This fixation has evidently not gone unnoticed by leaders of prominent corporations, including Tim Cook. After Trump threatened this summer to impose stiff tariffs on foreign-made semiconductors, a tax that would drive up the cost of iPhones and other devices, the Apple Inc chief executive officer arrived at the White House in August with a pledge to invest an additional US$100 billion in US manufacturing, helping Trump fulfill a campaign promise.
It wasn’t the only enticement Apple’s leader brought to the Oval Office that day. Cook, whose transactional relationship with the president has experienced many ups and downs, cracked open a white box to reveal a “unique” gift crafted specifically to Trump’s tastes: a glass Apple logo set atop a gleaming 24-karat gold base. Cook extended his hand to the only man who would ever win such an award. “Congratulations, Mr President,” he said, to Trump’s delight.
Cook walked out of the White House with a pledge from the president worth more than that trophy’s weight in gold. Trump announced that he would allow Apple, and other companies that invest in US manufacturing, to escape the chip tariffs.
Cook’s obsequiousness may have been over the top, but his method isn’t unique. Apple is one of several major corporations whose CEOs have recently succeeded in securing favourable treatment from the US government by handing Trump an opportunity to extract a hefty prize—along with bragging rights. Nvidia Corp and Advanced Micro Devices Inc got Trump to drop his opposition to the companies selling AI chips to China by sealing a controversial (and possibly unconstitutional) deal to give the US a 15% cut of their China sales revenue. A month earlier, Trump signed off on Nippon Steel Corp.’s takeover of US Steel Corp. after executives agreed to grant the government a so-called golden share in the company, which gives the administration a say over major decisions. In early September, tech executives flocked to a White House dinner, where they competed to praise Trump for his hands-off approach to artificial intelligence.
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There’s nothing inherently wrong with a government deciding to back certain industries or companies. France heavily invests in nuclear power, which provides most of the nation’s electricity. China pours billions of dollars into Huawei Technologies Co. and other national champions as part of its drive to surpass the US as a global tech power. But successful state investments depend on clear goals and careful planning, says Rebecca Henderson, a professor at Harvard Business School. “It seems to me unlikely that these investments will lead to significant benefit for the economy or the American people,” she says. “Because it’s random.” The president’s deals with CEOs are often made in haste, and his decisions about which companies to target sometimes appear to have less to do with a consistent policy than whom he happened to get mad at and make up with that week. White House spokeswoman Taylor Rogers said in an emailed statement that Trump has brokered “good deals on behalf of American workers” and “welcomes private sector and foreign investments in the United States.”
Some CEOs have turned the misfortune of incurring Trump’s wrath to their advantage, using it to get a coveted one-on-one with the president that ends with Trump claiming victory and easing off his attacks. That’s what happened in August, when Intel Corp CEO Lip-Bu Tan suddenly found himself under siege.
Tan, a US citizen born in Malaysia, took the helm at Intel in March with plans to turn around the chipmaker. Once an industry leader, it’s struggled in recent years to keep up with faster-moving competitors. Reviving Intel was a centrepiece of President Joe Biden’s 2022 CHIPS and Science Act. The US government was on track to award Intel more than $8 billion to help build factories stateside. But Trump didn’t share Biden’s enthusiasm for the company, especially after Tan sought to cut costs by slowing domestic manufacturing plans.
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Trump pounced after Republican Senator Tom Cotton of Arkansas asked the chairman of Intel’s board to answer questions about Tan’s past investments in Chinese semiconductor companies and others with alleged ties to China’s military. “I have always operated within the highest legal and ethical standards,” Tan said in a message to Intel employees. Tan’s investments broke no law, but they raised Trump’s ire. “The CEO of INTEL is highly CONFLICTED and must resign, immediately,” Trump posted on Truth Social. “There is no other solution to this problem.”
Apparently there was another solution. Tan didn’t resign, as Trump called on him to do. Instead he made haste to the White House, where he gave the president an enticing prize. He agreed to sell a 10% stake in the company to the US government for $8.9 billion. It was just the kind of unorthodox, controversial arrangement that Trump loves—and loves to talk about. “I think it’s a great deal for them,” he later told reporters. “He walked in wanting to keep his job, and he ended up giving us US$10 billion for the United States.” (Trump does like to round up.)
It’s too soon to tell if those billions will turn out to be a wise investment for taxpayers. But it’s likely a good deal for Intel in the near term, says Kunjan Sobhani, lead semiconductor analyst with Bloomberg Intelligence. The government won’t have a seat on the board, so it doesn’t have a direct role in influencing company decisions. At the same time, “having the backing of the US government unofficially implies that if they fail, the government could potentially aid them through a bailout,” Sobhani says. He notes another implied benefit: Trump’s very public support for Intel may create an incentive—or pressure—for other companies to use Intel’s US factories to manufacture their chips instead of turning to products made by foreign rivals such as Taiwan Semiconductor Manufacturing Co.
The agreement was certainly good for Tan himself. Just days after demanding his resignation, the president had nothing but nice things to say about him. “His success and rise is an amazing story,” Trump posted online.
Paying tribute to Trump is no guarantee of lasting leniency. Hyundai Motor Co pledged to invest billions of dollars in US manufacturing, agreements the president boasted about this year. That didn’t stop Trump’s immigration enforcers from raiding a Hyundai-LG Energy Solutions Ltd. electric-vehicle battery plant under construction in Georgia and arresting hundreds of foreign engineers and subcontractors working to get the factory up and running.
The Intel deal has given Trump a taste for using taxpayer dollars to buy stakes in other tech and possibly defence companies. Not too many years ago, Republicans lined up against the 2008-09 US auto industry bailout, arguing that the government shouldn’t interfere with the free market. There’s not much talk like that coming from Republicans now. A handful of right-wing podcasters have decried the US purchase of Intel shares, and four Republican members of Congress have expressed reservations. The boldest, Senator Rand Paul of Kentucky, called it “a step toward socialism.” If any of the other 268 Republicans in the US Capitol have a similar complaint about Trump’s not-so-hidden hand in the market, they’re largely keeping it to themselves. – Bloomberg Businessweek
