How the Trump Administration Became an Activist Investor

by Maggie Severns, Gavin Bade, Josh Dawsey and Meridith McGraw



There is free-market capitalism and state capitalism. Now, there’s Trump capitalism.

In recent months, the president has extended his hand into American business in unorthodox and, to some corporate leaders, alarming ways—from progressive-style demands to cap credit-card rates to assertive deals grabbing government shares in private companies.

Some executives are so worried Trump will ask for a stake in their company that they have prepared for Oval Office meetings by rehearsing what they would say to fend off the president’s advances, lobbyists involved in the preparations said.

Others welcome Trump’s attention. United Airlines CEO Scott Kirby appealed to Trump with the idea of creating a “national champion” airline during meetings with Trump and top officials at the White House, people familiar with the discussions said.

United asked for regulatory permission merge with American Airlines, and top Trump aides discussed whether the U.S. should take a stake in what would be one of the biggest airlines in the world, according to people familiar with the meetings. Trump later said he didn’t support a merger, American Airlines was resistant and United abandoned its bid.

The administration talked with Spirit Airlines about providing a loan of up to $500 million in return for warrants that would have given the U.S. a significant stake in the low-cost carrier, The Wall Street Journal reported last month. When the company offered 80% in exchange for the government bailout, Trump suggested 90%, according to people familiar with the matter.

But Spirit bondholders didn’t want to subordinate their claims to the federal government, according to a person familiar with the matter. The government pulled out of negotiations, and Spirit shut down Saturday.

Administration officials are stoking the president’s instinct to shift more authority over private-sector industries to Trump and his team. The Trump administration has announced direct investment stakes in at least 10 companies, including a 10% equity stake in Intel and a “golden share” of U.S. Steel, which grants the government power to influence company decisions.

We’re seeing the government get more involved in different aspects of the economy, which is a pivot off the more traditional Republican approach of the last century,” said Kelly Ann Shaw, deputy assistant to the president for international economic affairs in Trump’s first term.

The Trump administration obtained significant shares of critical-minerals companies to counter China’s dominance in rare-earth minerals, which are crucial for industries and national defense contractors. Trump’s deputy chief of staff, James Blair, is interested in stakes from more companies, said a person familiar with the matter.

“You have China with 70% chokehold over the production of critical minerals and 90% over processing,” Shaw said. “If you just let the market do its thing, we’re not going to be able to diversify away from Chinese dominance.”

Yet Trump’s approach extends well beyond national-security concerns, which startles many large U.S. companies that fear an expansion of government power in their industries.

After the Trump administration took a stake in Intel, lobbyists said they talked with clients who sought meetings with the president and Commerce Secretary Howard Lutnick and wanted to know what to say if Trump asked for a stake in their companies. The main question for executives: Would they be willing to give the administration something? If not, they wanted to know, What’s the best way to change the topic to friendlier matters without causing friction?

Decades of broken policymaking by Washington, D.C., hollowed out America’s industrial base and left Americans dependent on foreign imports for goods that are critical for our national and economic security,” White House spokesman Kush Desai said. “The Trump administration is accordingly rectifying America Last policies that have left our country behind while embracing the traditional free market policies that do work, from deregulation to tax cuts.”

In December, Trump met with The Wall Street Journal and said, “When people need something, I think we should take stakes in companies. Now, some people would say that doesn’t sound very American. Actually, I think it is very American.”

Lean left

White House officials say Trump’s approach to economic policy reflects longstanding voter frustration with big business. Some of his recent interventions were taken with an eye to the midterm elections, according to people familiar with his and his team’s thinking.

Trump’s political team in January flagged a speech by Democratic Sen. Elizabeth Warren that featured a comment about Trump’s campaign promise to cap credit-card interest rates. The president had again raised the idea. Warren said Trump was missing in action. “Why is she being critical of me?” Trump mused to an aide while watching the speech.

Soon after, Warren received a call from an unknown number and picked up. It was Trump.

The president told her the rates were too high, and she said they could work together to lower them. In an interview, Warren said she believed the traditional Republican free-market approach to economics was failing. “Donald Trump seems to be the number one Republican to figure that out,” she said.

Trump called for the interest-rate cap to begin in late January, a deadline that came and went without action from the administration.

Last summer, Trump’s economic team had brainstormed with home builders about getting more Americans to buy houses by cutting regulations to bring down costs, according to people at the meetings.

Then Republicans suffered losses in the November elections. Trump aides let home builders know that deregulation was dead, said people who were in the meetings or were briefed about them. Trump’s poll numbers on the economy were falling, and advisers wanted policies that spurred housing and could be easily understood by prospective home buyers, those people said.

In January, Trump announced policies that marked a turnabout, including a ban on institutional investors such as Blackstone from buying homes. The shift left lobbyists and trade groups unsure what to advise home builders anxious about any more Oval Office surprises. In March, the White House released an executive order on deregulating housing that didn’t touch many topics previously under discussion. Some in the industry refocused their hopes on Congress.

In a meeting with his cabinet in January, Trump echoed Democrats’ complaints about affordability, blaming health insurers for rising healthcare costs. He said he wanted to lower prices and hold “big insurance companies accountable.” His new healthcare framework calls for low-cost insurance alternatives and for striking pricing agreements with pharmaceutical companies.

“We pay the money, billions and billions, really trillions of dollars going to insurance companies,” Trump said. “We want that money to go to the people.” Details of the proposed pharmaceutical agreements haven’t been disclosed.

A White House official said the administration continues to work with Congress to pass a healthcare plan.

“This is a much different Republican Party and a much different leader than I think we’ve seen in the last 50 years,” said Suzanne Clark, president of the Chamber of Commerce, which represents many of the largest U.S. corporations and for decades has advocated for a smaller government role in the economy.

‘Horrible, horrible’

Western countries have oscillated for centuries between robust state interventionism, most pointedly President Franklin D. Roosevelt’s New Deal-era of the 1930s, and a more hands-off laissez-faire economic view that rose to prominence around the mid-1970s.

Many industrialized nations, particularly in Western Europe, have retained a larger role for the government in the economy, including partial or full state ownership of significant companies and sectors such as healthcare. China grew to an economic superpower in recent decades by fully embracing a robust state role in a capitalist economy.

During former President Joe Biden’s administration, some advisers said the government needed to abandon 1990s-era globalism in favor of industrial policies to revive U.S. manufacturing. The advisers felt the U.S. needed to rely less on overseas supply chains, especially for goods central to national security.

That push resulted in 2022 legislation that put billions of dollars into boosting domestic semiconductor manufacturing. The CHIPS and Science Act was passed to reduce U.S. reliance on foreign supply chains. Trump labeled it a “horrible, horrible” corporate giveaway last year, and his administration has in some cases used CHIPS Act money to negotiate equity investments in companies picked by his administration.

The Biden administration also considered launching a U.S. sovereign-wealth fund, Biden national security adviser Jake Sullivan and others said in interviews. They hoped to create a government-funded investment vehicle to take stakes in companies seen as valuable for national security but which needed help developing.

The idea never got off the ground, partly because administration supporters ran out of time, former officials said. It would have likely required both legal scaffolding and money appropriated by Congress. Trump proposed creating a sovereign-wealth fund on the campaign trail around that same time, but little has come of it.

To Trump allies, the Biden administration opened the door to the government’s stepped-up role in the economy and reflected bipartisan support for moving further from a laissez-faire approach.

“We’ve crossed a Rubicon as a country in terms of getting more comfortable with the government playing a slightly heavier role,” said Shaw, Trump’s first-term economic adviser. “But overall, the U.S. economy is still undoubtedly a capitalist democracy, and so what we’re talking about is fiddling around the edges instead of wholesale transformations of our economy.”

To critics, the president has embraced a form of state capitalism that expands the authority of the executive branch, recalibrating America’s traditional balance of powers. Democrats say the president has intervened in the media and entertainment sector, including on behalf of Paramount Skydance, owned by David Ellison, whose father, Larry Ellison, is a longtime Trump supporter.

The president’s policies appear to have “a side effect of concentrating power either in the hands of Trump himself or in the executive in general,” said Ilias Alami, an assistant professor of political economy at the University of Cambridge who has written a textbook on state capitalism.

Trump last August called for the resignation of Lip-Bu Tan, chief executive of chip maker Intel, after news reports on Tan’s history of doing business in China. His team had no idea that Trump wanted a share of the company as they orchestrated a meeting, a person with direct knowledge of the discussions said.

Four days later, Tan met with Trump at the White House, and 11 days later, the Commerce Department announced it would take a 10% stake in the company for $8.9 billion.

“He walked in wanting to keep his job, and he ended up giving us $10 billion for the United States,” Trump said at a news conference last August. Last week, the president said the U.S. investment in Intel had generated $30 billion in gains over the past 90 days.

The U.S. corporate stakes are held by various agencies including the Pentagon and the Commerce Department. The Trump administration hasn’t said what, exactly, the government might do with profits or dividends from the companies it has taken stakes in.

Sullivan, Biden’s former adviser, said he worried that the administration’s investment in companies might warp markets and reward cronies. He also acknowledged that some of Trump’s efforts reflect a new, bipartisan consensus on using industrial policy as a tool to enhance national security—even at the expense of free-market economics.

“We are on a new path,” Sullivan said. “The U.S. government has to bring tools to the table that solve vulnerabilities for the U.S. that the market doesn’t solve.”