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The federal government has become Intel’s biggest shareholder after President Donald Trump allowed it to take a 10% stake in the beleaguered American chipmaker. The decision breaks with Republican orthodoxy and has provoked outrage from conservatives who typically support the president.

Trump has countered that the deal is a savvy investment that will make the country “richer and richer,” and he has strongly suggested that Intel is the first step in a broader strategy: “I hope I’m going to have many more cases like it,” he said. Trump is veering into territory that, until recently, mainstream economists called industrial policy, and critics are beginning to wonder whether his approach crosses the line into socialism.

By many definitions, socialism has for decades been shorthand for government control of the means of production for the benefit of the whole of society. By that standard, Trump critics argue, his decision is only slightly different from the kind of government intervention seen in countries like China or Russia.

The irony is not lost on conservatives who recall how, in 2008–2009, when President Barack Obama seized control of Chrysler and General Motors to save both companies during a financial crisis, it was conservatives who defended the administration’s move as an emergency measure to protect American icons. Had Obama instead taken a 10% stake in Intel, Trump’s friends say, conservative commentators would have railed about the president’s embrace of communism.

The president insists this is different: It’s an investment, he said, not a bailout. Trump took credit for converting nearly $9 billion in grants — taxpayer money that had already been appropriated to the company under President Joe Biden’s bipartisan Chips Act — into equity for the U.S. government. By that accounting, Trump claimed, the deal immediately created $10 billion to $11 billion in value for taxpayers. “Why are ‘stupid’ people unhappy with that?” he asked.

Reaction from Conservatives

Leading conservatives have not been amused. Trump’s top economic adviser during his presidency, Larry Kudlow, said on Fox Business that he was “very, very uncomfortable with that idea.” Steve Moore, an informal Trump adviser, was blunter: “I hate corporate welfare. That’s privatization in reverse. We want the government to divest of assets, not buy assets. So terrible, one of the bad ideas that’s come out of this White House.”

The National Review published an editorial warning that “government shouldn’t get into the chip business.” Senator Thom Tillis was apoplectic about the deal, tweeting that it risked creating a “semi-state-owned enterprise a la CCCP” (the acronym for the Soviet Union). Senator Rand Paul piled on, retweeting Tillis with the question, “Wouldn’t the government owning part of Intel be a step toward socialism? Terrible idea.”

Progressives are celebrating, though. Bernie Sanders tweeted that the decision was “huge,” while progressive commentator Khadija White said it was an example of “how the federal government can support the industry of the future.” Trump’s initial announcement of the deal was so striking, Commerce Secretary Howard Lutnick felt compelled to rush to his defense on Laura Ingraham’s show, saying, “That is not socialism. That’s the best businessman in the United States of America in the Oval Office doing fair things for us.”

Intel has already raised some of the concerns. In an SEC filing, the company wrote that the arrangement might limit its ability to win future government grants, could hurt global sales, and would subject the company to greater regulation. Intel had previously announced plans to cut 15% of its workforce earlier this year. The company’s market cap is around $110 billion, but its stock is down 50% this year. In the days immediately after Trump’s announcement, the price rose 4%.

The Wall Street Journal reported that Trump had demanded Intel CEO Lip-Bu Tan’s resignation over his ties to China, but called off the order after a personal meeting at the White House. “I liked him a lot, I thought he was very good,” Trump said afterward.

Uncertainty Looms

Intel will try to quash rumors of political interference, and the terms of the deal clearly state that the U.S. government will not have voting power or a seat on the board of directors. That will do little to assuage critics who point out that when the president of the United States becomes a company’s biggest shareholder, his influence is virtually inevitable.

Intel’s stock price will be another measure of Trump’s success or failure. If Intel’s prospects stabilize, he can claim credit for bolstering a pillar of American industry. If Intel continues to struggle, taxpayers could lose billions of dollars. Trump has already made clear that he plans to pursue additional arrangements like this one in the future.

At the very least, the decision marks a new level of intervention in the relationship between the federal government and private business, and it makes clear just how far Trump has redefined the Republican Party’s approach to economic policy.