In December 2023, U.S. Steel, the storied industrial giant, announced it would be acquired by Japanese conglomerate Nippon Steel.
The announcement drew swift, bipartisan condemnation. Presidents Donald Trump and Joe Biden criticized the proposed sale, warning that it would harm U.S. workers.
Yet, less than five months into his presidency, Trump approved the merger. The deal Trump negotiated included a remarkable concession: The U.S. government would hold a single “golden share” in the merged steelmaker, granting the president significant control over the company.
Given Trump’s track record, this move appears to be another example of blending official authority with personal and political interests. But it was Biden who laid the groundwork for this outcome by expanding the law designed to prevent risky foreign investment in the United States.
This is a tangled story of big government, industrial policy, the expansion of executive power, and Trump’s unique approach.
The Defense Production Act and CFIUS
The Committee on Foreign Investment in the U.S. was created by President Jimmy Carter in 1975. In 1988, Congress passed Section 721 of the Defense Production Act, empowering the CFIUS to review foreign investments deemed a threat to U.S. national security and, in turn, allowing the president to block such deals.
The treasury secretary chairs the CFIUS, and it includes the attorney general and the secretaries of homeland security, defense, commerce, state, and energy, along with the U.S. trade representative and the head of the Office of Science and Technology Policy. Notably, the committee is composed entirely of executive branch officials, all political appointees, making it, in effect, an extension of presidential power.
The CFIUS rarely blocks foreign investments. Before 2025, it had intervened only eight times, and in every case, the target was a Chinese or China-connected firm.
For instance, in 2016, a Chinese firm wanted to acquire a U.S. semiconductor maker called Aixtron. The Chinese firm Fujian Grand Chip Investment Fund was privately owned, but its financiers were tied to the Chinese government.
Treasury Department officials explained that the administration blocked the sale because of “national security risk posed by the transaction” relating to “the military applications of the overall technical body of knowledge and experience of Aixtron, a producer and innovator of semiconductor manufacturing equipment and technology.”
In short, former President Barack Obama’s administration concluded that the purchase might help China’s military, so he blocked the sale.
That’s the typical use of Section 721: blocking foreign investment in a U.S. company that could help an enemy or rival gain weapons technology or steal U.S. secrets.
Nippon, despite having no Chinese ties, came under CFIUS scrutiny decades ago. During President Ronald Reagan’s administration, when Japan was feared as an economic rival to the U.S., the committee held up Nippon’s purchase of a unit of Allegheny International, another Pittsburgh-based steel company. An Allegheny executive said Defense Department officials “voiced concern about access by any foreign-owned company” to advanced metals that could be used in fighter jets. Specifically, some at the Pentagon feared the technology would leak from Japan to the Soviet Union.
Facing this extra scrutiny, Allegheny and Nippon abandoned the merger before Reagan took any action.
Biden’s actions
In his four years in the White House, Biden made it a priority to expand government involvement in industry. As part of that, he wanted to expand the president’s control over foreign investment beyond investments by hostile powers and beyond technologies directly related to defense and national security. To that end, Biden issued an executive order in 2022.
In the executive order, Biden ordered the CFIUS to consider how a foreign investment might affect U.S. “technological leadership” and supply chains. This broadened the type of transactions the committee could review.
Then, after the Nippon-U.S. Steel merger was announced in late 2023, Biden announced he would oppose the merger. Biden made the merger an issue on the campaign trail, particularly in Pennsylvania, a swing state home to U.S. Steel.
In March 2024, Nippon submitted the purchase to the CFIUS for approval. After the election, the committee concluded its investigation and referred the matter to Biden, but made no recommendation either way. On Jan. 3, Biden ordered the sale blocked.
This was the first time Section 721 was used to block a non-Chinese-connected purchase, and remarkably, it was used to block a purchase by an ally.
Biden didn’t argue that Japan was a threat to the U.S. or that Nippon Steel would leak technologies to China, Russia, or Iran. Instead, the reasoning was that the U.S. defense industry relies on a robust domestic steel industry, and so our national security requires U.S. ownership and control over U.S. Steel.
Biden thus expanded the reach of the CFIUS and Section 721, and by doing so, empowered Trump to play dealmaker.
Trump’s reversal and the ‘golden share’
“I am totally against the once great and powerful U.S. Steel being bought by a foreign company, in this case Nippon Steel of Japan,” Trump posted on his Truth Social platform in December 2023.
Trump maintained his opposition throughout the 2024 campaign. In April 2024, though, after Trump had locked up the Republican presidential nomination, Nippon hired a new U.S. lobbying firm: Ballard Partners.
Brian Ballard, one of the founders of the firm and a lobbyist on the Nippon account, is a confidant of Trump and a top fundraiser for him. Hunter Morgen, an alumnus of the Trump 2016 campaign and the first Trump White House, was also registered to lobby on the account.
In the first quarter of this year, when Trump returned to the Oval Office, Ballard Partners lobbied the White House on Nippon’s behalf, according to a recent lobbying filing. Second quarter lobbying filings are not due until July 20.
Some time in his first five months in office, Trump warmed up to the Nippon purchase, if the right conditions were added.
And holding the power to block the purchase gave Trump the leverage he needed to get concessions from Nippon.
This brought Nippon to the administration’s negotiating table, where it agreed to give the U.S. government a single “golden share” of the merged company. With this share, the president could block Nippon from offshoring steel jobs, closing plants, or changing how it sources its raw materials.
The no-layoff provisions in the deal highlight how much Biden and Trump stretched the understanding of national security regarding the CFIUS and Section 721. This is, like Trump’s tariffs in the name of national security, quite clearly industrial policy with straightforward economic aims, using national security as a justification.
Also, as many Trump critics have pointed out, this golden share gives Trump immense power. He can now wield U.S. Steel for political or personal gain. He could enrich himself or push the company to take actions that help Republicans.
Already, Trump has reaped political benefit from the deal.
Nippon Steel Vice Chairman Takahiro Mori, grateful for allowing the purchase and eager to stay on Trump’s good side, lavished him with praise: “Because of President Trump, US Steel will remain … made in America by Americans. Thank you, Mr. President. You are saving American steel. And now we will start to make the massive investments that will transform US Steel on the world stage.”
TRUMP MAKES DEAL OF A LIFETIME FOR US STEEL
This is another reason presidents and governors love industrial policy: It forces corporate executives to woo them and publicly sing their praises. Biden was always a fan of such praise. In the Obama era, Biden appeared by video at the groundbreaking of a second factory for Solyndra, a solar company heavily subsidized by the 2009 stimulus bill, of which Biden considered himself the sheriff. Sure enough, Solyndra’s CEO made sure to give the politicians credit: “Because of the vision and the support of President Barack Obama, Vice President Joseph Biden, our Secretary of Energy Dr. Stephen Chu, the U.S. Congress … and many others, we are able to build Fab 2 right here.”
Trump now wields unprecedented control over the steel industry — and thus heavy influence in industries that use steel. This is an occasion for the abuse of power, which should be a lesson for those, such as Biden in 2024, who expand government power.