The question of whether President Donald Trump has turned the United States toward a new "state capitalism"—one in which the government is not just economic referee but active player—has been answered. His second term brings policies that go well beyond traditional Republican pro-market orthodoxies, such as tax cuts and deregulation, and into direct involvement with production and capital. Yet this doctrine is less a coherent grand strategy than a set of ad hoc deals, sometimes pro-market and sometimes interventionist.
Some Trump policies—tax cuts, deregulating, talk of budget-deficit reductions—retain a traditional Republican tone. On the other hand, this administration's protectionism and tariffs would have been inconceivable a decade ago. Republicans would also traditionally label the government's acquisition of a 10 percent stake in Intel as socialism if proposed by anyone other than Trump. And other policies have the feel of mafia tactics made possible by the exercise of leverage, like letting Nvidia and AMD sell their chips to China in exchange for a 15 percent cut back to the U.S. government.
Trump also departs markedly from the past GOP playbook in his lack of recognition that the market allocates resources much better than politicians and bureaucrats do. He treats the market as a stage for negotiation to reorganize the world's economies. Old-guard Republicans were globalists, whereas Trump built his appeal on "America First" nationalism and protectionism.
