investor may own a U.S. company without ever fully controlling it.
How will the Golden Share Impact M&A Activity?
Over the past six months, investors have shown increasing hesitation toward U.S. assets, driven by political uncertainty, unpredictable executive intervention, and fiscal instability:
M&A and FDI Slowdown: Cross-border merger activity has decelerated sharply, particularly in sectors adjacent to national defense, where regulatory scrutiny has intensified. While greenfield foreign direct investment has surged on paper—with 729 new U.S. projects announced year-to-date—historical trends show that only 10–15% of pledged capital is typically deployed in the early years, casting doubt on near-term impact.
Capital Reallocations: Institutional capital is gradually shifting toward Europe. Despite their own strategic-sector controls, European markets offer investors a clearer regulatory framework and fewer post-closing surprises, making them relatively more attractive than the increasingly politicized U.S. landscape.
Treasury Market Stress: In April alone, foreign investors sold off $41 billion in U.S. Treasuries. The combination of rising debt levels and expanding executive intervention in private enterprise is making U.S. financial instruments appear riskier.
The golden share adds a new layer of political unpredictability to U.S. assets, especially for long-term foreign investors seeking operational control. If the U.S. government begins routinely requiring golden shares or “veto rights” to limit post-acquisition freedom, foreign firms may never truly control what they purchase on American soil, no matter how committed to investment or job creation. Investors will begin to ask:
Can the company execute a growth strategy if headquarters location, supplier choices, or layoffs require federal blessing?
Will this deal trigger political scrutiny in a volatile election cycle?
Strategic or Short-Sighted?
Defenders of the golden share argue it’s a necessary tool to protect national security. In theory, it protects national interests. In practice, it blurs the line between legitimate oversight and political interference—raising the risk of retaliation abroad. The move may also invite reciprocal measures: if the U.S. can insert itself into foreign-backed deals, why shouldn’t other countries do the same to American firms?
This is not a hypothetical risk. We’ve already seen this dynamic play out in Europe and parts of Asia. As soon as one country begins weaponizing M&A approvals for domestic political aims, the dominoes start falling.
For example, France has maintained a well-defined list of “strategic sectors” where foreign investors must seek approval for controlling stakes. These rules are intended to safeguard national sovereignty; but they’ve also made France a notoriously challenging environment for cross-border mergers.
Despite efforts to streamline its regulatory regime and promote “La French Tech,” France consistently lagged behind the UK and Germany in attracting foreign direct investment (FDI) throughout the 2010s and early 2020s. According to OECD and UNCTAD data, while France occasionally led in project count, it trailed both countries in total capital inflows and deal size, particularly in high-tech and industrial sectors.
France’s experience offers a warning: When national security becomes a political wildcard, foreign capital starts looking elsewhere.
The Stakes Are Bigger Than Steel
The Nippon Steel deal may be remembered as a turning point not just for industrial policy, but for how the U.S. is perceived by global investors. If golden shares and executive vetoes become the new norm, the era of the U.S. as the “safe haven” for foreign capital may be ending.
In a geopolitical moment defined by economic competition and fragmented alliances, the U.S. must choose: will it lead by example as an open, rules-based economy or slide into the very model of conditional capitalism it has long criticized in others?
The golden share may be strategic. But unless applied with extreme caution, it could prove to be short-sighted, self-defeating, and a poor trade for long-term investment leadership.
