Economic Nationalism: From Classical Roots to Modern Trade Policy
Mercantilism: Foundations of Economic Nationalism
Mercantilism is a state-focused view of international political economy that prioritizes national security, power, and economic control. From the 15th to 19th centuries, classical mercantilism aimed to build trade surpluses by promoting exports and limiting imports. Wealth—especially gold and silver—was seen as necessary to fund military power and secure dominance. Charles Tilly argued that war drove state consolidation, making trade and resource control essential.
Classical Mercantilism: Principles and Practices
Thinkers like Thomas Mun, Gerard de Malynes, Antonio Serra, and Jean-Baptiste Colbert supported strong government intervention in trade. Britain, for instance, used tariffs and subsidies to control the wool market. Mercantilists saw global trade as a zero-sum game, where one country’s gain meant another’s loss. This logic encouraged protectionism and colonization. Colonies acted as captive markets and sources of cheap raw materials, often secured through monopolies and violence. The Dutch and British empires used charter companies and promoted domestic manufacturing. Slavery was central to colonial wealth extraction, and colonialism served as a tool for national power.
Key Thinkers and Historical Examples
In the United States, Alexander Hamilton and Friedrich List promoted protectionism. Hamilton supported protecting young industries, while List focused on building production capacity. Both criticized Britain’s support for free trade after achieving dominance. Their ideas reflect economic nationalism, using the state to advance national interests.
Neomercantilism: Modern Economic Strategies
Mercantilism survives today as neomercantilism. Since the 1970s, oil crises and global competition led countries to adopt defensive policies. These included creating strategic reserves, using tariffs and subsidies, and regulating foreign ownership. Nations like Japan, the Asian Tigers, and later China adopted strategic trade policies to grow key industries. Many developing countries (LDCs) resisted free-market reforms pushed by the IMF and World Bank, arguing that rich countries had used protectionist policies in their own industrialization but now blocked others from doing the same.
Controversial Policies and Shifting Paradigms
Programs like the 1994 WTO agreement and Structural Adjustment Policies are often seen as forms of “malevolent mercantilism.” In the 1980s–90s, Ronald Reagan and Margaret Thatcher supported free markets at home but used intervention abroad. The U.S. relied on trade sanctions, aid, and pressure through institutions like the IMF to support national interests. Reagan blurred the line between liberalism and mercantilism. Scholar Robert Gilpin distinguished between malevolent (offensive) and benign (defensive) mercantilism—both still relevant.
Resurgence Post-2008 Financial Crisis
The 2008 financial crisis and recent globalization trends brought back mercantilist thinking. Problems like outsourcing, intellectual property theft, and inequality caused many countries to reevaluate open markets. Some imposed tariffs on strategic goods and invested in infrastructure and domestic production, like the U.S. Strategic Petroleum Reserve. Industrial and infrastructural policies still help local industries.
Mercantilism in Contemporary US Politics
Donald Trump’s economic agenda is a modern version of mercantilism. He sees trade as a zero-sum game and imposed tariffs on goods from China, Europe, and Mexico. He renegotiated NAFTA (now USMCA), promoted returning industries to the U.S., and aimed to reduce foreign dependence in key sectors like energy and semiconductors. His strategy includes subsidies, penalties for outsourcing, and a strong economic nationalism that challenges global free trade norms.
Joe Biden also follows an “America First” approach. He imposed tariffs on imports like stainless steel and emphasized buying American products in executive orders. Like Trump, he wants to reduce imports and increase exports, but his actions are less aggressive and more targeted. Biden raised taxes and boosted public spending, especially on infrastructure, believing government investment is key to economic competitiveness. Unlike Trump, Biden seeks to repair international relations and resolve trade conflicts diplomatically, especially with China.
Shared Goals, Divergent Methods
Both Trump and Biden moved away from neoliberalism toward neomercantilist policies to protect the U.S. economy. They share the goal of strengthening “Made in USA,” but differ in their methods. The main difference: Trump favors liberal domestic policies and a confrontational foreign stance; Biden promotes interventionist domestic policies and global cooperation to achieve similar goals.
The Enduring Influence on Global Economy
Mercantilism and neomercantilism continue to influence global economic behavior. As interdependence grows, states still seek security and economic sovereignty, often using protectionist tools despite free trade rhetoric. These ideas shape modern trade wars and debates about fairness in globalization.