Trump’s Intel Move Blurs Party Lines on Economic Intervention

One critic calls the stake in the chip maker “socialism with an R next to its name.”

President Trump’s latest economic move has drawn outrage from conservatives—and praise from some on the left—in the latest example of the odd bedfellows created by his idiosyncratic worldview.

Trump said he had changed his mind since calling for the company’s CEO to be fired

The announcement last week that the government plans to take a 10% stake in the troubled U.S. chip maker Intel prompted an outpouring of criticism from voices on the right, who accuse the administration of nationalizing industry. “Today it’s Intel, tomorrow it could be any industry,” Sen. Rand Paul (R., Ky.) said Friday. “Socialism is literally government control of the means of production.”

That was music to the ears of Paul’s self-described socialist colleague, Sen. Bernie Sanders (I., Vt.), who praised the move that he said mirrored legislation he had proposed. “Taxpayers should not be providing billions of dollars in corporate welfare to large, profitable corporations like Intel without getting anything in return,” Sanders said Friday, urging the administration to go still further.

Under the deal announced Friday, the U.S. government will become Intel’s largest shareholder as nearly $9 billion in grants awarded to the company by the 2022 Chips Act are converted to equity. Commerce Secretary Howard Lutnick said Friday the agreement would “both grow our economy and help secure America’s technological edge.”

Speaking in the Oval Office on Friday, Trump said he had changed his mind since calling for the company’s CEO to be fired. “I said, ‘I think you should pay us 10% of the company,’ and they said yes,” the president said.

It is far from the first time Trump has parted ways with the free-market economic views that once defined the GOP, from his enthusiasm for tariffs to the taking of stakes in companies such as Nippon Steel. Some have likened the approach to China’s “state capitalism,” in which the government exerts extensive control over the private sector.

Supporters say there is a public interest in supporting American chips manufacturing, which has long been a vital component of the defense industrial base and has been supported by administrations of both parties. “It’s just realism,” said Julius Krein, co-founder of the New American Industrial Alliance, which advocates for government-supported industrial policy.

“The U.S. government has always intervened to support America’s strategic interests” with grants, loans and investments, Krein said. He painted those objecting on ideological grounds as clinging to obsolete doctrine, describing them as “the last dying breath of the George W. Bush era of the party.”

Trump has never been a doctrinaire free-market believer, and his longtime embrace of protectionism has upended the GOP’s longtime emphasis on the ideals of small government and laissez-faire capitalism. In an interview with Time magazine earlier this year, the president said he thinks of the economy as “a giant, beautiful store,” where “on behalf of the American people, I own the store, and I set prices, and I’ll say, if you want to shop here, this is what you have to pay.”

A cohort of New Right thinkers have amplified Trump’s populist instincts to urge more government meddling in the economy, from reining in Big Tech to blocking corporate mergers. The administration has sought investment pledges from trading partners in exchange for lowering tariffs, boasting of $1.5 trillion worth of investments that Trump plans to personally direct.

The president has also not been shy about jawboning companies and markets, from pushing the Federal Reserve to lower interest rates to urging Walmart not to raise prices to pressing Coca-Cola to change its ingredients. The White House keeps a list of hundreds of companies ranked by political loyalty, a White House official said, as earlier reported by Axios.

Larry Summers, the economist and former Treasury secretary, said the Intel stake might be reasonable in isolation, but it was part of a troubling pattern of arbitrary economic management that could slow long-term growth. “Where government provides support to private companies that are in trouble, taking a claim on the upside for the benefit of taxpayers may be appropriate,” he said, likening the move to the Obama-era bailouts of domestic auto manufacturers.

But the Trump administration has a history of picking winners and losers, seeking to orchestrate the functioning of the private sector rather than allowing markets to function independently according to rules—an approach that tends to fuel authoritarianism and corruption in places like Latin America, he said. “I don’t think deal-based capitalism, where the government uses leverage it has over companies to extort money or shares, is a healthy economic strategy,” Summers said.

That view was echoed by numerous conservatives on social media, including former U.N. Ambassador Nikki Haley, who didn’t criticize Trump by name but said on X that the Intel deal “will only lead to more government subsidies and less productivity.” The syndicated radio host Erick Erickson wrote on X that the measure was “socialism with an R next to its name” and that conservatives who called out Obama’s sins against markets while tolerating such behavior from Trump were “shameful and cowardly.”

In an interview, Erickson said he was alarmed by the increasing traction on the right of antimarket attitudes that ought to be consigned to history’s dustbin. “We’re having to re-fight these fights when we know markets work,” he said. “We went through a lot of hard times when government controlled the economy before we figured out that people should decide for themselves how to spend their money. It’s like, how did we forget the basics?”

Write to Molly Ball at molly.ball@wsj.com