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lite.cnn.com - on gopher - inofficial
ARTICLE VIEW:
Trump wants to call shots at all types of businesses. Here’s why
that’s a problem
By Chris Isidore, Auzinea Bacon, CNN
Updated:
4:07 PM EDT, Mon August 25, 2025
Source: CNN
Move over, CEOs. Someone else might be angling to weigh in on your
company: the president of the United States.
President Donald Trump has brought a transactional mindset to the White
House, one in which the US government isn’t just a regulator but a
participant. The administration is determining where companies can make
their products (likely domestically), what they can produce or who gets
a share of the revenue.
Last week, for an almost 10% stake in struggling chipmaker Intel.
“And we do a lot of deals like that,” Trump said from the Oval
Office on Friday. “I’ll do more of them.”
The White House has taken on a role akin to activist investors – but
with the muscle of the world’s largest economy and massive pressure
campaigns from the Oval Office.
Everything from US Steel’s output, where utilities source power, to
Coca-Cola’s formula now have Trump’s fingerprints on them. The
metric is no longer companies deciding the best business decision based
on economics or the market but what is going to make the White House
happy.
But that kind of government involvement carries any number of risks,
like impeding overall economic growth or making US companies less
competitive around the world.
“This is the most interventionist government of my lifetime, more so
than any Democratic administration,” said Justin Wolfers, professor
of economics and public policy at the University of Michigan. “This
isn’t the sort of thing that is going to cause a recession tomorrow.
It’s more termites in the woodwork, with long-run consequence.”
The White House said in a statement that it is working to deregulate
markets as well as to support Americans.
“Washington, D.C.’s blind commitment to consensus orthodoxy that
ignored the realities of the world is exactly why Americans and America
were left behind: look no further than lopsided ‘free’ trade
arrangements that let foreign cheating decimate our industrial base,”
White House spokesman Kush Desai said in the statement.
“The Administration is simultaneously pushing the free market
policies – such as rapid deregulation and The One Big Beautiful
Bill’s tax cuts – that do work while rectifying the America Last
policies that haven’t worked to safeguard our national and economic
security.”
Trump and members of his administration have frequently said they want
to free businesses from what they consider unfair regulation.
The ‘Cold War against central planning’
The Intel announcement is hardly the first time that Trump has tried to
exert influence over how US companies are run since he returned to
office.
Trump in May a “golden share” of US Steel in exchange for allowing
Japan’s Nippon Steel to purchase the company. That gave him a certain
level of control over the manufacturer, including preventing layoffs or
outsourcing production, no matter the economics.
That’s the same policy American steelmakers – like many US
companies – used to object to when describing unfair competition from
government-supported businesses overseas.
“The US fought a Cold War against central planning,” Wolfers said.
It’s very possible that now Intel’s overseas competitors will
object to the US government’s stake.
Intel said in a filing Monday that 76% of its revenue last year came
from foreign countries. Those foreign sales could be hurt since a US
government stake means they are possibly subject to “additional
regulations, obligations or restrictions, such as foreign subsidy
laws.”
The company also warned that the 10% stake could have downsides for
the firm since the “US government’s interests in the company may
not be the same as those of other stockholders.”
The Trump administration has pushed other companies to act against
their own economic interests.
Trump’s Energy Department ordered coal- and gas-burning utility
plants, which had been slated to close for fiscal reasons, to remain
open. The goal is to support the battered coal industry, which cannot
compete with other fuel sources. But clean energy advocates say that
comes with a cost for consumers.
Consumers Energy was ordered by the DOE to keep operating a coal-fired
plant in Michigan that was set to close in 2025. The company put the
price of complying at $29 million for just May 21 till June 30 – a
cost it would seek to recoup in higher rates.
“Mandating this half-a-century-old coal plant to stay open will drive
up electricity bills and pollution even higher for families and
businesses,” said Ted Kelly, director and lead counsel for US clean
energy at the Environmental Defense Fund, a public interest group.
“Imagine the price shock for ratepayers after several months.”
The utility said the plan to close had been approved in 2022 by
numerous stakeholders, including the Michigan Public Service
Commission, but that it would comply with the DOE order. Consumers
Energy added it would be able to keep operating through higher rates.
The economic cost of central control
Interventionist government policy over business decisions can have
wide-reaching consequences, experts say.
Wolfers said the best economic proof of the problem is what happened in
North and South Korea in the decades after the war there ended. The two
countries had similar land and weather, but post-war, the North Korean
economy was driven by central planning while the South relied on market
forces.
“Fast forward several decades, and people in North Korea are hungry,
they’re an inch shorter than people in South Korea, they’re sicker,
they have shorter life expectancy and average income per person is
very, very low,” he said. “When you have market forces, you have
South Korea, one of the world’s great developing miracles, people are
wealthy, healthy and happy.”
“Is Trump Kim Jong Il? Probably not,” Wolfers added. “But the
implications are so enormous, that walking down that path could be
profoundly economically destructive.”
Other economists warn that the White House directing business
operations, not just supporting them, is actually bad for companies in
the long run.
The president can “jawbone companies into doing this he wants,”
said Scott Lincicome, vice president of general economics and the
Stiefel Trade Policy Center at the Cato Institute, a think tank that
advocates free market economic policies. But long term that’s likely
to result in company operations becoming smaller, less efficient, less
effective, less competitive globally.
“They’re using the power of the state alone, whether it’s
withholding subsidies or granting tariff exclusions or threatening new
tariffs, instead of some sort of direct equity stake,” Lincicome
said. “They’re trying to, rather aggressively, dictate corporate
decisions in a way that is … certainly more forceful than previous
administrations.”
The threat of ‘crony capitalism’
What has many economists particularly worried is not just government
intervention in how businesses are run, but how some may feel compelled
to publicly please the president.
Whether it be through gifts or merely praise, they say this is a
version of “crony capitalism” that stops businesses from being as
efficient as they should be.
“The concern is that businesses will seek to get ahead, not through
innovation or competition, but by cozying up to Trump,” said Neale
Mahoney, professor of economics at Stanford University, adding that
such a shift would make the US economy “less dynamic” and the
country “less prosperous.”
Earlier this month, Apple CEO Tim Cook provided presented Trump with a
customized glass and 24-karat gold statuette. Cook himself theatrically
unveiled the item the Oval Office while announcing plans to in US jobs
and suppliers.
Experts say that announcement, and gesture, saved Apple from Trump’s
threats of a steep increase in tariffs unless it shifted production of
the iPhone back to America.
“I don’t doubt that Trump will get his photo-ops and big-dollar
pledges, but I’m less convinced that he’ll get the durable
investments that could make a difference for strategically important
companies and sectors,” Mahoney said.
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