Don’t Let Washington Turn Tech Companies into Amtrak
The Trump administration doubled down this week on its push for the federal government to take financial stakes or other commercial interests in major U.S. companies—a policy that would weaken American competitiveness, invite political manipulation, and undermine the very goals of U.S. industrial strategy.
Last week, President Trump announced that the federal government had secured nearly a 10 percent equity stake in Intel as a condition of releasing $5.7 billion from the CHIPS and Science Act and $3.2 billion from the Department of Defense. Earlier this month, the administration required Nvidia and AMD to pay the federal government 15 percent of their revenue from sales to China in order to obtain export licenses. Now, the White House shows no signs of slowing down. On the Intel deal, President Trump declared, “I hope I’m going to have many more cases like it.” Commerce Secretary Howard Lutnick even floated the idea of taking stakes in defense contractors such as Lockheed Martin, which he described as “basically an arm of the U.S. government.”
Some critics have overstated the case—no, President Trump has not suddenly become a socialist or decided to start nationalizing American businesses. But neither is this policy pro-competitiveness. These moves aren’t about strengthening U.S. firms or outcompeting China; they’re about looking under the sofa cushions for revenue and gaining influence. And that comes with serious costs.
There are at least four major problems with this approach:
1. It’s bad economics.
Good economic policy encourages socially beneficial activities and discourages harmful ones. The government taxes pollution to reduce negative externalities, and it subsidizes research and development (R&D) to boost positive ones. In the case of Nvidia and AMD, the administration is doing the opposite—effectively taxing exports to China, which generate revenue that U.S. firms use to fund the next generation of R&D. Cutting into those earnings weakens U.S. leadership in advanced chips, particularly in AI, where global competition is fierce.
2. It leads to bad policy.
Decisions about export controls, grants, or defense procurement should be made on their merits, not on how much cash the government can extract. Prioritizing short-term federal revenue undermines long-term policy goals. For example, Congress designed the CHIPS Act to make it more economically feasible to manufacture semiconductors in the United States. It was not a subsidy. Forcing Intel to issue shares in exchange for funding makes it harder for the company to raise additional capital, directly undercutting the program’s purpose.
3. It’s the wrong way to govern.
Policymaking shouldn’t be a pay-to-play arrangement. If businesses need government support to advance national interests, policymakers should act on principle—not in exchange for equity or revenue. Likewise, revenue should come from a consistent, transparent tax code, not ad hoc side deals that give different firms in the same sector different treatment. That creates an uneven playing field and erodes trust.
Worse, this approach incentivizes the government to seek leverage over companies simply to extract concessions. Firms, in turn, will resist even beneficial regulations for fear they’ll become bargaining chips. And if Washington becomes a shareholder, the risk is even greater: political priorities could override sound business judgment. That means pressure to keep open an unprofitable plant in a swing state, or to align corporate strategy with whichever social policy goals the administration of the day wants to promote. Many Republicans criticized the Biden administration for tying CHIPS Act funding to childcare or union labor requirements. This new approach opens the door for even more politicization of private enterprise.
4. It’s bad fiscal policy.
Instead of pursuing real fiscal reform—such as raising taxes on high-earners, adopting a border-adjusted value-added tax, or slowing the growth of entitlements—the Trump administration chose to cut taxes while taking entitlement reforms off the table, a recipe for higher deficits and mounting debt. Now it has turned to squeezing revenue out of corporations and universities that are central to U.S. innovation and competitiveness. That approach is penny wise and pound foolish. And even if the administration were aggressive in extracting concessions, the sums involved are not going to come anywhere near addressing the federal budget crisis.
The United States needs a strong, innovative private sector working alongside government to achieve shared goals in economic and national security. What it doesn’t need is the government treating industry like a slush fund or a political pawn. Washington should be a partner—not a shareholder.
