Risk 6: State capitalism with American characteristics

In 2025, we warned that President Donald Trump would amplify crony capitalism in the world's largest economy. What has emerged is the most economically interventionist administration since the New Deal. In 2026, this will expand and entrench further, reshaping the relationship between the US public and private sectors. As Trump told The Wall Street Journal: "I think we should take stakes in companies. Now, some people would say that doesn't sound very American. Actually, I think it is very American."

Trump is hardly the first president to embrace industrial policy. Former President Joe Biden's administration did so through the Inflation Reduction Act and CHIPS Act, albeit with a limiting principle: supporting strategic sectors while leaving non-strategic sectors to markets. Small yard, high fence. There is an economic and geopolitical case for going further in an era of great power competition.

But Trump has shown no such limiting principle. Trump's state capitalism is personal and transactional. Businesses that align with Trump's agenda elicit better treatment from the federal government. Though most US firms continue business as usual, an increasing number of those that don't align risk finding themselves at a disadvantage. Increasingly, success in M&A bids, regulatory approvals, tariff exemptions, or access to deals requires not just alignment with the agenda but proximity to the president's inner circle. Some of corporate America has quickly adapted to the new rules. The break-and-repair approach to tariffs—exemptions dangled, then granted or withdrawn—has pulled firms across the economic spectrum into the lobbying game. Playing along is economically rational; resistance is costly. That's what makes the system self-reinforcing.


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