Trump administration equity stakes pose risks to U.S. companies and markets
https://www.cnbc.com/2026/02/07/trump-equity-stakes-pose-these-risks-to-us-companies-and-markets.html
> The Trump administration’s portfolio of equity stakes in U.S. companies has reached a scale that is unprecedented outside economic crisis or wartime. The administration has taken stakes or has agreements to do so with at least 10 companies, most of which are publicly traded. The government announced its latest investment, USA Rare Earth, at the end of January.
> “It is an invisible barrier to startups and new market entrants,” said Scott Lincicome, an international trade lawyer affiliated with Cato Institute. “Why would you ever want to enter a market that you know your chief competitor is backed by the U.S. government?” Many of the investments are in smaller critical mineral companies, like USA Rare Earth and MP Materials, but they also include big industrial and tech companies such as U.S. Steel and Intel.
> Historically, the U.S. has taken equity stakes in companies in the context of bailouts with the understanding that the investments were temporary and the government would exit its position when the company was financially viable again, said Peter Harrell, who served as the senior director for international economics under President Joe Biden. But the Trump administration appears to be taking open-ended ownership interest that the U.S. government is unlikely to exit, Lincicome said.
> The Trump administration’s approach creates political, legal and business risks for the companies involved, including potential conflicts of interest, capital misallocation, and the politicization of business decisions. “Big companies could decide to do business with the government-backed firms to curry favor with the administration,” Lincicome said. MP Materials warned investors that its deal faces “the risk of litigation” and is vulnerable to “changes in federal administration and related executive and legislative priorities.”
> Top executives have voiced virtually no public criticism of the Trump administration taking stakes, though some quietly oppose it. Citadel CEO Ken Griffin said, “When the U.S. government starts to engage in corporate America in a way that tastes of favoritism, I know for most CEOs that I’m friends with, they find it incredibly distasteful.” The number of government equity stakes is likely to grow, with Trump indicating he “will not permit” defense companies to issue dividends or stock buybacks until production accelerates, signaling continued government intervention in private enterprise.
