The US Government is Now “In Business”
Thank you for reading this post, don't forget to subscribe!The traditional conservative mantra that the “government has no business to be in business” appears to be obsolete under Donald Trump. While leaders like India’s Narendra Modi pitch for privatization, the US government under Trump is moving in the opposite direction, launching into an era of unprecedented industrial policy.
This shift is driven primarily by intense geopolitical competition with China, which the US views as a near-peer economic and military rival. The US is determined not to cede any competitive edge, particularly in vital high-tech and energy sectors.
Key Actions and Interventions
The US government is actively intervening in the private sector through various measures, escalating efforts that began under the prior administration:
- Direct Investment: The Department of Defence invested $540 million in a private rare earths company to secure minerals for advanced tech like stealth jets. The government also took a 5% equity stake in a firm to accelerate a lithium mine in Nevada, crucial for EV batteries.
- Industrial Policy & Energy: The government allocated $625 million to support coal plants and mining.
- Tariffs and Revenue Sharing: The ongoing trade war has seen average US tariffs soar from 2.9% to 17.9%, generating significant revenue. Furthermore, the government struck an unconventional deal with semiconductor giants like Nvidia and AMD, charging them 15% of revenue for export licenses to sell advanced chips to China.
- Restriction of Capital: The Treasury Department prohibited or required notification for US investments in Chinese tech firms focused on semiconductors, AI, and quantum computing.
A New Era of Intervention
This current wave of intervention is different from past historical actions, such as the 1933 New Deal or the World War II War Production Board, because its focus is proactive and peacetime. Rather than a crisis response like the 2008 financial bailout, this is a strategic push to bolster national security and domestic manufacturing in key sectors.
These actions represent the most fundamental reshaping of global geopolitics in the early 21st century, moving away from the post-Cold War international order and into a world where trade, investment, and security are being reconfigured.
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