The relationship between the United States government and corporate America is undergoing a profound transformation. Under President Donald Trump’s second administration, Washington is abandoning its traditional free-market posture in favour of a more interventionist model where compliance with national-security objectives is increasingly monetised. This evolving approach includes some elements of state-directed capitalism, as practised in countries such as China and Russia. This shift is notable in that it is not driven by economic crisis or wartime necessity but by the aims of generating revenue and deliberately reasserting political control over strategic sectors.
Transactional approach
Over the past few months, the administration has taken extraordinary steps to embed itself within the private sector. The government has acquired a ‘golden share’ in U.S. Steel as a condition for approving its acquisition by Japan’s Nippon Steel. Trump has struck a deal with Nvidia and Advanced Micro Devices, issuing export licenses in return for 15% of the companies’ China-related revenues from H20 chip sales. In July, the Pentagon purchased a 15% stake in MP Materials, a major rare-earth-mining firm, becoming its largest shareholder. Most recently, in August, the administration took a 10% equity stake in Intel, a chipmaker valued at US$8.9 billion, marking one of the most significant US-government interventions in a private company since the auto-industry bailouts implemented in the wake of the 2008 Great Financial Crisis.
These pay-to-play arrangements reflect the administration’s increasingly transactional approach to corporate America – an approach that challenges the foundations of the traditionally market-oriented US system. It blurs the line between regulatory oversight and commercial negotiation. The deals often rest on tenuous legal grounds, with little oversight or transparency. Yet few companies are willing to challenge the government. For many, these arrangements serve as political insurance – a way to ‘buy certainty’ in a volatile regulatory environment. For others, they are a defensive move to avoid more aggressive pressure or exclusion from government contracts. In effect, firms are paying to prevent worse outcomes. These quid-pro-quo deals are potential templates for broader application across strategic industries, with discussions under way about similar arrangements for defence contractors.
Shades of state capitalism
Two models of state intervention appear to be emerging. The first model, often framed as ‘patriotic capitalism’, treats companies or sectors as national champions and instruments of state power. Here, the American state behaves much like its Chinese counterpart, integrating firms into geopolitical strategies. For example, in August, Howard Lutnick, the secretary of commerce, called Lockheed Martin ‘an arm of the US government’, as the company is highly dependent on federal contracts. In its deal with MP Materials, the Pentagon will acquire rare-earth elements at guaranteed prices to establish an end-to-end supply chain of critical minerals in the US, very much mimicking China’s domestic tactics. Similarly, earlier this year, the US government announced plans to invest lavishly in the shipbuilding sector to counter China’s dominance in the industry. Unlike China’s reliance on massive subsidies, the Trump administration prefers to use regulatory leverage over strategic companies and empower government-backed institutions, such as the International Development Finance Corporation. For example, in the deal with MP Materials, the Department of Defense has secured US$1bn in private financing from JPMorgan Chase and Goldman Sachs to build a magnet-manufacturing facility in Texas.
The second model, which is currently dominant, is more transactional and opportunistic – targeting companies such as Nvidia or Apple because they are too large or too profitable not to chip in. This resembles Russia’s system of state capitalism, where firms are expected to share profits with the state in exchange for market access or protection. To make these deals impossible to refuse, the US government is increasingly resorting to lawfare – launching lawsuits under various pretexts. For instance, Apple has secured a tariff exemption in exchange for a US$600bn investment pledge, even as it faces a Department of Justice antitrust lawsuit over smartphone market dominance.
Alternatively, the government can use other regulatory levers to pressure firms by blocking their access to public contracts (the Kremlin’s favourites include investigations into embezzlement and the withholding of fire-safety certificates). As the Russian example shows, there is no such thing as a one-off tax – companies will remain on the hook as new demands will follow, often amid a growing number of lawsuits.
Global pay-to-play deals
What is most concerning is the spillover of this model into the international arena. The Trump administration is already testing global pay-to-play deals as part of its efforts to reorient global trade in favour of the US. This creates two distinct risks: firstly, that multinational corporations – both American and foreign – may become geopolitical instruments caught in the crossfire between Beijing, Brussels and Washington; and secondly, that US firms may actively exert pressure on foreign governments to align with the administration’s political agenda.
European companies with a US nexus – through dollar-denominated transactions or reliance on the American market and technology – are increasingly being pressured to align with US export controls. The Bureau of Industry and Security, which manages US export controls, has already escalated pressure on firms in allied countries. In August the administration removed the South Korean companies Samsung and SK Hynix from the ‘Validated End-User’ list, stripping them of the ability to ship US-made chips and chipmaking tools from South Korea to China-based factories without a licence, and in September it revoked the licence authorisation of Taiwanese multinational TSMC (Taiwanese Semiconductor Manufacturing Company). While it is not new for the US to exert extraterritorial pressure on foreign companies, it is less common for Washington to do so on key firms in allied countries. As with Nvidia’s deal, European tech firms may face demands to forgo revenue or invest in American supply chains to avoid secondary tariffs.
There is a risk that Chinese investors could gain access to sensitive US sectors if they strike the right deal and offer a high-enough price, despite scrutiny from the Committee on Foreign Investment in the US. Despite ongoing national-security concerns, TikTok, owned by Chinese company ByteDance, is increasingly being used as a bargaining chip in the US–China tariff conflict, with the administration signalling interest in acquiring a stake via a ‘golden share’ arrangement. US companies may also be pushed to re-enter the Russian market if doing so serves Trump’s political objectives. With Moscow expressing a desire to see Boeing return, it is conceivable that the administration could pressure the company to resume its operations in Russia as part of a broader peace settlement.
In return, the transactional approach allows US firms to pursue their own corporate interests by rallying behind the Trump administration’s political objectives. The boundaries between the public and the private are becoming increasingly entwined. Capitalising on Trump’s anti-climate agenda, some US firms have urged Washington to use trade negotiations with the European Union to weaken Brussels’ Corporate Sustainability Due Diligence Directive of 2024 (which puts obligations on non-EU companies to ensure their supply chains do not harm the environment or violate human rights). Others may seek to influence the administration on the EU’s 2022 Digital Services Act, which has already negatively affected American Big Tech companies. Acutely aware of Trump’s aspiration to end the Russia–Ukraine war, ExxonMobil executives have already sought government backing for a potential return to the Russian market and reportedly received a ‘sympathetic hearing’.
What we are witnessing is not merely a shift in policy but a systemic transformation in how the US government views its relationship with industry. The long-standing American model – where the market leads and the state follows – may be giving way to a new paradigm where economic power is politicised and corporate autonomy is conditional on national alignment. While it remains unlikely that the US will fully embrace state capitalism, one thing is certain: the rules of engagement between business and government are being rewritten – and the global implications are only just beginning to unfold.
To read the full analysis as it was published on the The International Institute for Strategic Studies website, click here.