Recent deals to have the U.S. take a stake in companies mark something new: Government ownership used as a standing industrial-policy tool rather than an emergency backstop
We're in a new era of government intervention in which the U.S. is looking to back businesses that could give it an edge as it competes with China for global leadership.
When the federal government took a stake in Intel last August, the comparison came fast: This was 2008 again, with Washington, D.C., playing shareholder the way it did with big banks, AIG and General Motors after the financial crisis.
Although the comparison is tempting, this era of government intervention is starkly different. Instead of rescuing troubled companies, the government is looking to back businesses that could give it an edge in a geopolitical landscape where the U.S. and China compete for global leadership.
The U.S. government now holds equity in several companies, including Intel, rare-earths supplier MP Materials and, through a single golden share, veto power over U.S. Steel. Leading the charge is the Defense Department, which unleashed a spree of deals securing equity in future gallium producer Atlantic Alumina and Canadian mining company Trilogy Metals.
And the DOD hasn't limited itself to mining, inking a $1 billion investment in defense contractor L3Harris's Missile Solutions unit in exchange for convertible equity. The Commerce Department is close behind with a profit-sharing arrangement in nuclear-energy company Westinghouse and stakes in semiconductor-related startups I-Pulse, SandboxAQ and xLight.
Together, the deals mark something new: government ownership used as a standing industrial-policy tool rather than an emergency backstop. Officials are also considering stakes in sectors relevant to national security and supply-chain resilience like defense contractors and critical minerals. It's a pattern pointing to the growing role of government in the management of the economy, and the 2007-09 recession is the wrong precedent for understanding it.
Rescue versus bet
During the 2008 financial crisis, the Troubled Asset Relief Program was built for companies that had been brought to their knees. Aimed at restoring financial stability and restarting economic growth, its purpose was defined narrowly under the Emergency Economic Stabilization Act. The government injected billions into banks, insurance giant AIG and the automobile industry to prevent the collapse of individual companies that would have jeopardized the economy and the financial system writ large if they failed.
The Trump-era stakes invert that premise. Intel, MP Materials, U.S. Steel and Trilogy Metals pose no systemic risk to the U.S. economy, nor do they carry enough employment weight to matter politically. Intel - a reliable dividend stock during the mid-2000s - had long struggled to reclaim its dot-com-era high of $74.88 a share before this year's rally. A combination of factors, including manufacturing delays, management turnover and betting on the wrong chips left the company underperforming expectations, but none of them raised concerns of imminent collapse. MP Materials, a volatile small-cap since its 2020 special-purpose acquisition company debut, has swung between boom and bust for rare-earth investors but has never teetered on the edge of failure.
Similarly, U.S. Steel wasn't in TARP-style distress before the government intervention. It was an aging company in an aging industry in a world where global overcapacity led to its decline. Trilogy, a Canadian company with projects in Alaska, operated below its listing price - often as a penny stock - before seeing its shares jump to record highs on the DOD announcement. Lackluster returns for investors? Maybe. Systemic risk? Definitely not. There is no common thread in the U.S. government's acquisition of these stakes beyond a broad "economic and national security" umbrella. The Trump administration treats these interventions as stock-picking wins rather than a coherent industrial policy. "Intel Stock continues to rise. I'm very proud of that Company in that I am responsible for making the United States of America over 30 billion dollars in the last 90 days on that stock alone," President Donald Trump wrote in a Truth Social post after Intel's shared rallied this spring. To be fair, retail and institutional investors have made a killing betting on state ownership. Since the government's entry, Intel has delivered returns of 304.8% - far outpacing the S&P's 19.8% gain over the same period. However, there is no promise these returns will last. Nor is there any accounting for the competitive damage the White House does as it pressures companies like Apple and Nvidia to sign deals with the chip maker.
For retail, the early pop isn't a strategy. It's a one-time repricing that isn't guaranteed through the next political cycle. Also, it doesn't always work: MP Materials is up only 6% net, having given back most of the gains from its post-intervention peak.
No comprehensive framework
In remarks at the Economic Club of New York on June 23, U.S. Treasury Secretary Scott Bessent highlighted five core principles of American economic statecraft in the 21st century. What Bessent didn't offer was a concrete framework for how those principles should translate into specific investment decisions and guardrails pertaining to them.
To be successful in achieving Bessent's objectives, the U.S. government will need a comprehensive framework for industrial policies that treats geoeconomics, AI and energy as intertwined domains, not as separate silos. Policies should be targeted, with explicit and well-defined objectives, and feature a governance framework to guarantee political accountability and minimize the risk of corruption.
Predictability is essential for investment planning, as these policies are likely to span different administrations - for example, chip restrictions across the Biden and Trump presidencies. It's also necessary to limit distortions to private-sector behavior, since private capital and competitive incentives drive the kind of innovation and financial firepower the rest of the world envies.
No off-ramp
TARP was built to eventually end. By Sept. 30, 2023, all programs had closed, with no troubled assets remaining on federal books. The taxpayer took a loss, but the collapse in growth and employment might have been more costly without the support.
In a new geopolitical reality, where the objective is not restoring financial stability but rather economic security and resilient supply chains, what is the U.S. government's exit strategy? What milestones in resiliency and economic capacity should trigger a handoff to the private sector in order to prevent an indefinite and growing public presence in the economy?
Considering the rapid evolution of artificial intelligence, even if a sector is identified as critical, should the government stand behind old industrial models, such as defense conglomerates, or take a more venture-capital-like approach to startups betting on technology?
These are hard questions with no obvious answers. But a piecemeal approach to industrial policies is not the answer. The U.S. is competing with China, where industrial policies have become broader and more systematic, spanning vertically across production steps and horizontally across industries, while maintaining a ruthless level of competition. The U.S. isn't just competing in a changed world. It's competing in a different game where it no longer holds the best cards.
Fabio Natalucci is CEO of the Andersen Institute for Finance and Economics. Cam Baker is managing editor and formerly a reporter for Bloomberg News.
-Fabio Natalucci -Cam Baker
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