How Trump Is Changing American Capitalism

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From the New York Times, I'm Natalie Kitroff.

This is the Daily.

The president spoke with reporters.

He says that the U.S.

will have a golden share in U.S.

steel.

Shares of rare earth producer MP Materials on pace for their best day in history.

DOD will be MP's largest shareholder after poverty.

NVIDIA and AMD have agreed to give the U.S.

government 15% of the revenue.

In a series of extraordinary deals, President Trump has muscled himself directly into the business of corporate America.

Friday night breaking news, it's on Intel, Intel Stock is.

Including making the U.S.

government the largest shareholder of Intel, one of the most iconic companies in the country.

It really is

almost uncharted territory, is it?

It's a move that's been praised by Bernie Sanders and criticized by by conservatives as socialism.

Today, my colleague Andrew Ross Sorkin on what all this means and how it could reshape America's approach to capitalism.

It's Tuesday, September 2nd.

Andrew, we've seen Trump insert the government into U.S.

companies in a bunch of ways in the last few months.

But the recent news that the U.S.

government was taking this ownership stake in Intel is the thing that convinced us we had to come to you.

This was the bombshell.

This is a major corporation.

And this kind of move is just extremely rare.

And you, as our resident expert on all things corporate America, have been trying to make sense of it.

There's no question that the decision by the administration to take a 10% stake in Intel is is a watershed.

It's a watershed not just for the world of business, but for the much larger idea around capitalism,

around free markets,

around the idea that the United States has spent the last century exporting the concept of free market capitalism and has been critical.

of state-run capitalism.

And in so many ways, even politically, this flips the entire script of the approach that Republicans and conservatives have taken towards business for so many years.

I can't tell you how many business leaders I've spoken to over the last several days who are looking at this and have so many questions, have so many questions, not just about the particulars of the U.S.

taking stake in this company, but in what it portends,

what it means.

You know, the last time we saw anything like this, and really the only times this has ever happened in American history where the U.S.

government's gotten this engaged in business, it's been in the context of a crisis.

We had this happen in 2008 with the investment banks, with the automobile makers, but it happened because those companies were considered in absolute distress and that the effect of letting them go bankrupt was going to be cataclysmic for the rest of the country and its economy.

Right.

The idea then was that these banks were too big to fail.

Incidentally, the title of your book on this subject, the idea was this was necessary to contain major economic fallout.

Exactly.

And look, that moment unto itself created all sorts of debates around the country that last even to this day around the very idea of bailouts and how the government should or should not be involved in the world of business.

And so here we have this example of Intel, which is just the latest in a string of transactions in which the U.S.

government has taken effectively stakes in businesses or otherwise collecting tolls or other things that they haven't done before.

at a time when we're not in crisis and how that may rewrite the rules of capitalism.

So let's talk about how all this started.

You mentioned that Intel is part of this string of transactions.

Take me through that.

So earlier this year, we saw Nippon, which is a steel maker in Japan, try to buy U.S.

steel.

And the president stepped in and said, I'll approve this deal, but I'll only approve this deal if the United States gets what's called a golden share.

So this is a special share that has certain governance powers, which effectively allow the U.S.

government, in many cases, to control what Nippon Steel does with U.S.

Steel in the future.

How so?

In what way?

Well, for example, if the U.S.

government decides that Nippon wants to close down a factory that's owned by U.S.

Steel, they could say no.

In certain cases, they may try to even be able to require Nippon Steel to to make investments in ways that Nippon Steel wouldn't normally.

So it just changes the complete dynamic of the business.

Right.

And then in July, we saw the Pentagon take a stake in a rare earths minerals company, which is something we've also never seen the government do in this kind of context.

And then after that, we saw an even more unique transaction.

Trump administration officials, you know, they had been railing about how we should not allow our chip makers to export their chips to China.

Right.

It was prohibited.

It was prohibited until the CEO of NVIDIA goes to the White House and makes the case to the president that they should be able to sell less advanced chips in China.

Right.

And the president says, you know what?

Okay, I'll let you do that, but you are going to pay me, you're going to pay the U.S.

government a 15% tax on those chips.

Now, some people look at that and say, that's a 15% VIG.

What's a VIG?

A VIG is like what the mafia would do.

You take a VIG.

Uh-huh, like extortion.

I mean, that's one way to, I'm being polite about it, but you can sell the chips, but we're going to take a piece of the action.

We're going to take 15% of every chip that you sell.

It's also just, as you said, it's a tax, right?

Which is not something that Republicans typically want to do, tax corporations.

It's the antithesis of what they've talked about for all of these years.

You know, Ronald Reagan has a famous quote where he says, the nine most terrifying words in the English language are: I'm from the government and I'm here to help.

And here we are in a situation now where a Republican president is saying, the U.S.

government is here to help and not just here to help.

We want to own you.

And then we get this Intel deal.

And that was really the biggest bombshell of all.

And let me go backwards just a minute to give you the backstory of that, because unto itself, I think it's fascinating, and it has the entire business world wondering what comes next.

In this instance, Fox News does a report.

The CEO's name is Lip Bhutan.

About the CEO of Intel.

He was formerly the head of Cadence Design Systems, a software company enabling chip design, but it was found guilty of violating export control, selling the technology and cadence design to a Chinese military university.

Alleging and claiming that he has ties to the Chinese government.

And that report sets off President Trump to the point where he literally takes to Truth Social.

On Truth Social, President Trump wrote, The CEO of Intel is highly conflicted and must resign immediately.

There is no other solution to this problem.

Questioning

the CEO whether he should be the CEO of Intel and what's happening at Intel.

And remember, importantly,

Intel was a recipient of billions of dollars of grants from the Chips Act in 2022 during the Biden administration, where they had committed to build advanced chips and what are called foundries in the United States.

And that came after COVID, where we decided as a country that we needed to have a more resilient supply chain.

We couldn't rely on all of of the major important chips being manufactured in Taiwan.

And so Intel is literally building huge manufacturing facilities in places like Arizona with the expectation that this grant money is coming their way.

So they have a lot at stake in all of this.

All the construction workers are there, and they're just waiting for more checks to keep coming for years.

Right.

So the CEO of Intel is now under fire in the biggest way because you have the President of the United States criticizing him, criticizing Intel,

and he and the board of Intel go into crisis management mode.

And what do they tell him to do?

They say, go try to take a meeting with the President of the United States in the White House.

This president loves to meet with CEOs, call the White House, and get a meeting.

Like, make this go away.

This needs to be solved.

Somehow make this go away because if it doesn't go away, the CEO might lose his job and he would go away.

So the CEO goes to the White House, sits in the Oval Office with President Trump and makes his case.

And in the context of making his case for himself, for the company, the president has a suggestion.

Well, you know, we're giving you all of this money.

And by the way, there's still billions of dollars in grant money that has been allocated to you, but we have not sent the check yet.

So you're going to still need that money.

I think the U.S.

government, given the fact that we're helping you so much, should own a piece of your company.

The CEO, given, I think, all of the pressures around him, against him personally, and the pressure on the company and the pressure on the board, says, okay.

Wow.

And so the president then takes to Truth Social and says that we, the U.S.

taxpayer, has just gotten 10% of the company, and he says that we got it for free.

And did we get it for free?

It's a good question.

Sort of.

We had committed and allocated this money as part of the CHIPS Act to Intel.

That money was supposed to go to Intel anyway.

Intel now is justifying its decision to give the 10%

in part because if you were to add up all of the dollars that the U.S.

government had granted the company, it would buy you the equivalent of 10% of the company.

Do we know why Trump is doing these deals, like with Intel, but also with these other companies that we talked about?

Is there a motivation that ties all of this together?

You know, if there's a through line to all of this, it's the general concept that Trump believes, as he has articulated for decades, that he believes the U.S.

government and the taxpayer is ultimately getting ripped off

and is oftentimes getting ripped off by businesses

and, in many cases, getting ripped off by other countries.

That's the rationale, for example, behind the tariffs.

And he's somebody who's saying there's no free lunch.

If the taxpayer is going to give a business money, the taxpayer should get something directly from it.

Historically,

the philosophy of grants, for example, was that the U.S.

economy and therefore the taxpayer indirectly would be a beneficiary of giving various grants to different industries or businesses or whatnot.

Sometimes we've wanted to increase innovation in EVs, and so we've subsidized that in the past or windmills, something the president is against.

But we never asked for something directly in return because what we were getting in return was hopefully a larger economic benefit.

And in this case, Trump is saying, we, the American taxpayer, the American government, we need something much more tangible than that.

Very much so.

He wants to be able to say, I gave out X amount of money and I can look right here and I can do the math and I can show you that we got X amount back.

And then some.

And it's not just money compensation that he's getting in these these deals.

He and the U.S.

government are also getting control, control over these companies, sway over their decisions.

This is something that we've seen the Trump administration do over and over again with a bunch of institutions in this country.

In this case, what is that control about?

There's two things going on here.

One is this issue of national security.

The president has been very outspoken about his worries that China is going to one day take over Taiwan.

And if that happens, the U.S.

is going to be in a real problem spot because most advanced chips in the world are made there.

And so he says to himself that he needs to have more control over the idea that Intel is going to have success in the United States, and he would like to have a hand in that.

There's another issue which is just broader.

that has almost nothing to do with national security and has everything to do with what President Trump would call the art of the deal.

You use the word control.

He might use the word leverage.

He likes to have leverage over somebody else, over a company, over an individual, over a country.

And

he is now finding every opportunity he can to create that leverage.

He doesn't have to be able to use the leverage.

He may not even know what he wants from the leverage, but leverage creates optionality.

That's That's the negotiating theory of the case.

But on the other hand, Trump isn't running a company.

He is the president of America.

And the tools that he's doing to get leverage in these cases, the extent of the government intervention, that's just a pretty big departure from what you normally see in America.

There isn't all that much precedent for this, as you've said.

There's almost no precedent for these kinds of deals in this country.

There's precedent for them in China.

There's precedent for them in Russia, there's precedent for them in France.

But we've always been a country that has advocated for this idea of free market capitalism.

Having said that, it's not exactly like free market capitalism is somehow the most popular concept in the world these days.

And there are a lot of people who look at the idea of free market capitalism and say it's not working for them.

And in many ways,

Donald Trump is puncturing the idea that free market capitalism ever existed.

He's saying free market capitalism has actually been a myth, that the U.S.

government has always been subsidizing all of these businesses in all sorts of different ways.

And

instead of pretending it's a free market and getting nothing for it, he's saying, give us something back for it.

And that very idea in America is so provocative.

We'll be right back.

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I'm Peter Baker.

I'm I'm Chief White House correspondent for the New York Times.

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Okay, Andrew, tell us about the reaction to these moves, to this provocative idea that the government should get a stake or some kind of say in the companies that it is helping in one way or another.

Well, the real surprising part of this in Washington is just how the politics have almost flipped.

So Bernie Sanders, for example, loves this idea.

When the CHIPS Act was first put in place in 2022, folks like Elizabeth Warren and Bernie Sanders were specifically articulating the idea that we should be getting something for these big grants.

So he's been out there for years advocating the idea that corporations should not be getting welfare, that all of these subsidies are bailouts, and that we shouldn't be involved in it.

And if we are, we should be getting something for it.

In a way, so much of what the president's doing is taxing corporate America, something the Democrats have long been advocating for.

It is fascinating.

You know, there's so many ways in which Trump's economic policies just don't fall within traditional party politics, tariffs, obviously being something that Republicans don't typically favor.

And this, too, in a kind of dramatic way, because here you have one of the most progressive members of Congress saying, good, this is good.

You know, his approach really has pulled in a certain subset of Democrats who look at at least some of his policies and say, yeah.

That's what we should be doing.

Now, on the other end of the spectrum, while much of the Republican establishment has, in truth, been pretty quiet about all this, they're not commenting on what the president is doing.

There are some prominent conservatives who are kind of going out of their mind about this.

Republican Senator Rand Paul criticized the deal before it was finalized, posting, if socialism is government owning the means of production, wouldn't the government owning part of Intel be a step towards socialism?

The conservative commentators look at this and say to themselves, this is a slippery slope.

You can't just be against socialism when the left does it.

So if you support socialism, apparently Donald Trump is your guy.

If you are a free market capitalist, you do not want government investing in public companies.

It may prioritize government goals as opposed to profit maximization.

The United States is the most dynamic economy in the world.

They would argue that capitalism across the globe has raised people out of poverty, they would tell you that innovation comes from competition, not protectionism.

And once you have the government picking winners and losers, and that's the phrase, picking winners and losers, you no longer have the idea of Adam Smith's invisible hand at work.

Right.

No more invisible hand.

Now we have the very visible hand of Donald Trump, of the U.S.

government, the strong arm, if you will.

Exactly.

So, just to do a reality check here, as dramatic as these moves may be, there are plenty of other countries that own stakes in corporations that they think are important to national security.

This happens in Europe.

France and Germany have a stake in Airbus.

I covered aerospace.

That's a really successful company.

And those countries are some of the biggest economies in the world.

Sure, but we've been critical of those countries for years for that approach, in large part because we look at their economy and we say that it doesn't grow nearly as fast as the United States.

It's not nearly as dynamic.

You're not seeing the kind of innovation out of Europe that you've seen out of the U.S.

over all of these years.

Where's AI come from?

Not Europe.

Where did the internet come from?

Not Europe.

And so I think, sure, there are other places that have economies that work to some degree, but what's made the American experiment so successful has been this very idea of a quote-unquote free market.

You're saying this kind of free market where you limit government intervention as much as possible, that's a key part of America's economic identity.

It also explains our success as a country, at least until now.

Well, that's the argument.

And the question is,

is this just a one-off or is this really the beginning of something much bigger?

You know, I spoke with Kevin Hassett, who runs the National Economic Council for the Trump administration, and he has said, as has the president, as has now Howard Luttnick, Secretary of Commerce, that this is the beginning, that the administration wants to have stakes in more businesses, specifically has identified the idea that defense companies may be up for grabs in terms of the U.S.

government taking stakes in them, given how much business the U.S.

government gives them.

You know, Lockheed Martin, a huge part of their business, as you might imagine.

The U.S.

government is their largest customer.

Should the taxpayer not just pay them, but have a stake in the company itself?

These are the questions.

And it's not just defense companies.

Think about all of the businesses that interact with the U.S.

government.

There are construction companies in America whose biggest client is the U.S.

government.

Should we own a stake in those construction companies?

And this goes then to the competition question, which is once you own a stake in the business, does the competition end?

Meaning, the next time the U.S.

government has to choose between two companies that it wants to use for whatever, maybe it's building an airplane, maybe it's building a building.

Is there actually a competition based on the lowest price and the best service?

Or does the U.S.

government say, actually, we own a 10% stake in this one, so we actually have to use this one?

And then, by the way, longer term, does the U.S.

taxpayer actually pay more?

But if I could push you on that just a little bit, some might argue that Americans already live in a world where competition has been stifled.

You know, there's antitrust cases against some of the biggest tech companies in this country.

And when you think about one of this country's biggest industries, healthcare, there's been all this consolidation.

And I think a lot of Americans would probably say, look, we're already paying through the nose on hospital bills and drug costs.

Is the argument from critics that that would be worse if the government owned stakes in a lot of these companies?

I think the critique is that you're right.

We don't have enough competition in this country as it is, but that this would make it worse, not better.

And think about this.

The next time a company in which the government has a stake wants to buy another company, how would regulators think about that?

For example, would they say, well, this is good for the American taxpayer because we own a stake in it,

even though it would be bad for competition.

You're saying it could lead to more consolidation, potentially.

It just changes the entire incentive structure because all of a sudden the government, the taxpayer, is now an official owner in these businesses.

I want to turn to the potential benefits that we'd theoretically be getting in exchange for these deals, including the government stakes and private companies.

The whole argument from the Trump administration is that ultimately they are extracting better deals on behalf of the U.S.

taxpayer.

My question is, does that money that the administration, that the government may be getting from Intel, from NVIDIA sales, from these other companies, do we know how it would actually benefit the American taxpayer?

Well, ostensibly, the benefit would be in the form of revenue to the government.

And if you think about the enormous budget deficit, which is in the trillions of dollars that we have today, I mean, I think there's no question that we already live beyond our means.

We're already trying to find other ways to raise revenue to pay for things.

I can't tell you where the money directly is going to go.

Will it be used for the social safety net?

Will it be used to pay down debt?

Will it be used for infrastructure spending in the United States?

Will it be used for education?

I don't think we know the answer to that question,

but the arguable benefit is that it would go into the coffers of the U.S.

government and the coffers need filling.

It's also worth noting that, you know, you go back to the financial crisis of 2008 and the U.S.

government did rescue the banks at that time and the automakers at that time.

And it was very unpopular.

And it was unpopular because people thought it was a freebie.

People thought that the money was going out and was never coming back.

And the truth is that the U.S.

government made a profit on that money.

And so the benefit was that not only did it make a profit directly, it also managed to prop up those companies and businesses and keep them in business, which kept the economy alive, kept people in their jobs, et cetera.

Okay.

Stepping back, I think it's probably worth noting that Trump won two elections now on the argument that this economic system has not worked for a huge swath of people in this country, that people had been left behind, they had lost good factory jobs.

And so I wonder if there aren't going to be people who look at this and say, sure, you may be kind of breaking the system, but that's what I voted for.

There's no question that many Americans voted for Trump to break the glass.

That's what they wanted him to do.

They wanted him to change the way this economy works.

Now, whether they want these specific changes, I think is still a big question.

I think an even bigger question is how permanent these changes really are.

You know, when I talk to CEOs, even in the past couple of days, they talk about this phrase, a generational shift, that we are in the midst of a generational shift in capitalism, a generational shift in the very idea of free markets where we own these businesses for decades to come.

The decisions that get made around that business or industry no longer have to do with profits or employees or anything else.

It has to do with potentially the influence of what comes from Washington.

And who knows who's going to be in the White House?

Maybe it'll be President Trump who's influencing this, but down the line, it could be a Democrat, could be Bernie Sanders.

But when the government becomes an owner in the business, that influence shifts the direction of travel such that business could potentially become deeply political.

Andrew, thanks so much for your time.

Thanks for having me.

We'll be right back.

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The judge expressed frustration with the government, saying it was surprising that the administration had tried to get the minors out of the country in the wee hours of the morning on a holiday weekend.

A lawyer for the government said the children were going to be reunited with their parents in Guatemala, but a lawyer for the children disputed that, saying that at least some of the children didn't want to return.

Migrant children have posed a challenge for the Trump administration's immigration crackdown because they're entitled to special legal protections.

And the death death toll from an earthquake that hit Afghanistan on Sunday has climbed to more than 800 people, authorities said, warning that the fatality count would likely rise.

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Foreign countries have become reluctant to send aid to Afghanistan in recent years as the Taliban faces accusations of diverting humanitarian assistance to their fighters and favoring some communities over others.

Afghanistan has been battling various crises and hospitals have shut down since the Trump administration completely cut off all U.S.

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I'm Natalie Kitroff.

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