The United States government is implementing a significant shift in economic policy, moving from a traditionally hands-off approach to direct engagement with dozens of companies across critical sectors. According to multiple sources familiar with the matter, administration officials are actively negotiating deals, offering incentives, and in some cases, taking equity stakes to reshape domestic supply chains and secure national interests.
Key Takeaways
- The U.S. government is directly negotiating with companies in up to 30 industries deemed critical to national and economic security.
- Tactics include offering tariff relief, providing revenue guarantees, and taking equity stakes in private firms.
- A key goal is to move manufacturing back to the United States and reduce economic reliance on China.
- Federal agencies like the International Development Finance Corporation are being repurposed to finance these strategic interventions.
- The policy has drawn mixed reactions, with some businesses seeing opportunity while others express concern over government overreach.
A New Era of Government Intervention
In a departure from decades of U.S. economic doctrine, White House officials and senior agency staff are pursuing a hands-on strategy to influence corporate decision-making. The outreach reportedly involves near-daily calls to executives in sectors ranging from pharmaceuticals and semiconductors to critical minerals and energy.
According to sources, this "whole-of-government approach" is designed to achieve several strategic objectives. The primary goals include strengthening domestic supply chains for essential goods, reducing dependence on foreign nations like China, and encouraging companies to relocate manufacturing facilities to the United States.
This initiative spans a wide array of industries, including artificial intelligence, quantum computing, shipbuilding, battery production, and freight logistics. The administration is using various tools to encourage cooperation, such as offering relief from tariffs, guaranteeing future revenue, and providing federal financing.
The Dealmakers and Their Playbook
The push is being coordinated at the highest levels of government. White House Chief of Staff Susie Wiles has been involved in major pharmaceutical negotiations, while Commerce Secretary Howard Lutnick is described as a central figure in the broader strategy. Lutnick has publicly endorsed the idea of the government receiving equity in exchange for financial support.
"If we're going to give you the money, we want a piece of the action," Lutnick stated in a CNBC interview in August.
To execute this plan, the administration has brought in experienced dealmakers from Wall Street. Michael Grimes, a former tech banker from Morgan Stanley, and David Shapiro, a former M&A lawyer from Wachtell, Lipton, Rosen & Katz, are reportedly leading some negotiations. This has prompted major financial institutions like J.P. Morgan to form special task forces to manage client inquiries about potential government partnerships.
Context: A Shift from Free-Market Principles
This level of direct government intervention in private enterprise marks a significant change from the free-market principles that have largely defined American capitalism. Critics, including corporate law experts, have noted the irony of a Republican administration implementing policies that involve more state control than seen under many previous Democratic administrations.
Pharmaceutical Sector in Focus
The pharmaceutical industry has been a primary target of this new policy. According to sources, Pfizer was asked to increase production of its cancer drug Ibrance and cholesterol medication Lipitor. Similarly, Eli Lilly was reportedly requested to produce more insulin, and London-based AstraZeneca was encouraged to consider establishing a new U.S. headquarters.
In a public example of this strategy, President Donald Trump announced a deal with Pfizer CEO Albert Bourla to lower drug prices in return for relief from planned tariffs on pharmaceutical imports. "The United States is done subsidizing healthcare of the rest of the world," Trump said during the announcement.
The administration has also emphasized the importance of public announcements originating from the White House to highlight these agreements as political achievements. A spokesperson for Eli Lilly stated the company had not been asked to increase insulin production and that it regularly invites White House officials to its announcements.
Financing the New Industrial Policy
To fund this ambitious strategy, the administration is looking to expand the powers of a lesser-known federal agency. The International Development Finance Corporation (DFC), originally created to finance projects in developing nations, is being positioned to play a central role.
Proposed DFC Expansion
A proposal sent to Congress would increase the DFC's financing authority by more than 300%, from its current $60 billion to $250 billion. The expansion would also create an equity fund to invest in sectors vital to U.S. interests.
The expanded mandate would allow the DFC to invest in a broad range of domestic projects, including infrastructure, energy, and critical minerals. The agency is awaiting congressional budget approval and the confirmation of its new head.
Additionally, the administration plans to use $550 billion from a trade agreement with Japan to fund a new U.S. Investment Accelerator. This entity, to be managed by the Commerce Department, is intended to further drive investment in strategic domestic industries.
Real-World Examples and Industry Reaction
Several deals illustrate the administration's new approach in action. The government converted a grant made to Intel under the CHIPS Act into a 10% equity stake. In another instance, the Pentagon used the Defense Production Act to acquire a 15% stake in rare earths mining company MP Materials, a deal that also included a price floor for government purchases.
The Department of Energy reportedly asked Lithium Americas for an equity stake of 5% to 10% in exchange for advancing a $2.26 billion loan for its Thacker Pass mine in Nevada, which is set to become the largest lithium source in the Western Hemisphere.
A Mixed Corporate Response
The business community's reaction has been divided. Some companies see an opportunity to secure federal funding and favorable policy treatment. Investment banks are actively exploring these new avenues on behalf of their clients.
However, others are apprehensive. Executives in the critical minerals sector have expressed fear that meetings about loans could turn into demands for equity. There is also significant concern about the long-term viability of business decisions based on policies that could be reversed by a future administration.
"The No. 1 concern is this may be short lived," said Y. David Scharf, a partner at a law firm representing companies in talks with the government. "Is there an unwind that has to happen if there is a 180-degree opposite view in the next administration?" This uncertainty remains a key challenge as the government continues its unprecedented foray into the private sector.
