The Trump administration is fundamentally transforming the relationship between the private sector and the U.S. government. As American capitalism evolves, the underlying logic of the global economy is quietly changing with it.
American capitalism has never followed a single static economic model — major adjustments have occurred from time to time. Today, with huge changes and concurrent crises at home and abroad, the U.S. seems to have reached another critical juncture for adjustment.
Major new steps have been taken recently by the Trump administration to significantly strengthen federal intervention in economic operations. Many of these groundbreaking moves have a far-reaching impact and may serve as a barometer for America’s effort to change its situation for the better. They include:
• The U.S. government is acquiring a 10 percent equity stake in Intel via congressional grants. President Donald Trump even demanded the resignation of Intel’s CEO.
• As a condition of Nippon Steel’s acquisition of U.S. Steel, the U.S. government will obtain a golden share of the company, securing veto power over critical decisions.
• Secretary of Commerce Howard Lutnick has talked about acquiring equity stakes in defense contractors such as Lockheed Martin and Boeing.
• NVIDIA and AMD have agreed to share 15 percent of their revenues from chip sales to China.
• Trump plans to guide the use of approximately $1.5 trillion in pledged foreign investments from sources including the European Union and Japan.
These measures are fundamentally transforming the relationship between the private sector and the government, indicating a major shift in the American capitalist economic model. The shift bears the distinct personal character of Trump — transactional, greedy and aggressive in pursuit of his objectives. In this connection, some U.S. media have called the moves Trumpian state capitalism to illustrate the strong interventionist role of the U.S. government and Trump himself in economic details.
It must also be noted that the transformation reflects a change in American views of the political economy. For a long time, U.S. authorities have been thinking about resetting the relationship between the government and capital. Strengthening government intervention in the market has been a long-term trend. After the outbreak of the 2008 international financial crisis, for example, the Obama administration launched large-scale financial rescue and fiscal stimulus. In his first term, Trump extensively implemented state interventionist policies such as trade protectionism, immigration restrictions and industrial reshoring. The Biden administration implemented the Inflation Reduction Act and the CHIPS and Science Act, focusing on revitalizing the clean energy industry and semiconductor manufacturing through government subsidies.
In 2025, Trump returned to office for a second term and has brought government intervention in the economy to a new level. Beyond traditional macro-policy tools such as tax cuts, tariffs and deregulation, the government now looks to take stakes in large technology and defense companies and to invest in key industries and emerging technologies. Trump himself was ready to indicate his choice for the chief executive of a large company like Intel. Obviously, the U.S. government is now ready to micromanage large businesses.
These are by no means the mere result Trump’s whims or grandstanding. Notably, Americans have been debating and reflecting on their political and economic system for quite some time. Despite serious differences between the two parties’ elites about which industries to prioritize (clean energy or fossil fuels, for example), or policy choices on immigration and social security, they do agree and endorse the government directly investing in key industries for competitive advantage over foreign countries. Burying the liberal international economic order has become a consensus.
Jake Sullivan, who was national security adviser during the Biden administration, proposed a New Washington Consensus in April 2023 that would have reshaped industrial policy. He proposed that the government should invest in “specific economic sectors of strategic significance” and build secure industrial supply chains on that basis to safeguard national security.
In a sense, many of Trump 2.0’s economic management interventions reflect the Sullivan proposition. Trump has targeted key enterprises in critical fields: for example, cutting-edge tech giants Intel and NVIDIA, as well as industrial giants Lockheed Martin, Boeing and U.S. Steel. All of these conform to the new national security definition and can be described as “specific economic sectors of strategic significance.”
Since its founding, the United States has long pursued the model of a capitalist market economy, but the role of the government has never been absent, and the relationship between the government and capital has been unusually close — especially in the emerging tech industry related to national security. Government agencies have been strategic collaborators with capital.
A classic example is the Internet, which was born out of early research and development efforts by the U.S. Department of Defense through its Defense Advanced Research Projects Agency (DARPA) during the Cold War. In this light, some Western political economic commentators argue that the U.S. government has actually been “secretly implementing industrial policies” that are limited and local and commonly seen in the early cultivation of emerging tech.
Generally speaking, the mercantilist industrial policy approach of America’s first treasury secretary, Alexander Hamilton, in the early 19th century and the Keynesian economic policies implemented through Franklin D. Roosevelt’s New Deal in the first half of the 20th century were good examples of massive government interventions. Today, Trumpian state capitalism may well become a historical footnote to the third era of strong government intervention.
Notably, as American capitalism evolves, the underlying logic of global economic operations is quietly shifting. Relationships between the government and the market, between development and security and between localization and globalization will be profoundly reshaped. Among the major global economic blocs, East Asian countries such as China, Japan, South Korea and Singapore generally have strong government interventions. These were once criticized and dismissed by the U.S., the World Bank and the International Monetary Fund as the Asian “developmental states.” But now the U.S. is itself moving closer to the development model of East Asian countries, marking the “full return of the government” in the international political economy.
The world will certainly want to reexamine the role of governments in economic development and technological innovation. In this connection, it is also necessary for countries to strengthen coordination on economic intervention and industrial policies to prevent the global economy from falling into a resource-consuming and divisive “race to the bottom.”
