Is President Trump nationalizing United States Steel? The question arises after the president advised that the “partnership” between the industrial icon and a Japanese steelmaker would leave the firm “controlled by the United States, otherwise I wouldn’t make the deal.” Mr. Trump adds that “it’s an investment and it’s a partial ownership but it’ll be controlled by the U.S.A.” No doubt this raises questions at the Tokyo headquarters of Nippon Steel.

The Japanese company, after all, had sought to buy the steelmaker outright. Its bid was approved by the board and shareholders of the Pittsburgh-based firm. Generally in a free-market, capitalist system such points are paramount. Yet, per the AP, Senator McCormick reckons that the deal now would “guarantee an American CEO, a majority of board members from the United States and U.S. government approval over certain corporate functions.”

How does that arrangement square with Nippon Steel’s purported purchase of the American company? The Trump-backed terms center on granting Uncle Sam a so-called golden share in the acquired firm. That amounts to an equity stake that gives the holder, in this case the federal government, certain special rights in the company’s operations. As of this writing, it’s not clear whether Nippon Steel has signed off on the “golden share” proposal.

The details, too, of what privileges America would receive along with its “golden share” of United States Steel are not yet known. During earlier negotiations over the sale of the firm, per Reuters, Nippon Steel had vowed not to “reduce production capacity” without the okay of the firm’s three federally appointed directors. Those concessions were made after the Biden White House, in a sop to unions, had blocked the sale for national security reasons.

It’s hard to see how granting Uncle Sam such a potentially decisive role in running what was supposed to be a wholly owned subsidiary of Nippon Steel would appeal to the company’s actual owners. It echoes Mr. Trump’s musings about requiring a federal ownership stake in TikTok if the company finds a new American owner. Such “golden shares” also appear to take a page from the statist brand of capitalism practiced by the Chinese communists.

Such ownership stakes help the mandarins at Beijing to have sway over private firms on the mainland, the Wall Street Journal reports, without the fuss of “a public battle with some of the country’s biggest companies.” The “golden shares” amount to a “quieter form of control,” the Journal adds, in “private companies that have long driven Chinese innovation and job creation.” Feature the 1 percent stake Beijing recently took in Alibaba’s digital-media division.

The “golden shares,” per the Journal, “give the government board seats, voting power and sway over business decisions,” and for the companies involved, “there is little choice” but to accede to Beijing’s requests. As these columns noted in the case of Mr. Trump’s envisioned American Sovereign Wealth Fund, such arrangements would appear to run the risk of fostering corruption and cronyism between the government and the corporate sector.

That could give the legitimate owners of Nippon Steel — the shareholders — pause if it looks like the management’s ability to efficiently run the company is impaired by Uncle Sam’s pettifoggery. “I think they know what they’re getting into,” Mr. McCormick says of Nippon Steel. “They negotiated it.” Even so, considering the power of the federal leviathan, it’s hard to say that any private corporation can fairly “negotiate” with Uncle Sam. 

Nationalized industry in the West has a poor track record, too. When socialists in Britain and France took over their steel industries, the results were disastrous in part because the companies were serving politicians’ interests rather than the market. Far better for United States Steel to be owned by a private sector firm — whether headquartered in America, Japan, or another democratic nation — than to fall under government control anywhere.