Donald Trump administration has been making significant investments in U.S. companies, a move not commonly seen outside of major crises or wartime. This includes taking stakes in companies and embracing state intervention in industries deemed crucial for national security.
What Happened: The Trump administration’s investments include a controversial merger between Japan’s Nippon Steel and U.S. Steel, where Trump now holds a “golden share,” giving him veto power over major business decisions.
Additionally, the Department of Defense has agreed to purchase a $400 million equity stake in rare-earth miner MP Materials, becoming the company’s largest shareholder, reports CNBC.
“You know who has the golden share? I do,” Trump said at a summit last week.
This level of federal support for a mining company is unprecedented, Gracelin Baskaran, who is an expert on critical minerals at the Center for Strategic and International Studies told the outlet.
These moves indicate a shift in the Republican Party, traditionally a champion of free-market capitalism, towards state intervention in industries considered vital for national security.
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“This is the biggest public-private cooperation that the mining industry has ever had here in the United States. Historically, DOD has never done equity in a mining company or a mining project,” Baskaran said.
This approach is similar to nationalizing a company but without the benefits usually associated with such a move, like direct government investment.
Why It Matters: Experts suggest that this level of state intervention could be a new norm, as the Trump administration develops policies to support U.S. companies against state-backed competition from China.
The government’s investment in MP Materials is seen as a model for future public-private partnerships.
However, the question remains whether state intervention can solve the failure of the free market to address national security concerns in industries like rare earths, as it could lead to a cascade of new market failures.
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