The Trump administration has involved itself in private-sector business decision-making in several deals, reflecting a level of comfort with activist economic management unusual for recent United States presidents, especially Republicans.
The actions, which range from taking ownership stakes in private firms to directing spending decisions by foreign governments, are in line with President Donald Trump’s penchant for deal-making, but are at odds with the free-market philosophy that top Republicans espoused for decades.
The administration has justified some of the deals on national security grounds, while others have been framed as improving the terms of trade with foreign nations.
Either way, though, the level of direct federal intervention into private business decisions by the Trump administration is beyond recent precedent.
Gary Hufbauer, a fellow at the Peterson Institute for International Economics and former Treasury official, said that the main precedent for Trump’s actions is the federal control of industrial production during World War II.
“Most U.S. industrial policy episodes involve subsidies or tariff protection to select industries, but not direct federal control,” he said.
Here are the Trump administration’s notable actions in managing private businesses directly.
MP MATERIALS OWNERSHIP STAKE
In July, the Department of Defense became the largest shareholder of rare earth mining company MP Materials, agreeing to buy $400 million in preferred stock. The deal also includes a 10-year agreement to buy Neodymium-Praseodymium (NdPr) metal and oxide products, which are necessary to produce permanent magnets, at a price floor.
The unusual deal has been justified as necessary to compete with China in the production of rare earth minerals that have important clean energy and defense applications.
U.S. STEEL “GOLDEN SHARE”
The Japanese steelmaker Nippon Steel entered into a merger agreement in June, subject to a national security agreement with the government that gives the administration a “golden share” in the business and gives it the final say over many business decisions. The golden share allows the government to blackout certain capital expenditure decisions, any renaming of the company, a change in headquarters, shutting down factories, and more.
DIRECTED INVESTMENTS UNDER TRADE DEALS
Several of the trade deals that Trump has touted would give the administration the ability to direct investment into the U.S. by the counterparty in the trade deal.
The Japan trade deal struck in June, according to the White House, includes commitments from Japan to invest $550 billion in the U.S. at Trump’s direction. The funds are supposed to be used for energy infrastructure and production, semiconductor manufacturing, critical minerals production, and more.
Similar provisions were included in deals reached with the European Union and South Korea.
Treasury Secretary Scott Bessent likened the trade deal provisions to a form of state-directed investment, akin to the sovereign wealth funds maintained by some governments.
“Other countries, in essence, are providing us with a sovereign wealth fund,” he said last week in a television interview.
NVIDIA AND AMD EXPORT FEES
The Trump administration reached an unusual deal this month with Nvidia and AMD to have the two companies pay the government 15% of the revenues from sales of certain chips to China.
The administration has banned the sale of cutting-edge chips used for artificial intelligence to China for national security reasons. However, it lifted the export controls for the sale of less powerful chips, subject to the government taking the 15% cut.
REPORTED INTEL SHARE
The Trump administration is reportedly considering taking a stake of about 10% in Intel, which would make it the chipmaker’s largest shareholder.
The deal could involve converting government grants under the 2022 CHIPS and Science Act into equity.
The CHIPS Act provided tens of billions of dollars in subsidies to bolster the domestic production of computer chips. The Trump administration could use a direct stake in Intel to advance the goal of boosting domestic production by an American company.
PRECEDENT FOR THE GOVERNMENT TO BE INVOLVED IN PRIVATE INDUSTRY
While the Trump administration’s direct intervention into the management of specific businesses is notable, the government’s involvement in private industry is not unprecedented.
The Biden administration, for example, carried out major initiatives of industrial policy – that is, efforts by the federal government to develop and shape specific industries. The CHIPS Act significantly increased the government’s involvement in chipmaking, including by setting labor requirements for grant recipients. The 2022 Inflation Reduction Act, too, included numerous provisions meant to encourage the growth of domestic clean energy companies.
The government has long helped finance private companies exporting, importing, or developing overseas. In 2018, Trump signed the BUILD Act, which created and funded the Development Finance Corporation, which invests in companies around the world to further U.S. interests.
Looking further back, the U.S. has bailed out companies or temporarily taken them over in times of financial panic or war. For example, in 2008, the Treasury took major stakes in the automakers General Motors and Chrysler and helped reorganize them.
Still, Trump’s interventions are notable in their scope and in that they are at odds with the skepticism of industrial policy and state intervention that has been strong among conservatives for years.
