NEW YORK: The Trump administration is negotiating an equity stake in Lithium Americas, marking the latest government entry into private enterprise and testing American free-market traditions.
This move follows announcements of government holdings in semiconductor firm Intel and rare earth company MP Materials.
President Trump also secured a “golden share” for Washington in United States Steel as a condition of its sale to Japan’s Nippon Steel.
A Trump administration official confirmed ongoing talks regarding the Lithium Americas stake, which is part of a renegotiation of a US Department of Energy loan involving the Canadian miner and General Motors.
The White House has portrayed these stock holdings as a taxpayer benefit that showcases Trump’s dealmaking skill, while insisting day-to-day management remains with the companies.
Free-market advocates have reacted with varying levels of alarm to a trend they view as undermining the US system and encouraging crony capitalism.
Fred Ashton, director of competition policy at American Action Forum, stated that state involvement in private enterprise leads to inefficiency and favours politically connected firms.
“We know the president likes to win so there’s no way the government lets these firms fail,“ Ashton said.
Trump officials recently utilised the US Steel golden share to influence operations after the company planned to idle an Illinois factory.
According to a Wall Street Journal report, the company decided to keep the plant running after Commerce Secretary Howard Lutnick invoked the golden share, affecting 800 workers.
Governance expert Charles Elson of the University of Delaware criticised the White House intervention for interfering with capital allocation.
“The government is not in the business of picking winners and losers in the capital system,“ he said.
US government equity stakes are not unprecedented, as seen during the 2008 crisis with holdings in AIG, General Motors, and Chrysler.
The Treasury Department sold those shares after the crisis, reflecting a bipartisan consensus favouring free markets.
Michael Strain of the American Enterprise Institute noted that presidents from Ronald Reagan to Barack Obama embraced the free market.
“Obama would have laughed out of the room the suggestion that the government take an equity stake in a manufacturing company,“ Strain said in a column.
Strain predicted a significant increase in crony capitalism under Trump but believes the US macroeconomy’s size will limit major distortion.
Ashton agrees the US free-market status is not seriously threatened but says Trump’s actions are distorting corporate behaviour.
He cited reports that Apple may take a stake in Intel following CEO Tim Cook’s White House visit where he presented Trump with a gold piece.
“It’s become so murky,“ Ashton said regarding whether business decisions are made for commercial reasons or to please the White House. – AFP