Professor flags Trump's 'scary' new plan with major implications
The New York Times ‘Deal Book’ newsletter railed against President Donald Trump’s proposal to have the government have a “golden share” in the Japanese company Nippon Steel.
A golden share “would effectively allow Washington to inject itself into the fabric of a foreign-owned, yet strategically critical, American enterprise,” the Times reports.
The proposal, which has yet to be finalized, is a part of the conditions for Nippon Steel’s purchase of U.S. Steel.
The Golden share would also give the U.S. government veto power over certain corporate functions and board appointments for Nippon Steel.
According to the Times, “This echoes the governance models of nationalized industries in Europe and elsewhere, a stark departure from America’s historically hands-off approach. (Exceptions in the U.S. have included the government-backed rescues of General Motors and Chrysler.)”
They asked if “this becomes the new blueprint for high-stakes foreign direct investment — or outright acquisitions — in the U.S., particularly in strategic sectors like manufacturing, technology, or defense?”
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Professor of business law at the University of Pennsylvania, Jill Fisch, said the idea would be “both unprecedented and a little bit scary.”
This is because if the government’s authority is open-ended, whoever is running Washington could inject themself into matters beyond national security and into corporate operational decisions.
“Imagine a future in which a highly ideological administration uses its golden share to push for politically driven hiring mandates, board shake-ups, headquarters relocations, or production quotas that run counter to the interests of the business or shareholders,” the Times said. “It’s not so far-fetched given President Trump’s recent board purge at the John F. Kennedy Center for the Performing Arts.”
Lawrence Cunningham, the director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, also expressed concern, saying, “What you might see is other countries retaliating, just in the same way they do with tariffs.”