Terms such as “crony capitalism,” “state capitalism,” and even “MAGA Marxism” have entered mainstream business discourse in the United States this year, as corporate leaders, legal scholars, and political analysts attempt to describe how Donald Trump’s economic policies are reshaping American capitalism. While definitions vary, the underlying concern is consistent: the traditional boundary between government and private enterprise appears increasingly blurred, with potential long-term consequences for competition, innovation, and the country’s global economic standing.
“At its core, a free market depends on neutral rules,” said Ann Lipton, a business law expert and professor at the University of Colorado Law School. “When the American government appears to favor one company over its rivals, that distorts the marketplace.”
Lipton warned that such favoritism undermines innovation — the very engine of U.S. economic dominance. “If firms are competing on their ability to schmooze political leaders instead of competing on products and ideas, that’s bad for everybody,” she said. “It’s just bad for the economy.”
Favoring Friends, Pressuring Rivals
Over the past year, Trump has openly intervened in the affairs of major U.S. corporations, sometimes publicly pressuring executives while rewarding others who maintain close ties to his administration.
In August, the president called for the resignation of Lip-Bu Tan, chief executive of Intel. The confrontation subsided only after Tan visited the White House and agreed to grant the U.S. government a 10 percent ownership stake in the company — a move that startled corporate governance experts.
Similar dynamics have played out across the technology sector. Jensen Huang, head of Nvidia, one of the world’s most valuable firms, has been among executives seen cultivating personal goodwill with Trump. Nvidia has also supported the president’s controversial plans to build a ballroom at the White House.
This month, Trump announced that Nvidia would be allowed to sell advanced semiconductor chips to China — provided the U.S. government receives a 25 percent share of the proceeds. Business analysts say such arrangements resemble revenue-sharing deals more typical of state-controlled economies.
In a statement, a Nvidia spokesperson said, “In our discussions, President Trump focuses on his desire for America to win as a nation and his efforts to protect national security, American prosperity, and technology leadership.”
A Shift Toward State Capitalism?
Business leaders have always sought influence in Washington, regardless of party. But critics argue that Trump’s personal involvement in corporate decision-making marks a departure from the rules-based capitalism that has defined the U.S. economy for decades.
“This looks less like free-market capitalism and more like government-directed capitalism,” said Daniella Ballou-Aares, co-founder of Dalberg and head of the Leadership Now Project. “When political relationships determine economic outcomes, you are no longer letting markets decide winners and losers.”
Ballou-Aares’ organization surveyed business leaders across party lines alongside The Harris Poll in October and found that 84 percent were worried about the current political and legal climate’s impact on their companies.
A White House official, speaking on condition of anonymity, rejected the characterization of Trump’s policies as crony capitalism. The official said the administration’s approach reflects “traditional free-market policymaking” and argued that government involvement has been limited to sectors tied to national and economic security, such as semiconductors, steel, and rare-earth minerals.
“What we’re doing is embracing the free market while making targeted interventions where there’s too much at stake,” the official said.
Tech Winners, Corporate Unease
Many businesses welcomed Trump’s return to office after growing frustrated with what they viewed as an overly aggressive regulatory environment under President Joe Biden. Nowhere has that relief been more visible than among the technology giants driving the artificial intelligence boom.
“The so-called ‘Magnificent Seven’ tech firms and Trump 2.0 are largely aligned,” said Daniel Kinderman, a political science professor at the University of Delaware. “For these companies, dealing directly with the president can actually be more efficient than navigating complex regulatory systems.”
Executives appear to have learned that personal diplomacy pays dividends. Tim Cook, head of Apple, reportedly presented Trump with a gold-plated plaque this summer as Apple pledged $600 billion in U.S. investment. Notably, Apple’s iPhones have avoided the brunt of Trump’s sweeping tariffs.
Still, experts caution that such arrangements carry risks. “These relationships may feel efficient now,” Kinderman said, “but history shows they can turn quickly if political winds shift.”
Lessons From Abroad
Critics point to countries such as Russia, Hungary, and China as cautionary tales of state-controlled capitalism, where political favor can make or break corporate empires.
Ballou-Aares cited the example of Jack Ma, founder of Alibaba, who disappeared from public view after criticizing Chinese regulators. “Crony capitalism never ends well for most companies,” she said. “Just ask Jack Ma.”
Frustration Beyond Big Tech
Outside Silicon Valley, corporate America is far less enthusiastic. Trade groups and major firms have quietly pushed back against Trump’s policies, filing lawsuits over tariffs and immigration restrictions while avoiding public confrontation.
“Most CEOs are pretty frustrated,” said Jeffrey Sonnenfeld, a Yale management professor. “They don’t want to look like they’re buying favors.”
The U.S. Chamber of Commerce recently sued the administration over a proposal to charge $100,000 for H-1B visas, even as it praised Trump’s broader agenda. Jamie Dimon echoed similar caution, explaining why his bank declined to donate to Trump’s White House ballroom.
“We have to be very careful about how anything is perceived,” Dimon told CNN. “We’re quite conscious of risks that look like buying favors.”
Weaponizing Regulation?
One of the most controversial aspects of Trump’s approach has been merger review. The Federal Communications Commission approved several mergers only after companies agreed to roll back diversity, equity, and inclusion policies — a move critics say politicizes regulatory oversight.
“Merger review has been weaponized,” said Elizabeth Wilkins, former chief of staff at the Federal Trade Commission. “That creates fear and breeds silence.”
As businesses adapt to an unpredictable policy environment, many are stuck in what consultants call “tactical firefighting.”
“Every hour spent mitigating tariffs is an hour not spent on innovation,” said Drew DeLong of Kearney. “There’s urgency — and there’s fatigue.”
With three years remaining in Trump’s term, executives and economists alike are bracing for more uncertainty.
“This is just year one,” DeLong warned. “The bigger question is where this version of capitalism ultimately leads.”
