Trump, the modern mercantilist
The case that Trump is a latterday mercantilist is surprisingly strong. Mercantilism was never a tidy theory. It was a set of habits that involves treating trade as a contest, counting the surplus as the score, and letting the state steer commerce toward national power. On each count, Trump's record fits.
The mercantilists believed one nation's gain was another's loss. Trump speaks in exactly these terms. A trade deficit with a country means America is ‘losing’ to it, and a surplus means winning. Mainstream economists see a bilateral deficit as a mostly meaningless accounting result of millions of voluntary exchanges. Trump sees it as a scorecard. The 2025 ‘reciprocal’ tariffs made this explicit. The rates were derived largely from each country's trade surplus with the United States, not from its actual tariff barriers.
Old mercantilists wanted to export more than they imported and pile up bullion. Trump has no interest in gold hoards, but the instinct is the same. Imports are a drain and exports a gain. Consumers, whose cheaper goods Adam Smith saw as the whole point of trade, barely feature in the reckoning.
Mercantilism favoured makers over buyers. Trump's policy is built around reviving manufacturing, especially steel, autos, and semiconductors, even at the cost of higher prices for everyone who buys them. The romance of the factory floor runs right through it.
Before income tax, customs duties funded the Crown. Trump openly admires McKinley and the era when tariffs funded the federal government, and he talks of tariff income as a fiscal windfall, even as a substitute for income tax.
The label bites hardest where the state becomes a player. The government has taken equity stakes in firms such as Intel and MP Materials, secured a ‘golden share’ in US Steel as a condition of its sale to Nippon, and struck a deal to take a cut of Nvidia's chip revenue from China. Colbert would have recognized the method; the state does not merely referee commerce, it owns a piece of the play.
Mercantilists saw commerce as an arm of national power. Trump uses tariffs as threats and bargaining chips on matters well beyond trade, from migration to drug flows to foreign policy disputes. Put together, the pattern is clear. It is the ‘mercantile system’ that Smith spent much of The Wealth of Nations demolishing, revived with a Twitter account.
There is a case against the label. Critics argue that Trump is transactional rather than doctrinal, using tariffs as leverage that shifts deal by deal, not as a coherent system. Classical mercantilism came bundled with chartered monopolies and heavy domestic regulation, while Trump pairs protection with tax cuts and deregulation at home.
Some prefer ‘economic nationalism’ or plain protectionism as the more precise term. His defenders go further, arguing that China is the true mercantilist, and that American tariffs are a defensive response to subsidized overcapacity and closed markets rather than an ideology of their own. And there is a live empirical dispute about whether the policies are actually bringing industry back on shore or simply taxing American buyers.
Still, if it counts deficits like a mercantilist, taxes imports like a mercantilist, and buys shares like a mercantilist, it would be churlish to call it a duck.
Madsen Pirie