President Donald Trump’s administration is considering acquiring stakes in domestic defense contractors, including aerospace company Lockheed Martin.
On Tuesday, Commerce Secretary Howard Lutnick hinted at an administration that would allow for investment in the company as he defended Trump’s demand for a bigger role in the business.
“They’re thinking about that,” Lutnick told news outlet CNBC when asked if the administration was considering taking contractors such as Lockheed Martin, Boeing and Palantia Technologies.
Lutnick cited the Pentagon leader as a source of information, but he also showed that the deal was far from complete.
“There’s a lot of stuff that needs to be talked about, but how do you fund the ammunition acquisition?” Rutnik said.
Still, he argued that some private companies are extensions of the US government. “There’s a huge debate about defense,” he explained. “Lockheed Martin earns 97% of his revenue from the US government. They are basically the arms of the US government.”
Lutnick’s statement comes shortly after the Trump administration last week, which announced it had acquired a 10% stake in the struggling semiconductor chip Giant Intel.
Since taking office for a second term, Trump has increased US investment in several major industries, from steel to technology, prompting questions about whether Republicans are drifting from the often associated “small government” platforms.
Lockheed Martin, whose shares rose 1.6% following the remarks, responded to Lutnick’s comments by saying, “We continue to continue to strengthen our national defense with President Trump and his administration.”
Boeing declined to comment, but Palantier did not respond to a request for comment. Boeing’s shares rose 2.8%. Meanwhile, Palantir reversed a small initial slide of about 1% after his remarks, trading at 1.4% by noon.
Lutnick’s comments are the latest example of active intervention in the White House private sector.
Such moves have been made historically only during wartime or to save struggling strategic domestic businesses in times of economic stress.
William Harton, a senior researcher at the Institute for Responsible Statistics, a think tank, described the move as a bad idea.
He explained that “encourages the government to bring Lockheed Martin’s economic success before more important strategic considerations.”
“We need a healthy distance between the government and the businesses it is supposed to regulate,” he added.
Increase in government interests in private companies
But despite the ridiculousness from critics, the Trump administration has pushed forward in gathering stocks from various industries.
On Friday, Intel announced that it had sold a 10% stake in its chip manufacturing business to the government. And in June, the Trump administration stepped in and completed the purchase of Japanese Steel’s US steel, taking what Washington called the “golden share” that shakes its operation.
It also acquired a shares in Rare Earths Company, MP Materials, brokered transactions with technology companies Nvidia and AMD, and undertook 15% of revenue from previously banned Chip sales.
On Monday, Trump said he wanted to increase U.S. government investment in healthy U.S. companies despite warning that such a role in the government can limit corporate strategy and market agility. Critics have also raised questions about the impact on consumers.
The extraordinary level of federal intervention in the economy has created an unexpected alliance. For example, Vermont’s left-leaning Sen. Bernie Sanders supported Intel’s stock.
“If a microchip company makes a profit from the generous grant it receives from the federal government, US taxpayers are entitled to a reasonable profit on their investment,” Sanders told Reuters last week.
Lutnick said Tuesday that businesses that need federal support should prepare to deal with Trump.
“If the company comes to the US government and says, ‘We need your help, we want to change everything,’ I think that’s a question between the CEO and the US president.
“If we’re adding fundamental value to your business, I think it’s fair to think of Donald Trump about Americans.”
