Highlights
- The Trump administration pioneered a new approach of taking minority equity stakes in critical strategic industries like rare earth minerals and semiconductor manufacturing.
- The government can now use legal tools such as CFIUS, CHIPS Act, and Defense Production Act to invest in and influence private companies' strategic capacities.
- This emerging policy of state capitalism aims to rebuild US industrial competitiveness, particularly in critical mineral supply chains dominated by China.
In a detailed legal analysis, Peter Harrell, a Non Resident Fellow at the Carnegie Endowment for International peace and an attorney in private practice, argues the Trump administration’s move to take equity stakes—9.9% in Intel, a “golden share” in U.S. Steel, and a targeted stake plus warrants in MP Materials—marks a significant policy shift toward U.S. state capitalism. While not always explicitly authorized, these stakes likely rest on broad statutory tools: the Committee on Foreign Investment in the United States (CFIUS) mitigation authority (for U.S. Steel), CHIPS Act funding flexibility and “other transaction” authority (Intel), and Defense Production Act Title III (MP Materials). Because companies have consented, near-term court challenges are unlikely; real constraints may come from Congress (appropriations riders, DPA reauthorization guardrails) or future litigants if equity becomes a routine condition for permits, contracts, or grants.
Relevance: Rare Earths & the Supply Chain.
For critical minerals, the MP Materials precedent is pivotal. Title III lets the government underwrite productive capacity, set purchase commitments/price floors, and—per Harrell’s reading—take minority equity when firms agree. That cocktail directly targets the weak link in Western rare-earth chains: volatile revenues in upstream mining and midstream separation/magnet-making. If replicated, similar structures could help de-risk U.S./allied projects in NdPr, Dy/Tb, and magnet capacity—especially where offtake is thin and Chinese rivals enjoy scale, lower capex/opex, and equipment dominance.
The “golden share” logic also signals that future foreign takeovers in strategic metals may require permanent U.S. governance rights (e.g., preventing redomiciling or investment pullbacks).
So Harrell, whose scholarly research focuses on the intersection of international economics and U.S. national security, also previously served at the White House in 2021-2022, points to some marked implications.
Peter Harrell, a Non-Resident Fellow at the Carnegie Endowment for International
Implications—Fast, Loud, and Real
| Implications | Summary |
|---|---|
| Financing gets teeth | Pair minority equity with offtake contracts and price floors, and suddenly rare earth projects look bankable. That combo mutes the boom-bust whiplash that scares lenders and unlocks capital for mines, separation plants, and magnet lines |
| Control goes hardwired | Golden share” covenants can bake in U.S. jobs, on-shore production, and tech safeguards—especially where defense supply chains are at stake. Think permanent guardrails on redomiciling, investment pullbacks, or IP flight. |
| Precedent becomes policy | If Congress sits this out, agencies will keep testing broad authorities. The result? State equity shifts from crisis one-offs to a standing tool in strategic sectors—reshaping who gets funded, where they build, and how the market plays. |
What are some challenges or limitations with the perspective?
Key Limitations & Uncertainties
| Limitations & Uncertainties | Summary |
|---|---|
| Legal footing is interpretive | Legal footing is interpretive. |
| Consent today, challenge tomorrow | As equity becomes more common—or if conditioned on permits—non-consenting firms, diluted shareholders, or competitors could sue. |
| Policy durability | A different Congress or administration could curb equity tools via appropriations riders or DPA/CHIPS amendments—raising regime risk for projects financed under today’s template. |
| Industrial trade-offs | Government as shareholder can create favoritism or blunt competitive discipline if stakes outlive their strategic purpose. |
Conclusion
Harrell’s analysis maps a legally plausible pathway for a more activist U.S. state—one that can take minority stakes, lock in governance rights, and use Title III purchasing power to rebuild strategic capacity.
For rare earths, that’s the first credible U.S. playbook in years to counter China’s scale and price power. The opportunity is real—but so are the guardrails: clarity from Congress, disciplined sunset provisions, and strict conflict-of-interest norms will determine whether this becomes a resilient industrial strategy or a short-lived experiment. The stakes could not be bigger for the future of America’s security.
Citation: Harrell, Peter E. “_The Legal Bases for Government Stakes in Private Firms (opens in a new tab)_.” Lawfare (The Lawfare Institute in cooperation with Brookings), Aug. 28, 2025.
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