Brown: Did President Donald Trump just nationalize U.S. Steel?

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On Wednesday, Nippon Steel of Japan finalized its long-sought $14.1 billion acquisition of U.S. Steel following a highly conditional blessing from President Donald Trump. Notably, the U.S. government now holds a so-called “golden share” of U.S. Steel, promising unprecedented veto power over certain company decisions.

The deal stokes the furnaces of cash-strapped U.S. Steel but casts a hot roll of heavy questions.

Among them, did Trump just nationalize one of the country’s oldest and most celebrated corporations? And what will the merger really mean for U.S. Steel’s 22,000 American workers, including 2,000 here in Minnesota?

The terms of the deal resemble a traditional merger in many ways. Nippon laid out the money to the U.S. Steel board while pledging to invest $11 billion in U.S. Steel’s aging plant infrastructure nationwide. It also promised to build a new $3 billion steel mill somewhere in the U.S. after 2028.

That’s sweet music to the company that was founded in 1901 as the world’s largest and most powerful corporation. They even get to keep the U.S. Steel name, logo and Pittsburgh headquarters. But it doesn’t change the fact that the company had become much less significant in recent decades.

For instance, Nucor, a nonunion company based in the South, surpassed U.S. Steel as our nation’s biggest steelmaker in 2008. While U.S. Steel rode profits off big blast furnaces in the 1970s, Nucor capitalized on electric arc furnace technology that makes steel from pure iron and scrap. That technology has since become the industry standard.

Then, just a few years ago, Cleveland-Cliffs passed U.S. Steel as America’s largest flat-rolled steelmaker.

Nippon’s investment in U.S. Steel offers hope to iron and steel communities, like those on the Mesabi Range, where we plainly see the rust forming on old production facilities. Here, plant closures mean economic devastation.

But Trump’s veto powers make this deal a wild card. David McCall, president of the United Steelworkers of America, said Wednesday that the president “has assumed a startling degree of personal power over a corporation.”

Among the chief executive’s seemingly sovereign rights are the power to nix plant closures or cuts to steel production. These are core functions of steel industry decisionmaking, often turning on rapidly changing economic conditions. Companies that react too slowly go bankrupt.

“U.S. Steel may not be state-owned, but it is certainly now controlled by the U.S. government,” wrote Sarah Bauerle Danzman at the New Atlanticist.

I remember the scene after the closure of the LTV taconite mine at Hoyt Lakes in 2001. Range lawmakers, then all Democrats, sought ways for the mine to stay open after the bankruptcy of LTV Steel. One idea, pitched by the late state Rep. Tom Rukavina, was for the state to operate the mine. That suggestion was a nonstarter, dismissed at the time as another crazy whim from “Tommie the Commie.”

But today, no one is calling Trump a communist, even though he claims extraordinary governmental power over the private sector.

Now, it might be that “nationalization” is the wrong word. The U.S. government holds no financial interest in the company, meaning that profits will go to shareholders. What the U.S. taxpayer owns are the immense liabilities of the steel corporation.

What will happen if U.S. Steel says, “Mr. President, if you won’t let us reduce production because of market conditions, we’ll go bankrupt.” Or perhaps, “Mr. President, we need to build electric arc furnaces to stay competitive, but they don’t need as many workers as blast furnaces.”

What’s a president to do? Anyone who’s spent time around the steel industry knows that these decisions are cyclical and never-ending.

The Nippon-U.S. Steel merger was never something to fear on its own. Modern-day Japan is our ally and there are always steps that can be taken to secure domestic steel production in an emergency (including, ironically, nationalizing the industry). But the political dance that was necessary to clear the deal’s political hurdles continues a discouraging trend.

U.S. trade and economic policymakers, Trump included, seem to have no problem reserving profits and assets to the private sector. That’s in keeping with the nation’s capitalistic traditions. But now the U.S. government is granted the impossible task of nannying the most difficult parts of running a business. That includes keeping people employed, assessing production goals and deciding where to spend company funds.

Chances are, Trump and the government won’t do much. Nippon will operate its new subsidiary with one eye on the future and the other on its profits, as enormous corporations tend to do. Who’s looking out for the workers? As usual, mostly just the workers.

“As the sale concludes, it seems likely that attention will dissipate,” said McCall. “U.S. Steel’s PR machine will power down, and the majority of elected officials will turn their attention elsewhere.

“However, our union will remain. We will continue watching, holding Nippon to its commitments. And we will use the most powerful tool workers have against global corporations: collective bargaining.”

The union contracts at U.S. Steel expire in September 2026. By then, we should see the investments Nippon has promised and evaluate the grade of the company’s lofty promises. If gold paint is rubbing off the government’s share in U.S. Steel, we’ll know this ordeal was mostly for show.