Under Donald Trump, the US government has taken an unusually active role in business, reversing the principle of minimal state involvement that Indian PM Narendra Modi promoted in 2021 when he said the “government has no business to be in business.” Trump’s administration has made substantial moves in strategic sectors, investing directly in rare earths firms, acquiring equity in lithium mines, striking revenue-sharing deals with semiconductor giants, and hiking tariffs, all unprecedented in recent decades.
In July, the US Department of Defense invested $540 million in a private rare earths company critical for technologies ranging from stealth jets to semiconductors. In August, the government required Nvidia and AMD to pay 15% of revenue from export licenses to sell advanced chips to China. Additionally, the US acquired a 5% stake in Lithium Americas to accelerate lithium mining in Nevada, vital for EV batteries and renewable energy, signaling deeper federal involvement in critical minerals to reduce dependence on China. Energy and interior departments allocated $625 million for coal projects, new mining initiatives, and royalty reductions to support “reindustrialisation and the AI race.” Meanwhile, US tariffs have surged from 2.9% to 17.9%, generating an additional $200 billion monthly revenue.
These measures reflect more than mere economic policy—they are part of a broader geopolitical strategy. The US now faces China as a near-peer competitor, economically and militarily, unlike the Soviet Union. Policies restricting US investments in Chinese tech sectors and proactive measures to secure semiconductors, energy, and pharmaceuticals illustrate a national security-driven industrial strategy.
Trump’s interventions follow a historical precedent of government involvement in crises, yet differ in scope and intent. During the New Deal of 1933, the US sought economic recovery, financial reform, and social relief. During World War II, 30% of industrial output was directed via government oversight, and in 2008, $3.2 trillion was injected into the economy to stabilize financial markets. Today’s actions, however, are proactive and peacetime-focused, aimed at strategic sectors to counter China and reshape global economic and security dynamics.
Economists describe this as reshaping “The New Economic Geography,” reflecting the shift from a US-led international order to multiple competing economic blocs. These interventions, combining trade, investment, and security considerations, represent one of the most fundamental realignments of geopolitics in the early 21st century.
