How Trump’s economic takeover mirrors Beijing’s playbook

President Donald Trump’s second-term push to control American business through state-directed policies has drawn sharp comparisons to China’s authoritarian economic model, marking a dramatic break from free-market principles.

It’s not socialism: In state capitalism, government steers private companies without owning them outright. Most recently, Trump’s version includes forcing Nvidia and AMD to hand over 15% of their China semiconductor sales to the Treasury, claiming a “golden share” in U.S. Steel that lets Washington veto company decisions and making the Defense Department the biggest shareholder in rare-earth miner MP Materials.

To support his economic policies, Trump has also stretched national security justifications to new heights. His declaration of a national emergency to impose broad reciprocal tariffs, as the prime example, is based on the argument that it is essential to protect critical industries and restore economic sovereignty. “This is a Republican administration embracing state capitalism in a way we haven’t seen in a long time, while all the time decrying ‘socialism,’” Indiana University Bloomington professor Sarah Bauerle Danzman told Foreign Policy last month.

China parallels: The irony is that China was supposed to become more like the U.S.’ free market. Instead, Washington is adopting Beijing’s playbook, with the government prompting business decisions. Trump’s “golden share” works exactly like the oversight powers Chinese companies must grant the Communist Party. His demand that Intel CEO Lip-Bu Tan resign is reminiscent of Xi Jinping’s iron grip over business leaders such as Alibaba’s Jack Ma, who disappeared from public view after criticizing China’s financial regulatory system in 2020.

Business leaders who previously criticized Trump’s policies now largely stay silent or shower him with donations and praise. Companies have also preemptively rolled back diversity, equity and inclusion (DEI) programs to avoid potential retaliation, while others rush to announce domestic investments after facing tariff threats. Like China’s system where business survival depends on party favor, American executives are learning that success increasingly requires navigating Trump’s personal approval rather than market forces alone.

What this means: Seven months into Trump 2.0, Asian Americans are adapting with great sacrifice to the changes. The president summarized the consequences of his tariffs in late April: families might have “two dolls instead of 30 dolls” and pay “a couple of bucks more” for them. Meanwhile, Commerce Secretary Howard Lutnick sketched out a future where jobs become family inheritance. “This is the new model where you work in these kinds of plants for the rest of your life, and your kids work here and your grandkids work here,” he told CNBC. Sadly, this is a far cry from the economic mobility many Asian immigrant families have come to expect.

Beyond higher prices and fewer choices, critics see something darker: a governing style that demands political loyalty while expanding federal control over universities, independent institutions and dissenting voices through mass firings and pressure campaigns. Constitutional limits still apply unlike in China’s one-party system, but the shift upends the government-business relationship that many Asian American entrepreneurs built their success on.