Trump economic interventions reshaping U.S. model amid tariff dispute and corporate-state actions

Former President Donald Trump’s recent economic actions and proposals are creating significant uncertainty about the future shape of the U.S. economic model, following the administration’s implementation of reciprocal tariffs, direct interventions in private companies, and personnel changes in key economic institutions.

Trump announced reciprocal tariffs on April 2 and has said he may “unwind” trade deals if the tariff regime is struck down by the U.S. Supreme Court. At the same time, his administration has taken a 10% government stake in Intel, demanded 15% of revenue from Nvidia’s chip sales to China, and publicly suggested the removal of Goldman Sachs’ chief executive.

The administration has also sought to influence independent economic institutions. President Trump criticized Federal Reserve Chair Jerome Powell, attempted to remove Lisa Cook from the Fed’s board, and dismissed the head of the Bureau of Labor Statistics after a run of weak jobs data. The National Labor Relations Board chief, Jennifer Abruzzo, was also removed.

Observers describe these moves as a combination of systematic attempts to alter established norms and chaotic, ad hoc interventions. Support and opposition have been mixed across the political spectrum: Senator Bernie Sanders welcomed the Intel stake as a form of public investment consistent with his past proposals, while some Republicans criticized it as akin to “socialism.”

Trump’s interventions coincide with a strong AI-driven rally in technology stocks, which has so far limited market turbulence. Analysts warn, however, that continued policy unpredictability increases economic risk and could leave the U.S. economic model substantially altered after the remainder of Trump’s term.

Commentary in recent years has traced the erosion of unchallenged U.S. free-market leadership to the 2008 financial crisis, when large financial-sector bailouts undermined claims that laissez-faire capitalism was a reliable global model. That episode, critics say, fuelled public resentment over perceived unequal accountability and contributed to populist political shifts.

Trump’s present measures build on an environment in which both major parties have supported a stronger industrial policy: former President Joe Biden maintained China tariffs from Trump’s first term and pursued large-scale targeted grants and loans through measures such as the Inflation Reduction Act to advance national priorities like decarbonization and job creation.

Economic indicators released Friday showed weak payroll growth and an unemployment rate near a four-year high, prompting analysts to say companies may be responding cautiously to policy uncertainty. Investors have remained relatively calm, supported by expectations of future Federal Reserve rate cuts and strong returns in technology stocks, but economists warn that prolonged volatility could undermine economic credibility and increase long-term risks.

Source: theguardian