The U.S. is turning more socialist under Trump 2.0, one analyst says. What could change with a Democratic-run Congress?

By Victor Reklaitis

A handy chart shows how the U.S. used to be among the economies with the least state control - until that changed last year

A demonstrator wears a "Socialism is the Future" shirt at a July protest against U.S. Immigration and Customs Enforcement in San Francisco. Could she be right?

Americans have been getting a bit of socialism during President Donald Trump's second term, but there is likely to be a modest shift next year, according to one analyst.

Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics, said at a briefing last week that he thinks "you're already getting socialism under the Trump 2.0 administration." He noted that he made this point in a recent article; his piece cited socialism's defining feature as state control of productive resources - and the Trump administration has taken a big step toward exactly that, by acquiring equity or equity-like stakes in many companies.

"I expect it to continue," Hendrix said during the Peterson Institute briefing on Thursday - though he predicted a slight change as well.

"What I think is going to happen is that there'll be this increased supervision. The new Congress is going to want checks and balances, and ... so will markets," he said. There will be "a continued turn towards industrial policy and state ownership, but under sort of written, codified rules, rather than ad hoc deals."

"There are some private-sector-focused Republican voices who want all of this divested.?I don't think that's going to happen," Hendrix added during the briefing, which analyzed this month's midterm election results and the incoming Democratic-controlled Congress. Another camp in Congress favors continued movements toward state control of companies, Hendrix told the audience, with that group led by Sen. Bernie Sanders, a Vermont independent and a democratic socialist.

Hendrix's September article - titled "You're already getting socialism - and Democratic Socialists have nothing to do with it" - covered how the U.S. had been among the nations with the least state control of its economy, but that changed in 2025 as the Trump administration began to take stakes in companies.

Now, 15 countries have less government control of their economies than the U.S., according to Hendrix's analysis, which made use of the Varieties of Democracy Project's State Ownership of Economy data set. Before falling to 16th, the U.S. had since 2010 typically ranked second or third, as shown in the chart above.

The article also noted that the Trump administration hasn't portrayed its stakes in companies as socialism, but rather "as sage industrial policy focused on industries critical to national security and economic competitiveness." While this description "may be accurate," the acquisitions "are no less socialistic for it," Hendrix wrote.

In response to MarketWatch's request for comment on Hendrix's view, White House spokesman Matthew Middleton offered the following statement: "Securing and reshoring America's critical supply chains has been a top priority for President Trump. Through voluntary equity investments in willing companies, the Trump administration has partnered with the private sector to rebuild America's industrial base and bring critical production back home. Moving forward, the president will continue to work with anyone as we advance solutions that strengthen our economy and put more money back in the pockets of American workers."

The Cato Institute, a libertarian think tank, also has been putting a spotlight recently on the U.S. government's increased ownership of private-sector companies.

-Victor Reklaitis

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11-15-26 0830ET