The Trump administration is considering a dramatic restructuring of the nation’s defense and industrial financing strategy. According to Commerce Secretary Howard Lutnick, Pentagon leaders are actively “thinking about” whether the U.S. government should acquire equity stakes in some of the country’s largest defense contractors, including Lockheed Martin.
This revelation, made during Lutnick’s appearance on CNBC’s Squawk Box, follows the government’s recent purchase of a 10% equity stake in Intel for roughly $9 billion. That deal marked a significant departure from traditional U.S. economic policy, raising both support and criticism across the political spectrum.
Lockheed Martin in the Spotlight
Lockheed Martin, the world’s top defense contractor by revenue, is the primary company in focus. With the bulk of its revenue already tied to federal contracts, Lutnick described the company as “basically an arm of the U.S. government.” His comments underscore the blurred lines between private enterprise and federal defense funding, suggesting that an equity stake could formalize a relationship that is already deeply intertwined.
Other contractors potentially in play include RTX, Northrop Grumman, General Dynamics, and Boeing, all of which rely heavily on Pentagon appropriations. Any move by the government to acquire stakes in these firms would reshape the dynamics of defense contracting, raising questions about competition, efficiency, and political influence.
Rethinking Defense Financing
Lutnick hinted that President Donald Trump is re-evaluating how the U.S. finances its defense capabilities, including munitions and other critical technologies. “The way it has been done has been a giveaway,” Lutnick said, implying that the traditional system of appropriations may be unsustainable or inefficient.
The annual defense budget, approved by Congress, has long been the mechanism for funding contractors. However, direct equity stakes would mark a fundamental departure from that model turning contractors into partially government-owned enterprises and possibly tying their strategic direction more closely to national policy objectives.
Echoes of the Intel Deal
This debate comes on the heels of Trump’s high-profile deal with Intel. The administration acquired a 10% stake in the struggling chipmaker, a move Lutnick argued “strengthens U.S. leadership in semiconductors” and secures America’s technological edge.
The Intel deal has already drawn heated criticism. Some economists and lawmakers argue that government ownership of private companies risks distorting decision-making. “The most immediate risk is that Intel’s decisions will increasingly be driven by political rather than commercial considerations,” wrote Scott Lincicome, an economist at the libertarian Cato Institute.
Senator Rand Paul went further, warning on X (formerly Twitter): “If socialism is government owning the means of production, wouldn’t the government owning part of Intel be a step toward socialism?”
Despite criticism, Trump and his team appear undeterred. The president has signaled his intent to replicate the Intel model, saying he would make similar deals “all day long.” Lutnick echoed this enthusiasm, describing ongoing discussions about defense as “monstrous.”
Proponents argue that such investments could provide the government with greater leverage in steering defense companies toward national security priorities. For instance, an equity stake in Lockheed could help ensure faster production of fighter jets, hypersonic missiles, or missile defense systems, while also preventing contractors from prioritizing profit over readiness.
Critics, however, caution that government stakes in defense contractors could undermine competition, create conflicts of interest, and further entangle politics with corporate strategy. The U.S. defense industry, while heavily reliant on government spending, has traditionally operated within a competitive framework where multiple contractors vie for lucrative contracts.
Equity ownership could erode that competition and leave companies vulnerable to shifting political winds. Investors may also worry about the long-term profitability of firms that are forced to align more closely with government mandates rather than market-driven innovation.
Lockheed Martin’s Response
In a statement to CNBC, a Lockheed spokesperson emphasized the company’s longstanding collaboration with the U.S. government. “As we did in his first term, we are continuing our strong working relationship with President Trump and his administration to strengthen our national defense,” the spokesperson said.
The Pentagon itself has yet to formally comment on Lutnick’s remarks. However, defense leaders have been increasingly vocal about the need to accelerate weapons production and secure supply chains in the face of geopolitical threats from China, Russia, and other rivals.
Whether the U.S. proceeds with acquiring stakes in defense contractors remains uncertain, but the conversation itself signals a shift in how the Trump administration views the intersection of government and private industry.
The stakes are high. On one hand, equity investments could give Washington more control over critical defense capabilities and align contractors more closely with national objectives. On the other, such moves could upend decades of free-market principles, exposing companies to political interference and creating inefficiencies that weaken competitiveness.
As Lutnick summed up on Squawk Box: “These guys are on it and they’re thinking about it.” The outcome of that thinking could redefine the balance of power between the Pentagon and the private defense industry with implications not just for Wall Street, but for America’s security and its role in the global economy.
