The government took stakes in a number of private companies during 2025, and it’s likely to continue making equity investments while Donald Trump remains in office. Whether or not this is a wise long-term strategy is an ongoing debate, with strong opinions on both sides.
The practice represents a new industrial policy that’s meant to tie the executive branch of government closer to companies it considers essential to national security and economic prowess. The Trump administration hopes it’s a more robust approach than subsidy grants in rebuilding critical supply chains domestically, reducing reliance on China, and ensuring key industries remain under U.S. control.
But it also puts the government in the venture capital business—which may not be a good fit for politicians and bureaucrats. “The government now perceives itself as a source of capital and the markets perceive them as a source of capital—it’s not going to stop,” said former acting White House chief of staff Mick Mulvaney on a recent episode of The Informed Board, a podcast from Skadden Arps. And it may not be easy for a private company to say no. “Any business that either sells a lot of stuff to the federal government or gets a lot of subsidies from the federal government is going to be a target,” he added.
“I think it’s extraordinarily dangerous. And the reason I think it’s not going to go away is that regardless of the outcome, I think this is where the Republican Party is,” Mulvaney said. “And it’s where the Democrat Party has wanted to be for a long time.”
The U.S. government has taken equity shares in private companies before, but only in times of war or economic crisis, and never as a normal feature of industrial policy, as the Trump administration views it.
The government took a minority stake in Chrysler in the early 1980s when the company faced bankruptcy. During the 2008 financial crisis, the government took equity stakes in AIG, General Motors, Citigroup, Bank of America, and others. During the COVID-19 pandemic, the Treasury received equity warrants in airlines, including Delta, United, and American, in exchange for payroll support.
Commerce Secretary Howard Lutnick has suggested that the administration is considering expanding the practice of buying equity to include defense contractors.
The U.S. and Intel
The government’s biggest equity investment is the troubled chipmaker Intel. The Trump administration said in August that it would take a 9.9% stake, using $8.9 billion of CHIPs and Science Act grant money that had already been earmarked for the company. Intel finance chief David Zinsner said the government’s investment was meant to incentivize Intel to keep majority control over its contract chip-fabrication business.
The bigger picture is that the U.S. economy, including the defense industry, is increasingly reliant on the powerful chips used to train and run AI models, and the vast majority of those are made in Taiwan by TSMC. The U.S. could benefit greatly if Intel could fabricate equally advanced chips in the U.S. Taiwan is a potential geopolitical flash point because it’s a mere 85 miles away from China, and while the island has its own government, the Chinese government denies its sovereignty and claims it as its own.
Other bets
In July, the Defense Department paid $400 million for a 15% stake in the rare earth minerals company MP Materials (MP), making the Pentagon the company’s largest shareholder. The deal includes a $150 million loan to help MP build a heavy rare earth separation plant in California.
The government received a “golden share” in Nippon Steel in exchange for approving the Japanese company’s proposed merger of Pittsburgh-based U.S. Steel Corp. The golden share doesn’t represent equity in Nippon, but it does give the U.S. veto power in certain kinds of business decisions, as well as a right to appoint a board member.
In October, the Department of Energy loaned the Canadian mining company Lithium Americas Corp. (LAC) and its Thacker Pass lithium mine project $2.26 billion in exchange for a 5% stake in both LAC and the mining venture.
In October, the Department of Defense paid $35.6 million for a 10% stake in the Canadian company Trilogy Metals, which is developing the Ambler Access Road infrastructure project in Alaska to access metals like copper, cobalt, and zinc.
In November, the Commerce Department said it intended to use $50 million in CHIPs Act money to buy a significant stake in the private rare-earth magnet producer Vulcan Elements. The Pentagon also intends to loan Vulcan another $620 million to help it build a large facility for neodymium iron boron magnets.
Risky business
There is a real purpose behind the stakes. The government isn’t putting tax dollars into golf courses or TV networks (not yet, anyway). The investments are targeted at weak spots in the supply chains that the government and its suppliers need to support U.S. economic interests and national security. That was the core idea behind the CHIPs Act, too.
After the government dispenses grants to private sector companies, equity investments allow the government to have something to show for them. And the equity ownership often affords the government some direct influence over the operations and plans of the company.
Prominent progressives have championed this sort of thing. In 2022, Sens. Bernie Sanders and Elizabeth Warren proposed that CHIPS Act beneficiaries give Uncle Sam an equity stake for that reason, but the measure failed. Sanders and Warren also wanted to attach prohibitions against CHIPs grant recipients from using the funds to buy back stock, to offshore U.S. jobs, or to discourage unionization.
Under Trump 2.0, the government is making bets on private-sector companies using tax money without the consent of Congress or the voters. What could go wrong? If the company falls on hard times, the government’s equity could shrivel, and the tax dollars that bought it could vanish.
In a broader sense, Republicans, especially small-government conservatives, have historically been hesitant to back private companies, out of fear of appearing as if the government is “picking winners” in the marketplace. The U.S. Chamber of Commerce warned that the government’s buying into private companies could “turn innovative manufacturers into state-owned enterprises” and harm U.S. competitiveness.
Still, the government’s investment has been met with criticism. The Cato Institute’s Scott Lincicome writes in a Washington Post op-ed that government equity stakes represent “a dangerous turn in American industrial policy,” adding that it abandons decades of market-oriented principles and risks politicizing Intel’s decision-making. “With the U.S. government as its largest shareholder, Intel will face constant pressure to align corporate decisions with the goals of whatever political party is in power,” he cautions.
All of these companies saw their stock prices rise, in some cases dramatically, after their government investments were announced. And most of the companies are still doing well. Intel stock has gained about 53% (calculated from the preannouncement opening price to the closing price on December 18). MP Materials shares have risen 8%. Trilogy Metals is up 113%. Lithium Americas is down 35%.