American mercantilism in 2025
Washington intervention in US Steel, MP Materials, and Intel. What about batteries? With contributions from Melissa Zhang, Principal at Azimuth Capital Management, where she co-leads strategy for critical minerals.
State ownership around the world
Governments take equity positions (and even voting power / control) in key industries: energy, defense, transport, etc. These moves are often primarily strategic and increasingly seen as vital to national security. A few examples come to mind.
Norway nationalized its oil sector in the 1970s, it created Statoil (now Equinor) with the state holding a majority stake, funneling profits into a sovereign wealth fund. This worked well as it turned oil wealth into long term savings for future generations. France, with Germany and Spain, backed Airbus as a state-supported rival to Boeing, leading today to the world’s largest commercial aircraft maker. Each government still holds stakes, France still holds 11%. This helped them survive early unprofitability and now one of the largest aircraft manufacturers in the world (56% market share of airplane manufacturing). TSMC, founded in 1987 with >48% of initial capital supplied by Taiwan’s government, remains a private-listed firm but strategically aligned with the state. The state (via a fund) still holds a 6.38% stake, making it the largest shareholder. Together with its board presence, Taiwan secures influence over the global semiconductor ecosystem via TSMC.
China’s blended model: “State Entrepreneurialism”
In China, the model is all around. Some 60% of China’s largest listed companies are state-owned enterprises (“SOEs”) for strategic purposes, with the share trending up since 2021. Roughly 25% of China’s GDP is produced by SOEs, especially upstream in batteries, semiconductors, and electric vehicles. National champions such as CATL, BYD, and Gotion remain private firms by way of primary ownership by private entities, including foreign investors (e.g. Volkswagen for Gotion, Berkshire Hathaway for BYD). However, each company maintains deep state alignment and support.
For example, CATL benefits from over $1B (in 2024) of annual government support, ranging from state-backed cheap credit, land, infrastructure, and “golden shares” that grant board influence. For context, this subsidy quantum is comparable to the $38B of US subsidies received by Tesla since its founding in 2003, which averages out to $1.9B per year. Unlike banking in the 1950s, the Chinese government has not formally nationalized cleantech and emerging, critical sectors such as AI to ensure innovation, competitiveness, and global market share. However, direct ownership could increase if strategic, geopolitical pressures tighten. State ownership does not correlate to success. SOEs may suffer from bureaucracy, weaker incentives, and political meddling, while private firms have been more nimble and innovative.
Broadly, the Chinese government begins by defining research areas of national interest, such as AI, quantum, energy production, with capabilities built through tight collaboration between national labs, academia, and startups. Michael Friedman calls this China’s “fitness gym” where hundreds if not thousands of companies compete brutally in free market dynamics until a handful of national champions, such as Huawei, BYD, emerge in strategic sectors through incentivized mergers, restructuring, or outright state equity ownership. The pace and extent of the latter is catalyzed by the degree of political urgency for self-reliance from trade pressures, e.g. US tariffs.
What about the US?
Historically, the US has favored market-based interventions (bailouts, subsidies, grants and loans) rather than equity stakes.
They have done it before to get through dire times.
One relevant example includes the GM and Chrysler bailout in the 2008-09 financial crisis. No one was buying cars and credit markets crashed and GM was projected to go bankrupt in 2009. In 2009, the Treasury intervened and invested a 60.8% stake in GM and ~8% in Chrysler, preventing bankruptcies after the economic downturn through the Presidential Task Force. GM and Chrysler survived and saved about 1.2 million jobs. Treasury sold their shares in 2013, direct ownership ended. Estimates place the cost to tax payers at $10B-$14B.
Between 1917-1920,President Woodrow Wilson nationalized the US railroad system as a war emergency measure, renamed the “United States Railroad Administration”. The previous system was struggling to carry heavy demands. Under nationalization, they standardized railcar and locomotive designs to increase efficiency and streamline services.
Quasi-equity and golden shares
The US has flexed their interventionist policy muscles in 2025. Examples in the last few months:
1. US Steel
When Nippon Steel acquired US Steel for $14.9B in June 2025, the deal included a “golden share” for the US government. It grants veto rights over corporate headquarters relocation, plant closures, strategic investments, the company name, etc. Highly strategic as control extends into future administrations to allow control of whatever the future may bring.
“What the US is showing that it can do with a golden share is basically engage in a partial nationalization of the company. If the company just says, you know what? The private markets aren't smiling on our $14 billion investment - the US government could say, OK. Well, then we're going to run this more fully as a public company than even we did with this sort of intermediate step of the golden share.” - Todd Tucker, Director of industrial policy and trade at the Roosevelt Institute.
2. MP Materials
In July 2025, the Pentagon took a $400m preferred stock equity stake in MP Materials, becoming its largest shareholder and committing to a $150m loan, off-take and price-floor agreements, and a new 10X magnet facility targeting 10,000 metric tons annual capacity by 2028. Apple also signed a $500m deal for magnet sourcing and recycling. Highly strategic as rare earth magnets are used in many military weapons systems.
James Litinsky, CEO at MP, calls it “Chinese mercantilism” and that MP could be a model for similar deals with other US companies1.
3. Intel
In August 2025, the US government has now confirmed a rescue plan for Intel. The administration will take 10% equity in exchange for CHIPS Act funds in order to attempt to reshore chip making in the US.
Commerce Secretary Howard Lutnick also suggested doing this sort of equity deal with all of the other CHIPS Act recipients.
Steel, rare earths, chips… what are implications for batteries?
Batteries, especially their upstream inputs like anode, cathode, and critical minerals, mirror the above examples around hopes of an industrial destiny. Batteries are perfect examples where China (and other overseas countries) dominate the upstream, have bi-partisan interest, and bear long-term strategic importance.
One of the greatest challenges that many North American upstream and midstream innovators in the critical minerals space face today is the chicken and egg of proving commercial viability to a future pipeline of industrial scale offtakers while raising the necessary capital to build said proof point. Many products struggle to meet cost parity with non-domestic competitors at this stage. Battery recycling is a perfect example. Initially, costs are high, logistics are messy, and plants require billions in capex. Indeed, feedstock prices are also competitive and US regulation lagging in requiring scrap re-use at commission. US intervention may be valuable to help first commercial facilities get up and running, building a positive loop with steady scrap streams and credits could make recycling highly competitive.
US intervention may be effective upstream in cathode and anode production, mineral refining, and processing, and may also be impactful to help downstream manufacturers secure vertically integrated upstream reserves and refining capacity, mirroring China’s multi-decades of merging and restructuring rare earth firms to consolidate fragmented (both horizontally and vertically) critical industries. The US could also leverage proximal hubs such as Canadian resources or underutilized US brownfield sites.
Cell manufacturing remains complicated with most manufacturing activities structured as joint ventures between US and non-US companies, making government influence feasible but ownership less clear-cut for now. Another risk at this time is overestimating the government’s ability to pick winners and losers as many companies remain at an intermediate technology-readiness level.
Washington is now using these quasi-equity tools in steel, rare earths, and semiconductors. Extending the playbook to batteries with this ‘just in time’ intervention may (or may not) prove essential to securing America’s clean-energy future.
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Mercantilism is a form of economic system and nationalist economic policy that is designed to maximize the exports and minimize the imports of an economy.