The New State Interventions

Protectionism, industrial policy, and government ownership — all once conservative boogeymen — have become official doctrine.

By Adam B. Kushner

Aug. 27, 2025, 7:14 a.m. ET

Conservative orthodoxy once held that the free market was the key to America’s economic success. In this view, Milton Friedman was a laissez-faire prophet. The Soviet Union was the sclerotic alternative. Ronald Reagan captured Republican sentiment when he said, “The nine most terrifying words in the English language are: I’m from the government, and I’m here to help.”

That’s not how President Trump — or his party — feels. The president wields tariffs to boost American companies. Populist Republicans in Congress back government subsidies to juice manufacturing. The United States is taking a 10 percent stake in Intel and a 15 percent cut of sales by Nvidia, both chipmakers. And Trump wants to replace the people who run the independent Federal Reserve with more compliant appointees. Protectionism, industrial policy and government ownership — all once conservative boogeymen — are now official doctrine.

In today’s newsletter, I speak with several of The Times’s expert beat reporters about the new state interventions.

Lauren Hirsch, who covers Wall Street, answers these questions.

Trump wants to help Intel compete with chipmakers abroad that are doing much better. But how does a government ownership stake work?

On paper, the government put a few limitations on its role as a shareholder. It has agreed to side with the Intel board on most issues requiring a shareholder vote. (This usually includes things like selection of board directors and approval over major deals.) As a result, Intel’s other shareholders will now have less sway. But the government still has the power of the bully pulpit. What happens if Trump posts online that he would like Intel to build a factory in a certain state?

When Washington bailed out banks and automakers in 2008, did it take a position in those companies?

Yes, but they were different. At the time, officials worried that the collapse of the auto or banking industry would pull down the broader economy. And the U.S. government bailed them out because they couldn’t get cash elsewhere. (It sold its stock in G.M., Citigroup and others after the downturn ended.) This time, Intel isn’t facing that sort of crisis. And while the White House and others argue that Intel is important from a national security perspective, its demise wouldn’t wreck the U.S. economy.

Now Trump says the U.S. may buy stakes in “many more” companies. Is this state-managed capitalism?

The Trump administration says this isn’t socialism. But what’s unusual is that the government appears to be selecting companies, not industries. And it’s unclear whether those companies have a choice. The bipartisan Chips Act, passed under President Biden, awarded $11 billion to Intel so it would make more chips in the United States. But Trump this month called for its chief executive, Lip-Bu Tan, to resign, citing his ownership stakes in Chinese companies. Tan “walked in wanting to keep his job, and he ended up giving us $10 billion for the United States,” Trump said.

An ideological shift

Tony Romm, who covers economic policy, answers these questions.

Is Trump moved by traditional Republican views about keeping the government out of the private sector?

Conservatives have long said that Washington should not pick winners and losers. Historically, they have opposed efforts to nationalize certain firms or sectors, arguing that it risks taxpayer money and warps an efficient marketplace. But Howard Lutnick, the commerce secretary, explained this week that the administration now expected something in return before it would allow a company to benefit from government largess (as Intel did) or to do something it is not permitted to do (as with Nvidia’s chip sales to China). He appeared to open the door for future government stakes in other industries, including defense contractors.

Why has the G.O.P. pivoted so much in the Trump era?

Michael Strain, an economist at the conservative-leaning American Enterprise Institute, describes two camps. In one, Republicans “are genuinely wrestling with how to navigate our increasingly adversarial relationship with China while still maintaining a commitment to free markets.” Some think America must sacrifice some economic liberty to beat China. The other (larger) camp “doesn’t support an equity stake in Intel but doesn’t want to speak out against the president,” Strain says.

Breaking the bank

Ben Casselman, The Times’s chief economics correspondent, answers these questions.

The president wants to oust the Fed chair — who has kept interest rates too high for Trump’s taste — but he can’t do it without “cause.” So Trump hopes to chip away at his supporters on the board. What’s he doing?

Trump is attempting to fire a member of the board, Lisa Cook. If he can replace her, and the Senate also confirms his nominee for another open slot, he will have appointed four of the seven governors — theoretically enough to control the board.

Powell was appointed as governor by Obama and nominated as chair by Trump. | By The New York Times

But governors, like the chair, can be fired only for cause. Trump has accused Cook of committing mortgage fraud by claiming two homes as her primary residence before she joined the board. She has vowed to fight her firing, and it will be up to the courts to decide whether Trump has sufficient cause to replace her.

The issue seems to be that Trump wants more control over the central bank, which is meant to be independent. Why is that important?

Like central banks in most advanced economies, the Fed is meant to be insulated from politics as it weighs interest rates and inflation. But Trump has tried to control the central bank directly to a degree other recent presidents have not. He has repeatedly threatened to fire Jerome Powell, the Fed chair. He plans to nominate Stephen Miran, a top economic adviser, to an open seat on the Fed board. And now he is trying to push out Cook.

What should we expect if the president gets more sway over Fed decisions?

There is a lot of economic research on what happens when central bank independence breaks down. The gist is that inflation goes up. But I think there’s a broader point here. Trump has gone after independent actors that don’t align with his political objectives. Those moves threaten to chip away at what has long been a pillar of U.S. economic strength: our reputation as a safe, reliable place for investors to put their money and entrepreneurs to build their businesses. That isn’t something that will disappear overnight, but attacks on the Fed’s independence could help push companies and investors to look elsewhere.