State capitalism with American characteristics

Jorge Costa Oliveira

In the current Trump 2.0 administration, beyond the usual fiscal and budgetary measures, economic stimulus packages, and regulatory agencies in sectors such as finance, energy, and communications, there is a manifestly greater degree of political control over the economy. It began with a strong desire to also control monetary policy – the responsibility of the Federal Reserve (Fed) – with repeated attacks on the Fed’s governance and chairman, including reiterated calls for Jerome Powell’s removal, and constant pressure on the Fed to cut benchmark interest rates.

This has been accompanied by successive waves of tariffs, threats of sanctions, and vendettas against companies and business leaders Trump dislikes – and even some he claims to like (Musk). This drift toward diktat has gone beyond the economic sphere, including actions and vendettas against Democrat-governed states, universities, and law firms.

Trump has also made unprecedented decisions in the United States regarding direct intervention in private companies. In the case of Intel, one of the country’s leading semiconductor producers, after demanding the resignation of its CEO (whom he accuses of having ties to China), the federal government converted $8.9 billion in previously agreed federal subsidies (under the CHIPS and Science Act) into a 10% equity stake in Intel.

Last month, the U.S. Department of Defense revealed it would acquire a 15% stake in MP Materials, a critical minerals mining company. Given the stated rationale – supporting the strengthening of U.S. tech industries to promote industrial revival and uphold U.S. national security – it is likely there will be further cases of direct federal involvement in technology-sector companies.

Meanwhile, Trump authorized Nvidia and AMD to sell certain advanced chips to China – previously banned on national security grounds – provided that 15% of the sales value be paid to the U.S. government. “National security” was again set aside for commercial reasons when Washington approved the acquisition of U.S. Steel by Nippon Steel, on the condition of granting the U.S. government a “golden share.”

Preparations are also underway for the creation of an unusual U.S. sovereign wealth fund, expected to hold assets not derived from budget surpluses (as is the case with all other existing sovereign funds), but rather “including natural resource reserves” (e.g., critical raw materials concessions in Ukraine, Greenland, and elsewhere), which Forbes estimates could total “potentially more than $100 trillion.” On top of this, there are the massive sums of foreign investment in the U.S. (about $1.5 trillion) promised by economic blocs (the EU, Japan, and South Korea) that Trump has already announced he plans to personally direct.

Perhaps in his zeal to emulate foreign leaders he admires, Trump’s direct intervention in private companies, their management, and their business decisions, together with the growing political control of the economy, is pushing the United States rapidly toward a form of state capitalism with American characteristics – as even conservative media such as the Wall Street Journal have noted.

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