Back to the Future: A quick post on mercantilism.

According to data from MarketWatch, the DOW, S&P 500, and the Nasdaq are up after 48 hours of onslaught of the markets. The price of gold and oil are also up as volatility measured by the VIX has decreased.

I do not know how much of the turnaround is due to the reported 90-day pause President Trump has imposed on his tariffs. On the other hand, China appears to have drawn more of the President’s ire. Mr. Trump decided to raise to 125% tariffs imposed on goods imported from the world’s no. 2 economy.

Mr. Trump’s actions remind me of former vice-president Kamala Harris’ claims on the 2024 campaign trail that Mr. Trump’s intent was to take America back to some dark period of restrictions to reproductive rights and a quasi-Jim Crow era. Mr. Trump may be taking America’s currency union back to another time, a time when the United States, Great Britain, and the European continent engaged in mercantilism and the goal of outdoing the other country by racking up a higher gold bullion count (and when necessary, a higher body count from war.)

According to Britannica, mercantilism is an economic practice where government’s use their economies to augment state power by ensuring that exports exceed imports and accumulating wealth in bullion. It is a nationalist economic policy designed to maximize exports while minimizing imports.

Mr. Trump’s most notable rhetoric, make America great again, is emblematic of his nationalist approach. He makes no secret about desiring to put America first. So clear and influential is Mr. Trump’s intent that United Kingdom and European leaders are taking on the mantra for their own nations.

Mr. Trump has offered his reasons for his aggressive stance on tariffs from ensuring a fair balance of payments to reversing unfair treatment of the United States by its trading partners to reducing the number of crossings by immigrants entering the United States illegally to stemming the flow into the U.S. of illegal drugs.

When I connect the dots between his myriad of reasons it leads me to the biggest dot: the point in history where the United States, United Kingdom and Europe where the metropoles of the global political economy. Mr. Trump wants the U.S. to be the parent state of economic colonies and has no qualms turning Europe, the UK, Canada, and Mexico each into one of those colonies.

Contrary to David Ricardo’s theory of comparative advantage, I see trade as a way for one nation-state to stake a grip on another country’s resources. Nature is an extraction cycle and trade applies economic technology to replicate that cycle. Under the old model, Britain imported raw materials from the thirteen colonies and applied its intellectual property to those raw materials in order to produce goods that it could sell to those colonies. Britain maintained the trade surplus, getting greedy by taking the extra step to drop taxes on the colonies. We know the rest of the story.

Along the way, the United States became a debtor nation while incurring a trade deficit and ditching its manufacturing capacity. Mr. Trump appears determined to turnaround America’s misfortune and take her back to those mercantilist days.

Unfortunately for some of his supporters, they were not paying too much attention to his messaging on the economy and trade. They heard the “Make America great again!”, part, but never bothered to ask, “How did we do that again?”

And Mr. Trump never bothered to flesh out and express a message of empathy for those supporters who may be negatively impacted by the afterburn from the engines he is firing up around the world. The afterburn will likely get increasingly intense given the very short window Mr. Trump has to accomplish what he has in mind. There are 19 months left until the 2026 midterms. The campaign season will be in full swing in about 14 months. Between those two periods Mr. Trump will also nominate a replacement for Jerome Powell, the current chairman of the Board of Governors of the Federal Reserve System.

He may have to borrow Marty McFly’s car from Back to the Future.

Alton Drew

9 April 2025