President Donald J. Trump's Government Stakes in Private Industry

Never before has the U.S. government so proactively taken equity in private firms outside of a financial crisis. Consider some of the headline deals announced in 2025:

• U.S. Steel (Steel Industry): In June, the Administration obtained a special “golden share” in U.S. Steel – a non-financial stake granting veto power over certain decisions – as a condition for approving the company’s sale to Japan’s Nippon Steel. This ensured U.S. Steel’s new foreign ownership can’t undermine American interests.
• MP Materials (Rare Earths): In July, the Department of War (DoW) invested $400 million to acquire a significant stake in MP Materials, a rare-earth mining company, becoming its largest shareholder. The deal will fund a new U.S. magnet factory and includes a 10-year agreement to purchase all its magnets, with DoW even guaranteeing a floor price for critical rare-earth oxides. It’s an aggressive bid to break China’s stranglehold on rare earths.
• Intel (Semiconductors): By August, the Commerce Department had converted a portion of Intel’s federal chip subsidies into an equity stake of about 9.9% in the company. This $8.9 billion stake instantly made the U.S. government Intel’s largest single shareholder.
• Westinghouse (Nuclear Energy): In October, the Commerce Department secured an option to take an 8% ownership in Westinghouse, a major nuclear power firm, as part of a plan to jump-start construction of new reactors. If Westinghouse’s value climbs to the $30 billion range and it goes public, the government can exercise rights to purchase up to 20% of the company. This gives Washington influence in a sector deemed vital for both energy security and national defense.

Several other deals in late 2025 followed a similar pattern: Lithium Americas, a Nevada lithium mining venture, received deferred federal loans in exchange for a 5% government stake in the company (plus 5% in its Thacker Pass mine joint venture). The Pentagon took a 10% stake in Trilogy Metals, which has mining projects in Alaska. And in November, startups Vulcan Elements (a rare-earth magnet manufacturer) and ReElement Technologies (a critical minerals processor) secured federal funding with strings attached – equity warrants and future stock purchase rights for the government. In total, Washington’s equity investments now span industries that form the backbone of the modern economy.

What’s driving this flurry of Uncle Sam’s stock buying? In a word, security – both national and economic. Administration officials argue that these targeted investments will strengthen supply chain autonomy and reduce U.S. reliance on foreign powers for critical goods. A White House spokesperson defended the strategy, saying if “business-as-usual” policies had worked, “America would not be reliant on foreign countries for critical minerals, semiconductors and other products that are key for our national and economic security.” The message is clear: by taking ownership stakes, the government hopes to jump-start domestic capacity in areas where America has fallen behind, from chip fabrication to mineral refining.

The geopolitical context looms large. China’s dominance in rare earths, batteries, and solar panels – and its willingness to use that leverage – has shaken U.S. policymakers. In fact, earlier this year President Trump invoked emergency powers under the Defense Production Act to boost domestic mining of critical minerals. The Pentagon’s deal with MP Materials, for example, is explicitly meant to “keep China from accessing even more rare-earth metals.” Likewise, the stake in Intel comes as global semiconductor supply chains are being re-shored to prevent the kind of chip shortages that hampered industries in recent years. In short, these investments are seen as strategic bets to secure American control over key resources and technologies.

There’s also an economic argument: supporters claim that by investing directly, the government can shape industries in the public interest and share in their success. Rather than give outright grants or subsidies, they take equity so that “taxpayers get a good bargain” if the company thrives. The hope is that public money can “move the ball forward” in high-risk areas where private capital was skittish, and then crowd-in more private investment. In theory, this proactive approach could bolster U.S. manufacturing jobs and innovation, reinforcing long-term economic security alongside national security.

How is the Administration pulling this off, legally speaking? After all, the U.S. government doesn’t typically play venture capitalist. The answer is a patchwork of authorities and creative maneuvers crafted both by the Trump team and building on tools Congress created in prior years.

For one, the Administration is leveraging the Defense Production Act (DPA) – a Cold War-era law that allows the government to direct industrial production for national defense. Trump’s March 2025 emergency order on critical minerals opened the door for the Pentagon to pour money into mines and processing facilities. The MP Materials deal, for instance, is funded in part through DPA Title III appropriations. This essentially treats secure access to rare earths as akin to a wartime priority, which in today’s strategic climate isn’t far-fetched.

Newer institutions are in play as well. The Department of Defense’s Office of Strategic Capital, launched in 2022, received a funding boost to invest in critical industries like minerals, shipbuilding, and microelectronics. This office acts almost like an investment fund within the Pentagon. Similarly, the Commerce Department is tapping the CHIPS Act – a $52 billion semiconductor subsidy program enacted in 2022 – and converting some of those grants into equity stakes. The 9.9% Intel stake emerged from this approach: roughly $5.7 billion of remaining CHIPS Act grants, plus $3.2 billion from a Defense “Secure Enclave” program, were converted into common stock shares of Intel. It’s an unprecedented use of federal incentive funds.

Other agencies have joined in: the Department of Energy’s Loan Programs Office, originally geared to give loans for clean energy, has negotiated for warrants or equity options in exchange for helping firms like Lithium Americas. Even regulatory powers have been leveraged – the U.S. Steel “golden share” came about because the Administration could approve or block the foreign takeover, effectively using that as bargaining power to secure a stake without spending a dime. In short, the government is activating every lever it can: emergency powers, dedicated funds, loans, and deal-making clout – all to insert itself into the boardrooms of private industry.

This wave of proactive government intervention is not without significant controversy. Critics from across the spectrum are asking pointed questions about how these investments are being decided and what risks they carry.

First is the issue of strategy and transparency. Thus far, there is “no clearly articulated strategy” tying these deals together, observes Aaron Bartnick, a Columbia University fellow and former Biden administration official. It appears ad hoc – a deal here, a deal there – reactive to opportunities or crises rather than part of a cohesive industrial policy. The selection process for which companies get federal money has also been opaque. Are these truly the most critical and deserving firms, or just those with the right connections and lobbying? Darrell West of Brookings noted that many deals had “almost no serious review” and “don’t seem well thought out.” The fear is that, absent transparent criteria, political considerations (or even personal interests) could creep in. When huge sums are at play, the potential for “deals that favor friends or disfavor foes” is a real concern.

Indeed, conflicts of interest are a looming worry. The STOCK Act prohibits officials from insider trading, but it doesn’t prevent them from owning stocks they also influence. After all, if Uncle Sam becomes a major market player, will public officials be tempted to talk up or bail out the firms in which the government (and they themselves) have a stake? It’s a slippery slope that has some economists uneasy about the long-term implications for fair markets.

Then there’s the fundamental question of financial risk. These companies were not picked at random – several were in distress or carrying heavy debt. Westinghouse, for example, only a few years ago went bankrupt due to cost overruns on nuclear reactors, and it remains under financial pressure. MP Materials is attempting to build an entire supply chain from mine to magnet essentially from scratch, in an arena where China has undercut prices for years. Even Intel, while not distressed, is pouring capital into turnaround efforts as it fights off fierce overseas competition. In many cases, Uncle Sam is effectively backing underdogs in very tough industries. If these bets fail, taxpayers could lose billions. Unlike a venture capitalist, the government can’t easily diversify away the risk – it’s concentrating public funds in a handful of companies. And unlike the bank bailouts of 2008, these are not (yet) systemically critical firms that absolutely must be saved; they are strategic choices with uncertain outcomes. Will the public be willing to absorb a loss if, say, a mining venture goes bust or a high-tech company doesn’t pan out?

Lastly, observers worry about the long-term precedent. America has historically championed free markets and limited government involvement in business. This new “proactive capital intervention” reflects a sense of urgency about keeping up in the global industrial race (particularly vis-à-vis China). But it also marks a step toward a more state-directed economy. Today it’s rare earths and chips; tomorrow could a future Administration use this playbook for other sectors, potentially distorting markets or playing favorites? Once the government is in the habit of buying stakes in companies, it may prove difficult to draw the line. Even supporters of the strategy acknowledge these moves are experiments whose broader effectiveness and cost to the public “remain to be seen.”

Beyond security concerns, there’s debate over the economic effects of these investments. Do they actually benefit the U.S. economy? Potentially, yes: by catalyzing new domestic industries, they could create jobs and technological leadership in fields like advanced manufacturing, battery production, and nuclear engineering. If successful, the return on investmentmight include not just profit for the Treasury, but a larger tax base and reduced supply chain disruptions for American manufacturers in the future.

However, skeptics note that government-picked winners don’t have a great track record. Will these companies become self-sustaining engines of growth, or perpetual wards of the state? That likely depends on execution. One positive sign is that some of the companies’ stock prices have surged with the news – investors seem cheered that the federal government is providing a backstop. But Wall Street’s short-term enthusiasm is not proof of long-term success (and in fact could signal market distortions, since who wants to bet against a firm backed by essentially unlimited government resources?).

A related concern is inflation – pouring billions into companies could, in theory, stimulate parts of the economy and add to inflationary pressure. In practice, though, these sums (around $10 billion total so far) are tiny relative to the $25 trillion U.S. economy and the trillions in federal spending during the pandemic. They’re targeted investments, not broad stimulus. If anything, by addressing supply bottlenecks (e.g. helping produce more semiconductors domestically), these actions might reduce inflationary pressures over the long run in those specific markets. For example, more chip fabs in America could eventually mean cheaper, more stable supply of electronics, cars, and appliances for consumers. Still, any new government spending when the economy is running hot has to be watched. The key is that these investments should increase productive capacity – otherwise it’s just money sloshing around. In short, the jury is out on the macroeconomic impact; it likely hinges on whether these companies thrive. If they do, the economy gains productive assets and high-paying jobs (a plus). If they don’t, we’ve effectively thrown money into a hole (a loss, potentially slightly inflationary with nothing to show for it).

This great experiment in government-as-investor underscores a broader shift in thinking. Faced with global industrial competition, the U.S. is edging away from a pure free-market ethos toward a more protective, strategic stance. It’s a recognition that, in an era of Chinese state capitalism and fragile supply chains, doing nothing may carry greater risks than doing something. In many ways, these equity stakes amount to catching up on industrial policy that rival nations have been practicing for years.

Yet even those sympathetic to the goals argue that more discipline and oversight are needed. If America is going to remake its approach, it must do so carefully. What might that entail? Based on the facts at hand, here are a few logical steps and policy recommendations:

• Develop a Coherent Long-Term Strategy: Rather than a series of one-off rescue missions, the Administration should articulate a national industrial strategy that prioritizes which capabilities we build domestically, in what time frame, and with what mix of tools (regulations, R&D, education, as well as investment). This plan should involve input from industry, labor, and security experts, so that investments are made in a coordinated fashion. A broader strategy could also ensure we support a diverse ecosystem of companies (big and small) to avoid creating single points of failure.
• Improve Transparency and Oversight: The government should be upfront about the criteria for selecting companies and the terms of deals. Clear benchmarks and conditions should be attached to each investment (e.g. performance milestones, matching private investment, limits on executive bonuses or stock buybacks until taxpayers are repaid). An empowered oversight board or inspector general should track these projects to make sure public funds are used for their intended purpose – supply chain resilience, not corporate welfare. This will help counter perceptions of favoritism and ensure conflicts of interest are avoided. Publishing periodic reports on the outcomes (jobs created, output achieved, revenues earned) will also help maintain public support.
• Protect the Taxpayer’s Interests: Whenever possible, structure the support as loans, convertible equity, or warrants so that taxpayers gain if the company gains. The Intel case, for example, might turn out well if Intel’s stock rises in the future and the government can sell its stake at a profit. Likewise, the Pentagon taking warrants in Vulcan and ReElement means if those startups succeed, the government can share in upside. Such arrangements are far preferable to straight grants or handouts. Additionally, set clear “exit” plans: the government shouldn’t plan to own pieces of companies forever. Once strategic projects are up and running, there should be a roadmap to either privatize the government’s stake or gradually withdraw support, to let market competition take over under normal conditions.
• Leverage Allies and Private Capital: The U.S. doesn’t have to shoulder the burden alone. For instance, on critical minerals and semiconductors, allies like Japan, Europe, and Australia are also investing in diversifying supply chains. Coordinating strategies can avoid duplication and share costs. If the U.S. is funding a rare earth facility, perhaps allies can focus on related processing or a different material. Private investment should be co-invested whenever feasible, as seen with the Vulcan project that raised $550 million privately alongside government loans. The more skin in the game private investors have, the more confident we can be that a project is economically sound. Public funds should aim to catalyze private innovation, not replace it.
• Focus on Innovation and Competitiveness: The end goal should be that these industries become globally competitive without indefinite subsidies. That means continuing to invest in R&D (through NSF, DARPA, ARPA-E, etc.) so that American firms lead technologically. Workforce development is also key – training the engineers, chemists, and skilled trade workers needed for these new factories. Policies like tax incentives for manufacturing, streamlined permitting for plants, and reliable infrastructure (energy, transport) will support the success of the very projects the government is funding. In short, money alone won’t solve the problem – it must be accompanied by smart policies that improve the overall environment for high-tech manufacturing in the U.S.

In conclusion, the Trump administration’s aggressive investment strategy reflects a seismic shift: economic security is now viewed as national security. By treating industrial capacity and supply chains as strategic assets, the U.S. government is wagering billions in public funds to reclaim domestic strength and reduce foreign dependence. The rationale is compelling—but so are the risks. This high-stakes experiment will ultimately be judged by outcomes.

The Administration has placed its bet. Now it must show the country not just the vision—but the plan—to make it pay off. America’s industrial revival cannot be built on government cash alone; it will require careful planning, accountable execution, and partnership with the private sector. Getting that balance right is the next big challenge. The stakes, both figuratively and literally, could not be higher. Because when Uncle Sam takes a seat in the boardroom, every American becomes a shareholder in the results.