Trump shifts America to China-style state capitalism model in great powers convergence

President Trump has implemented a new economic model that mirrors China’s state capitalism, requiring companies like Nvidia and Intel to align their operations with government objectives in exchange for market access. This represents a fundamental shift from traditional free-market capitalism toward what Long Le, associate teaching professor at Santa Clara University’s Leavey School of Business, terms “corporate statism,” where economic security becomes synonymous with national security and companies must pay levies or accept government stakes to operate.

What you should know: Trump’s administration has struck unprecedented deals that blur the lines between private enterprise and state control.

• Nvidia secured permission to export AI chips to China by agreeing to pay a 15% levy to the U.S. government on sales.
• Intel accepted an unprecedented 10% government stake in the company as part of a broader deal.
• Foreign and domestic AI companies receive green lights for major infrastructure projects, provided they align with administration priorities.

The big picture: This marks America’s transition into what Le calls “national security marketism,” where corporate groups form the basis of society under state direction.

• The model directly parallels China’s state capitalism system that helped transform it into a superpower.
• Trump’s approach aims to decouple the U.S. from China and disrupt the current bipolar power system.
• The administration is replacing traditional American values of diversity and inclusion with the principle that “personal, domestic and economic security are national security.”

How the system works: Companies must navigate a new “rent system” that requires payment for innovation and market participation.

• Both U.S. and foreign companies are expected to “pay forward” when innovating and making profits.
• Trump has threatened tariffs on American brands to boost domestic consumption.
• Export controls through the Department of Commerce govern AI product sales to non-allied countries.

Why this matters: The shift represents a point of no return for American capitalism, according to Le’s analysis.

• Growing public discontent with the status quo has created ideal conditions for this transformation.
• The change is “fueled by a deep-rooted shift in public sentiment and domestic politics that see America losing its way.”
• Le suggests the U.S. has “likely crossed the Rubicon” and cannot return to previous free-market approaches.

What’s next: The success of Trump’s state capitalism will depend on whether it develops vertically or horizontally.

• Vertical implementation could “significantly rock the U.S.’s healthy consumer economy and normalize today’s volatile stock market.”
• Horizontal development that accounts for key stakeholders and their interests “might have some real legs.”
• The model faces ongoing legal and political challenges as it continues to unfold.

What they’re saying: “It is indeed uncharted territory where the status quo is being reshaped before our eyes,” writes Le.