Donald Trump and Co. are dead wrong when they try to convince the American people that turning the United States toward state capitalism is a good thing. IT IS NOT.

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Moving miles away from free-market enterprise, the Trump/Vance administration is now demanding an actual stake in private companies (i.e., equity, warrants, licenses to intellectual property, royalties and/or revenue sharing, or other things that ensure a return on investment); significantly intervening in business transactions; and negotiating cuts of the revenue of the sales of American companies overseas.

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The U.S. government now has equity stakes in over 30 private companies, up from ZERO just one year earlier. This can, among other things, inflate share prices, lead to capital misallocation, and allow the government to dictate business terms – undoubtably making the American economy less neutral, less dynamic, and less productive in the years to come.

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We don’t want to hear one Republican say ANYTHING about how the Democrats are going to bring “socialism” to America. If they want to see “socialism,” they need to look in the mirror.

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First came the U.S. government’s 10 percent stake in Intel – which effectively made the United States a shareholder in a technology company – and the “golden share” arrangement in the Nippon Steel/U.S. Steel merger that gave the U.S. government the right to appoint a director to the board of U.S. Steel. The U.S. government’s approval is also needed for many of the strategic moves made by the company.

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Lest you think these were one-off deals, they were not. They were precedents. By the end of 2025, the United States also had a stake in Atlantic Alumina, Korea Zinc, Lithium Americas, MP Materials, ReElement Technologies, Trilogy Metals, Vulcan Elements, xLight and Westinghouse.

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In yet another move that looks far more like something that would happen in China than in the United States, the Trump/Vance administration has taken the unprecedented step of using export-control powers in a way that effectively forced an American A.I. developer to pull frontier models from the market over purported national-security concerns.

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The most hard-core example is the way the administration has treated Anthropic, one of the most advanced A.I. laboratories on the planet – and a company that the leaders of the United States of America should be immensely proud of.

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The official story from Donald Trump, JD Vance, Marco Rubio and Pete Hegseth is that their administration, using its export-control power, demanded that Anthropic restrict access to its powerful Mythos model over concerns adversaries could exploit it for cyber warfare. To help assuage the administration’s concerns, Anthropic then released Fable 5, a version that has most of the capabilities of its Mythos model (i.e., advanced coding, research, analytic, and agentic features) but also includes safeguards to prevent its use for cyber. < In reality, Anthropic itself had already deliberately restricted Mythos because of its cyber capabilities and Fable was Anthropic’s attempt to make Mythos-level capabilities generally available safely. >

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But that still didn’t seem to be good enough for the brain trust of Trump, Vance, Rubio and Hegseth (whom we're guessing know next to nothing about the inner workings of A.I.). While it’s true that Amazon researchers found a way to bypass Fable’s guardrails soon after its release, it’s very likely that concerns about the adequacy of safeguards were only one of the reasons these guys have beef with Anthropic.

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There is no public proof that the June export-control action was retaliation for that earlier fight. But given what happened between Anthropic and the administration only months earlier, I’m suspicious that the main reason Donald Trump, JD Vance, Marco Rubio, Pete Hegseth and the rest of the gang are ticked off at Anthropic is that its CEO Dario Amodei had the audacity to demand restrictions on how the Pentagon can deploy Anthropic’s tech for mass domestic surveillance and fully autonomous weapons. In other words, Donald Trump, JD Vance, Marco Rubio, Pete Hegseth and the rest of the gang are ticked off at Anthropic for having a conscience.

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For years, Anthropic has been, by far, the most vocal advocate from the A.I. world for guardrails to ensure the technology is used safely and responsibly. In a statement made amid heated discussions with administration officials, Mr. Amodei made Anthropic’s position clear: “I believe deeply in the existential importance of using A.I. to defend the United States and other democracies, and to defeat our autocratic adversaries. However, in a narrow set of cases, we believe A.I. can undermine, rather than defend, democratic values. Some uses are also simply outside the bounds of what today’s technology can safely and reliably do. Two such use cases have never been included in our contracts with the Department of War, and we believe they should not be included now: mass domestic surveillance and fully autonomous weapons.”

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Outraged, this led to Pete Hegseth designating Anthropic a “supply-chain risk,” removing its models from military systems, and President Trump directing federal agencies to stop working with the A.I. giant, accusing the company’s executives of being “leftwing nutjobs.”

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Amodei responded: “These threats do not change our position: We cannot in good conscience accede to their request.” (BRAVO and THANK YOU, Dario!)

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So, to recap: For 18 days, the United States federal government demonstrated that it could use export-control authority to impose restrictions so sweeping that one of America’s leading A.I. companies was effectively forced to pull its most advanced commercial models from the global market. That is an extraordinary precedent for government intervention in America’s A.I. industry and could not only potentially undermines our lead in A.I., but also push companies around the world into the arms of the Chinese and their open-weight and open-source A.I. models.

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< Open-weight means you are given pre-trained parameters to fine-tune the A.I. model, but the source code, architecture details, and datasets remain confidential. Open-source goes further, providing total transparency by including the source code, training methodologies, and training data so the public can audit and rebuild it. These models work great for users who want unconstrained access to systems they control because they are free to download, modify, and adapt them. By advancing these types of models, China can bypass U.S. hardware sanctions and restrictions; learn and implement best practices; rapidly integrate A.I. across its vast manufacturing base; and build global soft power through A.I. influence and dominance. >

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The Trump/Vance administration’s inconsistent approach to A.I. is confounding, but it looks even more contradictory and careless when you consider the Nvidia deal.

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In December 2025, President Trump announced that the United States would allow Nvidia – the dominant supplier of the advanced GPUs powering the A.I. boom – to sell its powerful H200 chips to approved customers in China, with the government collecting the equivalent of 25 percent through an unusual tariff arrangement.

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Five months earlier, the administration had brokered an even more extraordinary arrangement requiring Nvidia and AMD to pay the federal government 15 percent of revenue from certain A.I.-chip sales to China in exchange for export licenses. That arrangement immediately raised serious legal questions under both the Export Control Reform Act – which generally prohibits fees in connection with export-license applications – and the Constitution’s Export Clause, which prohibits federal taxes or duties on exports.

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This is quite possibly the most stupefying idea we have ever heard. For one, if advanced American A.I. chips really pose a national-security threat in Chinese hands, why does that threat become acceptable when the United States government gets paid?

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But setting aside the legal and national security concerns, why in the name of all that is holy would our leaders give our biggest economic competitor the chance to catch up with us in artificial intelligence?

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…. especially when experts say that China’s domestic accelerators still lag Nvidia’s most advanced chips in important areas, particularly frontier-model training. Basically, we are gifting China our computing power so they can buy time while their companies improve their own supply and performance.

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Donald Trump and JD Vance just handed Xi Jinping U.S. technological superiority on a silver platter… for what? 15 percent? This is insanity. Whose side are these guys on?

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The Institute for Progress, a think tank, estimates the American advantage over China in A.I. compute will shrink from around ten times to five times within a year of the Chinese having H200 chips (the H200 – a high-speed graphics processing units (GPUs) used for AI applications and high-performance computing – is Nvidia’s second-most-powerful chip). Well, that’s just great, isn’t it?

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In a most ironic twist, literally hours before the Trump/Vance administration’s announcement of their A.I. sabotage, the U.S. Justice Department announced that our federal government had “exposed a sophisticated smuggling network that threatens our nation’s security by funneling cutting-edge A.I. technology to those who would use it against American interests.” This “criminal network” – their words – tried to smuggle over $160 million worth of Nvidia chips to China (irony is not a strong enough word for this).

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The reasoning behind the bust, according to U.S. Attorney for the Southern District of Texas Nicholas J. Ganjei, is that the H100 and H200 chips are “designed to process massive amounts of data, advancing generative AI and large language models and accelerating scientific computing. These GPUs are used for both civilian and military applications.”

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“These chips are the building blocks of A.I. superiority and are integral to modern military applications. The country that controls these chips will control AI technology; the country that controls A.I. technology will control the future.”

 

Oh, for the love of %$#%.

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By the way, the Trump/Vance administration is trying to sabotage our technological superiority in other ways, like their wanting a piece of the patents owned by universities that result from new discoveries. At first glance, this may appear to make perfect sense. After all, as Commerce Secretary Howard Lutnick said, “If we give them the money, don’t you think it’s fair the USA and taxpayers who funded it get a piece of that?” But we assure you, it makes no sense whatsoever. This is nothing more than a tax on innovation.

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They can try to put lipstick on this pig all they want, but private-sector development featuring government ownership and control is state-controlled industry, pure and simple. Come on! You know it’s not a very capitalist idea when Senator Bernie Sanders is all for it.

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It’s no wonder that Donald Trump and JD Vance prefer this path because state capitalism is a means of not just economic, but political control. Blatantly exceeding authority; pressuring executives; singling out favored companies that kiss a$$ and pay to play; blurring the lines between public policy and personal business interests; arbitrarily picking “winners” and “losers;” and instilling fear and uncertainty into the entire process is what authoritarian governments do – and are now par for the course for these guys.

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Trump & Co. want the United States to control things so they can control things – handing out favors like King Midas to those who kiss the ring… a ploy Apple CEO Tim Cook took advantage of brilliantly when he, as Dr. Goddard and Dr. Newman mentioned, entered the Oval Office bearing some sort of engraved glass sculpture with, of course, a 24-karat gold base, and left the Oval Office with tariff exemptions.

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It’s no secret President Trump is using the office of the presidency to enrich himself and his family, administration officials, and business partners like no other president in history ever dreamed of – everything from inaugural and White House ballroom fundraising bribes to pardon kickbacks to cryptocurrency to foreign partnerships to Middle Eastern-funded golf tournaments and luxury jets. One must look no further than the highly corrupt United Arab Emirates chip deal that Steve Witkoff and David Sacks, key figures of the administration, negotiated, or the TikTok deal, which proved they aren’t even trying to hide their blatant cronyism (read more here).

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This all is just gross. Please don’t be fooled. None of this is the Art of the Deal. This is corporate statism and staying on its path would squash innovation and invention, distort markets, and fertilize and water unthinkable corruption. It’s un-American and it would end in disaster.

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Quite frankly, the American people should be insulted by the Trump/Vance administration’s turn toward state capitalism, because it feels like a declaration of defeat more than anything else. It’s as if they don’t think Americans can cut it without the Fatherland.

 

They are dead wrong. We can’t beat Xi Jinping by becoming him. At the end of the day – if we play our cards right and remember what makes America, well, America – there is NO WAY China beats us.

 

The way we win is to commit to smart, rigorous economic norms, stable and consistent rules, nonpolitical institutional integrity, and the rule of law. The way we win is by nurturing market-driven innovation, empowering entrepreneurs, ensuring that risks and rewards are shared fairly across society, and that opportunities are available to everyone.

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Despite what our current president believes, it wasn’t tariffs that made our country “very rich” in the 20th century. It was our unleashed ingenuity, entrepreneurial spirit, bold experimentation, economic freedom, smart foreign investment, and sensible immigration that propelled America forward – and allowed us to thrive. It will be these things – not oil in the ground or new territories on our map – that will help us do it again.