Mercantilism’s Modern Face: US Trade Policy Under Trump & Biden
Mercantilism: A State-Centered Economic Perspective
Mercantilism is a state-centered perspective in International Political Economy (IPE). It views the economy as an instrument of national power and security rather than a neutral system. Mercantilist theory assumes that international economic relations are inherently conflictual, operating under a zero-sum logic where one state’s gain comes at the expense of another. Under this logic, wealth is finite, and nations compete to secure the largest share possible. The primary goal of mercantilist states is to protect national sovereignty, enhance political power, and accumulate wealth—traditionally in the form of gold and silver.
Historical Roots and Development
Historically, mercantilism developed from the 16th to the 19th century alongside the rise of modern nation-states in Europe. Mercantilist policy emphasized export promotion, import restriction, and maintaining a positive trade balance. Wealth accumulation supported the financing of strong military forces, reinforcing state power. Typical tools included:
- Tariffs
- Subsidies
- Colonial expansion
- State-sponsored monopolies
- Investments in infrastructure to unify domestic markets
Notable examples include England under Henry VII, who taxed wool imports and subsidized exports to undermine competitors, and Colbert’s industrial policies in France. In this context, trade was not simply economic—it was strategic and political.
Colonialism as an Extension of Mercantilism
Colonialism functioned as an extension of mercantilism. Colonies provided exclusive markets, raw materials, and cheap labor, often sustained through slavery. Trade between rival colonies was discouraged, and economic policies were subordinated to national power. Thus, mercantilism became deeply linked to classical imperialism, where military conquest and economic exploitation were intertwined.
The Rise of Neomercantilism
In the 20th century, the term “neomercantilism” emerged to describe modern protectionist and defensive economic policies. These are used by states to safeguard their national economies within a global and interdependent world. Influential thinkers such as Alexander Hamilton and Friedrich List advocated for protective tariffs and industrial development. List, in particular, argued that national productive power was more important than mere wealth, and that no nation should embrace free trade until it is competitive.
Neomercantilist Tools and Strategies
Neomercantilism relies on various tools:
- Tariffs
- Import quotas
- Non-tariff barriers (e.g., domestic content requirements, health standards)
- Export subsidies
- Strategic resource stockpiling
- Direct support for national industries
States also implement industrial policies to foster competitiveness in key sectors. Examples include the support of “national champions” like Boeing or Airbus.
Modern Case Studies of Mercantilist Thinking
Several modern case studies illustrate the persistence of mercantilist thinking. In the United States, Trump’s presidency featured protectionist tariffs, withdrawal from trade agreements such as the TPP, and “America First” rhetoric emphasizing national strength and economic sovereignty. China is often cited as the most prominent neomercantilist state today, with centralized planning, subsidies for state-owned enterprises, and strategic foreign investments. Similarly, Japan and the Asian Tigers pursued development through industrial policy, education, and export promotion—what Robert Wade has termed the “developmental state.”
Mercantilism vs. Economic Liberalism
When analyzed through game theory, mercantilism is grounded in a zero-sum logic of strategic competition, where the state plays a central, active role. In contrast, economic liberalism is based on mutual benefit and minimal state intervention. Despite globalization, many states continue to act according to mercantilist logic—seeking control over supply chains, defending national industries during crises, and mitigating vulnerability to external shocks. Structural Adjustment Policies (SAPs) promoted by the IMF and World Bank have also been criticized as forms of modern-day mercantilism imposed on developing countries.
Developing Nations and “Kicking Away the Ladder”
Developing countries argue that wealthy nations historically used protectionism to industrialize but now impose liberal economic models on the Global South. Scholars like Ha-Joon Chang accuse these nations of “kicking away the ladder”—denying developing countries the tools they themselves used to advance.
US Economic Nationalism: Trump’s Presidency (2016–2020)
Donald Trump’s presidency (2016–2020) is widely viewed as a revival of economic nationalism. His economic agenda prioritized several core policies:
- Imposition of tariffs on imports from China and the European Union—particularly on steel, aluminum, and other manufactured goods.
- Renegotiation or withdrawal from major trade agreements such as the Trans-Pacific Partnership (TPP) and NAFTA (later replaced by the USMCA).
- Adoption of “America First” rhetoric that emphasized national sovereignty and job protection.
- Focus on strengthening the military and infrastructure as means of reinforcing national power.
These actions are consistent with mercantilist reasoning, treating the economy as an instrument to increase state power and independence within an environment of international competition. Trump perceived international trade as a potential threat to national strength, particularly when it resulted in trade deficits or damaged domestic industries.
Contradictions in Trump’s Mercantilist Approach
Nonetheless, contradictions exist in Trump’s approach. He often demonstrated distrust toward state institutions, leaving key administrative positions vacant. Unlike traditional mercantilists who viewed the state as a constructive and necessary actor, Trump was skeptical of government bureaucracy. His decision-making was frequently unilateral and unpredictable, differing from the strategic, long-term planning typical of classical mercantilist states.
Benign vs. Malevolent Mercantilism
Robert Gilpin distinguishes between benign and malevolent forms of mercantilism. Trump exhibited traits of both: he aimed to safeguard domestic industry, aligning with benign mercantilism, but also employed confrontational rhetoric and threats, characteristic of malevolent mercantilism. Friedrich List argued that free trade should only be pursued once a nation is economically strong—an idea Trump echoed in his claim that only powerful countries truly benefit from open markets. However, critics note that Trump’s mercantilism was often more rhetorical than structural. Despite the trade wars, the U.S. economy remained deeply integrated into global supply chains throughout his presidency.
Biden’s “America First” Economic Strategy
Like Trump, Biden adheres to the “America First” philosophy. He has approved high tariffs on stainless steel imports in an effort to strengthen domestic steel production and pursue self-sufficiency. A recent Executive Order underscored the importance of producing and consuming American goods. Like Trump, Biden seeks to reduce imports and increase exports (mercantilism), but his approach is less aggressive—he has removed certain tariffs imposed by Trump, such as the one on Spanish olive oil.
Key Differences in Biden’s Approach
Unlike Trump, Biden has increased taxes and significantly expanded public spending, especially on infrastructure (roads, railways, etc.). Biden views government investment as essential to enhancing U.S. competitiveness, connectivity, and internal efficiency, which in turn would boost international competitiveness.
Biden has sought to restore diplomatic ties. He has rejoined international agreements abandoned by Trump and has promoted dialogue to ease tensions in the U.S.-China trade war. Unlike Trump, Biden believes that maintaining strong international relations is crucial to reinforcing the U.S.’s global economic role.
Comparing Trump and Biden: Neomercantilist Tendencies
Both presidents have moved away from the traditional neoliberal model and have instead implemented neomercantilist and protectionist measures to defend the national economy and global standing. Both support policies under slogans like “America First” and “Made in USA”.
Trump’s Protectionist and Neomercantilist Stance
Trump’s goal was to reduce unemployment and boost (especially domestic) investment in order to increase exports and reduce imports—ultimately achieving a positive trade balance. To this end, he cut taxes, imposed tariffs on foreign products, invested public money, and supported nationally weak sectors so they could grow and reduce reliance on imports. Trump can clearly be described as protectionist. However, he is best understood as neomercantilist.
Biden’s Interventionist “Made in USA” Approach
As for Joe Biden, although he has been in office for a shorter time, his policies also show a strong emphasis on promoting the “Made in USA” brand. An example is his decision to increase tariffs on foreign stainless steel—an industry where the U.S. has little global market share and tends to import significantly.
While both share similar goals, Biden has raised taxes (unlike Trump), showing a more interventionist approach. Additionally, Biden’s style differs: he seeks to ease international tensions created during Trump’s presidency by rejoining international agreements and especially by calming the U.S.-China trade war. In short, both seek to expand the “Made in USA” label (protectionism), but Biden does so more moderately and with greater domestic government involvement.
Conclusion: Mercantilism’s Enduring Relevance
In conclusion, mercantilism remains a relevant and powerful framework for understanding international economic relations. Its emphasis on state power, sovereignty, and strategic control persists in today’s unstable global context. Both developed and developing countries continue to use protectionist tools to defend or enhance their position. In the 21st century, global interdependence and strategic competition coexist, and mercantilism provides valuable insights into this paradox.