Trump is targeting the free market and American exceptionalism

Ironically, the president who campaigned on “making America great again” is taking aim at the very foundations of what makes the U.S. economy truly great. 

Indeed, in recent weeks, the Trump administration has taken — or discussed taking — multiple actions that threaten to jam up America’s economic engine.  

As midterms approach, Trump’s corporate statism should also give moderate Democrats a roadmap to follow: Return to their free market roots and put forward a growth-centric agenda. 

In that same vein, Trump is also setting a dangerous precedent Republicans may come to regret. Future presidents may now feel free to intervene and force other companies to advance their own partisan goals such as climate change. 

Further, with Trump’s economic approval sitting at a net minus-12 points (42 percent approve versus 54 percent disapprove) according to the RealClearPolitics aggregator, the chaos he is introducing could exacerbate already negative sentiment. 

Plainly, Trump should be advancing an agenda centered on economic growth and free markets, yet his recent actions more closely resemble China than any Republican economic agenda. 

First, the White House inked a deal with semiconductor giants Nvidia and AMD.  

In exchange for export licenses to send chips to China, the government will get 15 percent of China-derived revenues. 

Then, after demanding that Intel’s CEO step down, ostensibly due to his alleged ties to the Chinese military, the administration unveiled a 10 percent stake in the struggling company.  

As Barron’s reported, Trump’s Intel plan was once floated by Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass). The alignment of Trump with two left-wing officials underscores how misguided this approach is. 

To be sure, this is not the first time the government has taken an equity stake in private companies. It happened during the Great Financial Crisis as well. 

What makes the Intel deal different is that, although troubled, Intel was not bankrupt and has ample ability to raise money in capital markets. 

Claiming that the stake was in exchange for Biden-era CHIPS Act funding may be accurate, but that does not mask the intrusion of the federal government into a private company. 

Taking things a step further, administration officials National Economic Council Director Kevin Hassett and Commerce Secretary Howard Lutnick told reporters that the White House is looking to take stakes in even more companies. 

Lutnick’s rationale, that the government should be free to take stakes in companies which sell to, or benefit from the services provided by the government, would seemingly make every company a potential target.

Bizarrely, the delta between Trump’s policies and those of the socialist politicians he often derides is rapidly shrinking. 

Nevertheless, the administration continues to double down. Last week on CNBC, Lutnick revived the idea of putting tariffs on patents.  

As the administration sees it, the U.S. government should get a cut of cutting-edge inventions, akin to what happens in communist China. This must be called what it is, a tax on innovation, and a total reversal of the free-market ideals that have traditionally been at the core of the Republican Party. 

Like anything, taxing it will result in less of it, and less innovation weakens the very foundation of American capitalism and exceptionalism. 

Finally, Trump’s long crusade to curtail the Federal Reserve’s independence took a drastic turn this week when he fired Fed Governor Lisa Cook.  

According to the White House, the firing was due to Cook’s alleged mortgage fraud, but there is an unmistakable sense that this was political.  

Bragging about now having a chance to nominate a majority of the interest rate setting body, as Trump did last week, lends credibility to claims that Cook’s firing was politically motivated. 

To be clear, if Cook did in fact commit a federal crime, she should be held accountable. Still, it should be possible to hold two thoughts at a time.  

The first being that Cook may have committed a crime. Second, that firing a Fed governor over allegations, before a conviction, feels like Trump is using the justice system to advance a political goal. 

Trump has railed against the Fed for months, demanding that they lower interest rates, including threatening to fire Fed Chair Jerome Powell unless he acquiesced.  

Taken together, the Trump administration’s turn into corporate statism, industrial policy and attempted subjugation of the Federal Reserve threaten the country’s long-term prosperity. 

And while Trump is hardly the first president to push for lower interest rates — former President Nixon famously bullied then-Fed Chair Arthur Burns — Trump has been significantly more intense. 

The president’s moves to control the Fed risk what Evercore’s vice chairman called, “a riot in the bond market.”  

Turmoil in the bond market would, ironically enough, lead to the very thing the administration does not want; higher interest rates. 

Zooming out, what the administration is doing is also bad politics. Surging costs were critical to Republicans’ dominance in 2024, but if a politicized Fed allows inflation to return, Democrats will likely take back at least one chamber of Congress in 2026. 

As the Wall Street Journal Editorial Board put it, “if he (Trump) succeeds in taking over the Fed, he and Republicans will own the results and whatever inflation returns.” 

Aside from the impact this could have on Republicans’ midterm hopes, the administration is setting an extremely dangerous precedent for future presidents.  

Suppose the next Democratic administration, citing a climate emergency, moves to nationalize Ford or General Motors, and demands that they only produce electric vehicles. 

Of course, Republicans would be apoplectic, but they would have no one to blame but themselves for allowing Trump to set this in motion. 

Ultimately, having portrayed former President Biden and Vice President Kamala Harris as socialists, Trump is now advancing policies that are frighteningly close to socialism. 

In order to preserve the key pillars of the greatest economy in the world, President Trump should protect Fed independence and return to emphasizing growth and unleashing the power of the free market.  

Douglas E. Schoen is a political consultant who served as an adviser to President Bill Clinton and to the 2020 presidential campaign of Michael Bloomberg. He is the author of “The End of Democracy? Russia and China on the Rise and America in Retreat.”