Imagine the government owning a piece of your favorite rocket company. That’s the wild scenario potentially facing Elon Musk’s SpaceX if a future Trump administration pursues equity stakes in defense contractors. Could the visionary billionaire truly resist such a move, or is this an inevitable clash between federal power and private innovation?

The prospect of a future U.S. government seeking ownership stakes in private defense contractors has ignited a significant debate, particularly concerning tech giants like Elon Musk’s SpaceX. This radical approach, where the administration demands equity beyond standard goods and services, presents a complex challenge to corporate autonomy and the existing relationship between the public and private sectors in the critical defense industry.

The discussion gained momentum following remarks from Commerce Secretary Howard Lutnick, who revealed that the Defense Department is actively considering such a strategy. His comments, delivered during a discussion on the government’s recent assumption of a stake in Intel, caught many industry observers by surprise, signaling a potentially unprecedented shift in federal economic policy and how it interacts with key players in aerospace and defense.

Unlike struggling enterprises such as the chipmaker Intel or rare earths developer MP Materials, which conceded equity for crucial funding, companies like SpaceX boast robust balance sheets. This financial resilience grants them considerable leverage, making the idea of granting the government a seat at the owners’ table and subjecting their operations to internal scrutiny particularly unpalatable for visionary founder Elon Musk, who is known for his fierce independence and innovative spirit in the aerospace innovation sector.

Legal experts have swiftly questioned the administration’s perceived authority to demand or seize stakes in financially healthy defense companies. Todd Harrison, a respected defense analyst, has highlighted the lack of clear legal precedent or mechanism for such an aggressive move, underscoring the potential for significant legal battles and challenges to government policy should such actions be pursued against defense contractors.

Historical attempts to exert government control over private industry, such as President Harry Truman’s effort to nationalize steel mills using the Defense Production Act, were ultimately declared unconstitutional by the Supreme Court in 1952. Furthermore, the act’s specific seizure powers were formally repealed by Congress in 2009, indicating the legislative branch’s intent to limit executive overreach in corporate equity matters and protect corporate finance structures.

Despite these legal and historical precedents, the White House has indicated its intention to “continue to explore other deals that ensure taxpayers reap the benefits of investments being made with their money by the federal government.” This statement, made in the wake of securing a 10% stake in Intel in return for significant grants under the CHIPS Act, suggests a proactive and persistent push to redefine the terms of federal engagement with private industry, particularly within the defense industry and aerospace innovation fields.

Historically, the U.S. government has taken equity stakes in financially distressed companies during severe economic crises, as seen with banks and General Motors during the Great Recession or airlines during the pandemic. However, the current administration’s approach extends beyond crisis intervention, exemplified by extracting a “golden share” in U.S. Steel and a deal for 15% of Nvidia’s chip sales to China, signaling an unprecedented grab for the spoils of corporate America’s activities under the banner of Trump administration policy.

The potential implications for Elon Musk and SpaceX are profound. For a company at the forefront of space exploration and satellite technology, the imposition of government equity could stifle the very innovation and agility that has propelled its success. This evolving situation represents a critical juncture for private enterprise, federal oversight, and the future of strategic industries like defense and space technology.