In the Media
THE AMERICAN PROSPECT: Rule by Deal
11. 10. 2025
Today’s battle is about whether a marketcraft in the public interest can win out over an authoritarian impulse.
Barely a week goes by without Donald Trump announcing a new public investment or industry-specific subsidy. Late last month, the Trump administration committed to investing $80 billion in nuclear power. A day earlier, the United States and Japan agreed to a robust set of investments in critical mineral production, an extension of the pattern of direct investments the U.S. government has already made. Meanwhile, the government is now the largest stockholder in Intel and worked with Nvidia to suspend export controls on certain high-powered chips to China.
Some observers have described these actions as a new “economic nationalism,” citing the administration’s prioritization of domestic economic interests over international economic integration. But that term fails to explain what makes this administration’s decision-making unique. Economic nationalism suggests a focus on industries that disproportionately benefit American workers, but the administration talks of the importance of semiconductors, critical minerals, and shipbuilding in the same breath as its support of AI companies, pharmaceutical production, banking and finance, and soybeans. There is little evidence for a particular focus on restoring blue-collar manufacturing jobs, which many might expect from an economic nationalist agenda.
Other writers call it “state capitalism.” But that projects too much coherence onto what so far has been an idiosyncratic collection of half-step policies. State capitalism entails public direction of market activity, either directly through state ownership of firms, or more indirectly through allocation of investment, credit, and subsidies. While the Trump administration’s actions constitute a level of state involvement in markets unusual in American history outside of wars and other crises, there is little evidence that these actions are coordinated across sectors in a systemic fashion.
Or could this be marketcrafting, the term I often use to think about a broad history of state action shaping markets toward the public interest? It isn’t—yet. Marketcrafting requires a particular economic goal, and a coordinated effort to use the tools of public policy to shape the market toward the public interest. Trump’s economic agenda looks to enhance presidential power in pursuit of an independent, even self-sufficient, economy. Just as Trump imagines himself to be superior to other businessmen, he now proclaims that America should dominate other nations through its economic leadership. Relying on other countries is no longer an option, whether they be distant foes such as China or friendly neighbors such as Canada. This search for independence and dominance extends to domestic institutions. No more should Americans need to rely on the expertise of administrative institutions, like the Federal Reserve or the Federal Trade Commission, to deliver economic policy that improves American lives. Only the president, in his unique capacity as the consummate outsider who is now head of state, can make America economically self-reliant and independent.
Trump’s economic policy is best understood as rule by deal. He makes ad hoc agreements with domestic companies, and deals with foreign nations that benefit particular businesses the president favors. Each deal is individually negotiated, unpredictable, and contingent on executive favor.
Lacking clear policy goals and without a coordinating institution to enforce the terms of the agreements, many of these commitments may end up being as thin as the paper the press release announcing them was printed on. Similar deals in the first Trump administration ended in failure, including the promise of 13,000 jobs in Wisconsin created by Foxconn that never materialized, and the eventual bankruptcy of Lordstown Motors in Ohio despite the promise of new investment and jobs.
Some of these deals may eventually add up to a marketcraft, if the administration builds an apparatus to manage the investments. Yet having bulldozed the bureaucracy, the administration has destroyed the institutional capacity required to convert dealmaking into durable policy, making it likely that rule by deal will produce little more than a trail of abandoned commitments and squandered opportunities.
TRUMP HAS ALWAYS SOLD AN IMAGE OF HIMSELF as a master negotiator. During his most recent presidential campaign, he promised farmers in Iowa that he would make a “great deal with China” and bankers in New York that he would use his dealmaking skills to force corporate leaders to onshore manufacturing. Once re-elected, he recruited fellow dealmakers from finance, particularly Commerce Secretary Howard Lutnick, the former investment banker and head of Cantor Fitzgerald, and Treasury Secretary Scott Bessent, who had 40 years in global investment management. Neither had served in government before, but they had spent decades doing deals.
Foundational to the administration’s dealmaking is the need to create leverage where it might not already exist. In his second term, Trump has used tariffs to bring companies and foreign governments to the negotiating table. In the first Trump administration, and in the Biden years, tariffs were primarily used tactically to craft particular markets, like supporting American automobile production. Trump and Biden both employed them as a means to build negotiating leverage with foreign adversaries, particularly with China, and to signal to voters their seriousness about supporting domestic manufacturing.
But Trump’s vision of the relationship between government and private industry transformed in the COVID crisis. In Operation Warp Speed, the Trump administration led a public-private collaboration to develop and distribute lifesaving vaccines, illustrating how policymakers might work with private companies to further political goals. In the absence of a problem as urgent as the pandemic, national self-sufficiency has emerged as the rhetorical goal. Instead of a public-health emergency to compel corporate action, the threat of new taxes on imports has forced business leaders to negotiate with the White House.
The “Liberation Day” tariffs implemented in April are the most sweeping since the 1930s. Trump has used questionable legal authority to claim the ability to set and adjust taxes on imports on any nation, at any time, on almost all imported products, from avocados to diamonds. The Yale Budget Lab estimates that the current U.S. average effective tariff rate across all goods is at 18 percent, the highest level in a century. Every country in the world is subject to a base tariff of 10 percent, and additional tariffs are negotiated individually on a country and market basis. The relative level of a tariff has little to do with the balance of trade specific to a country, but rather depends on the administration’s opinion of the foreign leader and how effective business leaders in a particular sector have been in securing lenient terms.
Trump variously justifies the need for tariffs as a means to reshore domestic manufacturing, strengthen national security, or raise revenue. Yet the primary utility of today’s tariffs is the leverage they build over other countries and domestic companies. With the threat of significant damage to their businesses and economies, many American companies and foreign countries feel they have no choice but to seek a deal with the White House to improve their financial position. Relief is routinely conditioned on explicit domestic‑investment pledges—from individual firms and allied governments alike—in the form of new capital expenditures and hiring commitments inside the United States.
Take Pfizer. In May 2025, Trump issued an executive order instructing American pharmaceutical manufacturers to lower prescription drug prices. The president threatened to impose a 100 percent tariff on any branded pharmaceutical product entering the United States, exempting only companies that had begun building manufacturing plants in the U.S. Over the summer, the CEO of Pfizer personally negotiated with the president to sell drugs to Medicaid at the low prices it sold to other nations, reducing the price Medicaid pays for these drugs by an average of 50 percent. Pfizer also agreed to participate in a new “TrumpRx” website for direct-to-consumer sales and invest $70 billion in U.S. manufacturing and research. (TrumpRx doesn’t itself sell drugs; it will point patients to company sites where drugs can be purchased at set cash prices.) In exchange, Pfizer received a three-year exemption from pharmaceutical-specific tariffs, as long as the firm further invests in domestic manufacturing. The administration has paused the 100 percent tariff on pharmaceuticals while other companies proceed to negotiate similar deals, including a recent one with Eli Lilly and Novo Nordisk.
This case is not isolated. General Motors announced a $4 billion plan to move production of several models from Mexico back to the United States. The move reduced exposure to tariffs on Mexican-made vehicles and curried favor with the administration. The corporate leaders of Illycaffè, TSMC, and Samsung, among others, have made similar announcements of additional domestic investment.
Tariffs are a major source of leverage, but they are not the only one. Since 2022, U.S. regulators have restricted what semiconductor chips Nvidia, designer of the chips that power the revolution in artificial intelligence, could sell to China. Nvidia developed a specific chip, just powerful enough to meet Chinese demand, which would also comply with American export restrictions. After months of negotiation, including a $1 million gift to Trump to attend a Mar-a-Lago dinner, Nvidia CEO Jensen Huang asked the White House for export restrictions to be eased so Nvidia could sell its specialized chips to China. “If I’m going to do that, I want you to pay us as a country something, because I’m giving you a release,” Trump claims he replied. Trump agreed to suspend bans on the export of semiconductors critical to national security in exchange for a kickback payment to the government. Trump initially asked for 20 percent of sales revenue, but Huang negotiated him down to 15 percent. They announced the deal in August. No American company had ever agreed to pay a portion of revenues to obtain export licenses. Bessent called it a “beta test” and said the administration could “see it in other industries over time.”
In other deals, the administration has used government equity investments as a policy instrument. American government has frequently made investments in private companies, sometimes with great success. Policymakers often invest across an industry, like banking in the 1930s, semiconductors in the 1980s, or automotive manufacture in 2009. Rather than supporting a particular market broadly, Trump and his team have singled out specific companies to receive policy advantages. In June 2025, as a condition of Nippon Steel’s approval of the acquisition of U.S. Steel, the government secured a “golden share,” a noneconomic equity stake that gives the president veto power over major corporate decisions including plant closures, salary reductions, and relocation of headquarters. The government has already exercised this authority once, blocking U.S. Steel from shutting down a plant in Illinois. In July, the Department of Defense paid $400 million for a 15 percent equity stake in MP Materials, owner of the only operational rare earth mine in the U.S. The Pentagon agreed to support a price floor for certain minerals and committed to buy all of the magnets MP produced at a new facility for a decade. Other ad hoc equity investments in mining companies have followed, including in Canadian companies Trilogy Metals and Lithium Americas. The criteria for these deals are unclear, as are the benchmarks for success.
Also in July, the Trump administration announced commitments for nearly $1 trillion of American investments from the Japanese and South Koreans as part of trade deals. The funds will be invested in specific companies that the Trump administration selects, and all money must be spent by the end of Trump’s first term. In August, the government took a 10 percent equity stake in chipmaker Intel. Rather than converting all grants from the CHIPS Act into equity investments, Trump decided to prioritize Intel because of the “personal” appeal of its CEO.
Rule by deal picks winners and losers—the exact fear that so many free-market voices wielded incorrectly at the Biden administration. In all of these deals, there is no industry-wide analysis, credit facility available to all companies in a sector, or equitable offering of investment capital. It’s also not clear what legal authority they are relying on to make direct investments. This selective approach risks trapping the government in a cycle of doubling down, investing more public money to prop up struggling, politically favored companies rather than letting them fail. Promising firms in the same sector may lose access to private funding, as investors gravitate toward firms with governmental support.
WHILE RULE BY DEAL MAY BE CHAOTIC, it is effective in consolidating political power in the office of the presidency. In no domain is this more apparent than in the response of corporate leaders in the second Trump administration. The transformation from Trump’s first term is dramatic. In August 2017, after a white supremacist ran a car through a crowd in Charlottesville, Virginia, killing a 32-year-old woman, Trump declared that there were “very fine people on both sides.” Immediately, the CEOs of Merck, Intel, and Under Armour resigned from Trump’s manufacturing council. Dozens of other CEOs followed—including Disney’s Bob Iger and Tesla’s Elon Musk—in what became a mass exodus from White House advisory positions; Gary Cohn, the chair of the National Economic Council, left as well. In the wake of the January 6th, 2021, insurrection attempt, the Business Roundtable, the Chamber of Commerce, and the National Association of Manufacturers quickly condemned the administration, a rare moment of elite business leaders breaking from conservatives.
This time was different. In August 2025, Apple CEO Tim Cook presented Trump with a glass plaque mounted on a 24-karat gold base at the White House. The gift was in recognition of Apple’s announcement of a $100 billion U.S. investment commitment, bringing its total to $600 billion over four years. The company received an exemption from steep semiconductor tariffs in return. When Intel’s stock fell after Trump demanded CEO Lip-Bu Tan’s resignation in August over alleged China ties, Tan traveled to the White House. Trump offered to convert the CHIPS program’s grant dollars into a 10 percent government equity stake. Tan accepted, and shares rebounded.
Dozens of other corporate leaders have stayed quiet in the wake of unprecedented moves. Trump has weaponized the National Guard, the Department of Justice, and the IRS to pursue his political enemies, and corporate leaders have stayed silent. He has sought to coerce universities into compliance with his party’s ideology. Independent agencies, from the Federal Trade Commission to the Federal Reserve, are no longer insulated from the president. Immigrants are abducted and rushed into vans to be deported to developing-world countries beyond the rule of American law. For corporate leaders, protecting their businesses requires avoiding criticism of these actions. Rule by deal is an effective political strategy to neutralize what were once among the most powerful and independent voices in civil society.
Some go further, choosing to openly participate in the enrichment of the president, his family and friends, and other officials. In January, Trump made over $1 billion after issuing his own “meme coin,” a crypto asset with no underlying value outside of collective support in the president himself. Weeks later, the Securities and Exchange Commission ruled that meme coins are not securities, exempting them from oversight. The next month, Trump hosted a dinner at one of his golf clubs for the top investors in his coin. Collectively, attendees reportedly spent $150 million to gain access. Meanwhile, the president’s sons “advise” many private companies, enhancing their direct access to the president; a drone company that Donald Trump Jr. holds a $4 million stake in recently won a Pentagon contract. Business leaders can pay anywhere between $1 million and $5 million for access to dinner at Mar-a-Lago and a chance to meet the president. While Trump’s presidential envoy to the Middle East Steve Witkoff conducted delicate cease-fire negotiations between Israel and Hamas, his son solicited billions of dollars from the same governments involved in the peace talks. Lutnick says he has no conflicts of interest, since he no longer runs Cantor Fitzgerald—easily eliding the fact that the firm is now run by his son Brandon. Faced with a disappointing job report, White House economic adviser Kevin Hassett countered: “Members of my family have been hired. Both of them started their new jobs about a week ago.”
AD HOC DEALMAKING MAY BE USEFUL for its effect on corporations, but the limits of such an approach may be showing on one of the most important markets to support in the short term: critical minerals. China dominates the production of many of the key inputs to phones, Air Force bombers, and even electricity transformers, giving it a choke point over the United States. Given their importance to American life, there are early signs of an attempt to pursue a critical minerals marketcrafting agenda. The Trump administration has made a series of public investments, procurement guarantees, and long-term loans to companies. For the moment, these deals have no institutional structure coordinating the investments, no structure of accountability to ensure the companies meet performance benchmarks, and no explicit congressional authorization to give investors long-term confidence in the strategy.
The administration could turn into a constructive marketcraft. It might work with Congress to charge a governmental institution with the mission of accelerating the production of important critical minerals in the United States or close allies. One option might be to use the “investment accelerator” at the Commerce Department that is coordinating the $900 billion investment from the Japanese and South Koreans. Or Congress could charter a new institution. Early interest in the creation of a sovereign wealth fund or national investment bank has morphed into a proposal to expand the Development Finance Corporation (DFC), a state bank created in the first Trump term charged with making foreign investments to further American foreign policy. Current legislative proposals imagine expanding the mandate to include investments in America and quadrupling its size.
The institution could run an open and transparent process to fund promising companies and cutting-edge research on extraction technologies. Investments could be made with clear benchmarks to ensure adequate progress. Given the urgency of the issue, government could also work to bring together competing companies to share premarket research, just as they did during World War II to produce synthetic rubber, or with semiconductors in the 1980s. Large buyers, like the Department of Defense, could commit to long-term supply contracts to ensure steady demand. The government could also partner with private-sector actors to set up new exchanges that facilitate the trading of futures contracts around these minerals, just as China did over a decade ago. Private investors have already rushed to support the ad hoc deals the government has made in the critical minerals sector. Institutionalizing rule by deal would attract even more capital.
This kind of institutional marketcraft is similar to what Marco Rubio, now secretary of state, and JD Vance, now vice president, championed in the years leading up to Trump’s second inauguration. Rubio and Vance made personal decisions to advance their own political ambitions rather than prioritize the use of institutions to shape markets. In an age of anger at the work of the administrative state, they deprecated their marketcrafting impulses to support Trump’s rule by deal. That will need to shift, if China moves forward on its threats to weaponize its mineral production and the issue rises in critical importance.
Policy-minded people are stuck in an impossible bind: How to advocate for good ideas to improve economic prosperity and resiliency in the short term if they serve to strengthen an autocrat-in-waiting? It feels wrong, or even unethical, to make the case for a more successful economic policy for this administration. Given the attack on the rule of law and the administrative state—key requirements for any marketcraft, let alone democracy, to function—it is unlikely that any kind of robust, effective marketcraft will emerge in the coming years. Perhaps that is for the best. The most potent check on consolidated presidential power may be the president’s own unpopularity, and nothing breeds unpopularity faster than economic mismanagement.
While Trump uses the presidency to force corporations to strengthen his power, Democrats search for policies that will shape markets to bring down the cost of living and boost wages for American families. The lonely voices who claim that unconstrained markets naturally create prosperity now have no political home. Today’s battle is about whether a marketcraft in the public interest can win out over an authoritarian impulse to bully corporations into strengthening presidential power. For marketcrafters, the task ahead will be practical: rebuild rule‑bound institutions with clear missions, persuade experts to return to the administrative state, and restore the practice of pursuing industry-wide programs so that policy does not devolve into picking winners and losers. Competence has never been more essential.