Trump’s Industrial Push Sees Washington Invest in Strategic Industries
Under President Donald Trump, the US government has begun taking direct equity stakes in major private companies, including chipmaker Intel, rare earth producer MP Materials, and lithium developer Lithium Americas, as part of a sweeping effort to bolster national security and reduce reliance on China.
The policy marks a sharp departure from decades of free-market orthodoxy. Some company boards are reportedly eager to gain Washington’s backing, seeing US investment as a competitive advantage.
Others, however, worry about the prospect of surrendering control or equity in exchange for regulatory approvals or funding.
While Democrats have criticized the approach as lacking long-term strategy, the move has attracted bipartisan support in key areas such as semiconductor manufacturing and critical minerals.
A New Era of Industrial Policy
Administration officials say this is just the beginning.
Treasury Secretary Scott Bessent has described the plan as part of a broader effort to secure industries essential to US national defence and supply chain resilience.
“I wouldn’t be surprised if the US took more stakes in private companies,” Bessent said at a CNBC event on October 15.
“When you’re facing a non-market economy like China, you have to exercise industrial policy.”
Beyond national security, the White House says the goal is also financial, to ensure taxpayers benefit from the billions being deployed to rebuild American industry.
High-Profile Stakes: Intel and MP Materials
The government’s move into Intel came just days after Trump publicly called for the ouster of its CEO, arguing that the company had received overly generous terms under the Biden administration.
In November 2024, the Biden White House had awarded Intel nearly $8 billion in grants to support its $100 billion US semiconductor expansion, without taking any equity.
Commerce Secretary Howard Lutnick defended Trump’s new approach: “Why are we giving a company worth $100 billion this kind of money? The American taxpayer should get an equity stake for our money.”
In July, the Defence Department invested $400 million in MP Materials, the owner of a rare earth mine in California.
The deal gave Washington a 15% equity stake, making it the company’s largest shareholder.
The Pentagon also guaranteed a minimum price for certain rare earth products and pledged to help find customers for the mine’s output for ten years.
Expanding into Critical Minerals
This month, the administration struck additional deals in the critical minerals sector.
The US acquired 5% stakes in Lithium Americas and one of its joint ventures, and a 10% stake (plus warrants for another 7.5%) in Trilogy Metals, both based in Vancouver.
The agreements included the approval of a 211-mile mining access road in Alaska, reversing a previous Biden-era decision.
According to TechMet CEO Brian Menell, whose firm received $25m from the US government in 2020 and another $80m under Biden, US investment has proven transformative.
“A US equity investment de-risks projects and attracts global investors,” he said.
“Governments around the world are very respectful of US interests, it’s been positive for us everywhere.”
Blending Policy and Profit
The White House insists it isn’t building a sovereign wealth fund but rather using equity stakes as one of several tools to strengthen the domestic supply chain.
“The point is to make sure taxpayers aren’t handing out money with no strings attached,” a senior official said, adding that any profits are a “welcome bonus” to the main goal of national security.
So far, the returns have been significant:
- The government’s stake in Intel, bought at $20.47 per share, has gained nearly 85% in value.
- The 15% MP Materials stake has more than doubled since the deal closed.
- The 5% position in Lithium Americas, acquired in exchange for deferring $184m in debt payments, is now worth about $93m.
Private shareholders have often benefited alongside the government, with share prices jumping after US investments were announced.
Corporate Concerns and Legal Gray Areas
Not all companies are comfortable with the new policy.
Some executives fear creeping government influence, while others see it as an unavoidable cost of doing business.
In some cases, the government has sought financial leverage without taking equity.
In August, Nvidia and AMDreportedly agreed to give the US 15% of revenue from AI chip sales to China in exchange for export licenses, though the deal was later scrapped after China imposed its own ban.
Similarly, the government received a “golden share” in US Steel during the approval of its sale to Japan’s Nippon Steel, giving Washington veto power over certain corporate decisions.
Critics like Yale’s Jeffrey Sonnenfeld have labelled such deals “extortion schemes,” warning that the line between strategic policy and government overreach is blurring.
A Mixed Record and Uncertain Future
Proponents note that US equity investments are not without precedent, the government took stakes in major banks, AIG, and automakers during the 2008 financial crisis and ultimately earned a small profit.
Legal experts say current deals fall within congressional authorization, especially through agencies like the International Development Finance Corp.
For now, Trump officials insist they are targeting only strategic sectors, from semiconductors to critical minerals, and acting with restraint.
“We’re not coming in to take stakes in nonstrategic industries,” Bessent said. “But we do have to be careful not to overreach.”
Whether this experiment in state-backed capitalism endures beyond the Trump administration remains to be seen — but it has already redrawn the boundaries of how the US government engages with private enterprise.