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Trump is a Mercantilist

Here’s a letter to my superb former GMU Econ student (undergrad and masters) Robyn Weaving:


Wonderful to hear from you.

You disagree with my insistence that Trump is a mercantilist. I disagree with your disagreement!

With the possible exception of Eli Heckscher, no one studied original mercantilist writings as extensively, as intensively, and as systematically as did Jacob Viner. This fact, along with Viner’s reputation for being as free of ideological biases as is possible for an economist to be, means that Viner’s 1968 article “Mercantilist Thought” – in the International Encyclopedia of the Social Sciences – is as reliable a source as any to judge if Trump is a mercantilist. And so here’s Viner from that article:

The essentials of the [mercantilist] doctrine can be summarized in terms of five propositions or attitudes: (1) policy should be framed and executed in strictly nationalistic terms, that is, national advantage alone is to be given weight; (2) in appraising any relevant element of national policy or of foreign trade, great weight is always to be put on its effect, direct or indirect, on the national stock of precious metals; (3) in the absence of domestic gold or silver mines, a primary national goal should be the attainment of as large an excess of exports over imports as is practicable, as the sole means whereby the national stock of precious metals can be augmented; (4) a balance of trade ‘in favor’ of one’s country is to be sought through direct promotion by the authorities of exports and restriction of imports or by other measures which will operate indirectly in these directions; (5) economic foreign policy and political foreign policy are to be pursued with constant attention to both plenty and ‘power’….

Also famously, William Grampp argued in a 1952 paper in the QJE that the mercantilists were additionally concerned about full employment – and that they believed that government should carry out trade policy in order to maintain full-employment in the domestic economy. Specifically, the argument is that the greater the net amount of money the nation gets through trade, the better the prospects for full employment.

Comparing the above description of mercantilists to Trump compels me to conclude, without hesitation or qualification, that Trump is a modern-day mercantilist, and quite an unalloyed one at that. The only difference between mercantilists, as described by Viner, and Trump is apparent and not real: during mercantilism’s heyday (16th-18th centuries), money was precious metals (gold & silver) while today money is fiat. And so while mercantilists of old were obsessed with the home country acquiring through trade as much precious metal as possible, today’s mercantilists are obsessed (even more unreasonably, by the way) with the home country acquiring through trade as much fiat money as possible. Think here, for example, of Trump’s recent assertions that the size of the U.S. trade deficit is the size of what Americans have been ‘losing’ through trade.

But whether precious metals or fiat money, in both cases the mercantilists’ objective is for the home country to use trade policy as a means of getting a net inflow of money – an outcome that they believe is achieved the greater is the home-country’s exports over its imports. Trump, like mercantilists of old, is utterly blind to the reality that, as Adam Smith correctly argued, the ultimate objective of trade is for people to acquire as many consumption goods and services as possible.

Put differently, Trump is fully mercantilist in his belief that exports are the benefit of trade, and that imports are the price paid in order to enjoy the benefit of exporting. This belief, of course, is completely backwards. But everything in Trump’s rhetoric, as well as the thrust of his trade policy, signals his commitment to this backwards – and, ultimately, impoverishing – belief.

Further pieces of evidence that Trump is a mercantilist include his incessant uninformed griping about the U.S. trade deficit, and his frequent complaint that a great deal of Americans’ trade with foreigners has destroyed jobs – meaning, in context, net jobs – in the United States.

In word and deed, Trump reveals in all essentials that he is just as deeply ignorant of trade – and in the same particular manner – as were the mercantilists of old. In accusing Trump of being a mercantilist, I do not deny that countless other modern-day politicians are also mercantilists. But this fact doesn’t mean that Trump is less of a mercantilist than he really is. He is a poster-boy for modern-day mercantilism.

Be well,


UPDATE: I should make clear that central to Robyn’s complaint about my labeling Trump a mercantilist is the claim that Trump has no “underlying philosophical viewpoint.” If by this claim Robyn means that Trump isn’t self-consciously philosophical, I completely agree. But this reality about Trump doesn’t mean that some default, scattershot philosophy isn’t at the root of his thinking. That default, scattershot philosophy is that of very many business people who mistake their knowledge of business for being a knowledge of economics.

Indeed, his unconscious reliance on a scattershot, default underlying philosophy is yet another way in which Trump is a mercantilist. Many mercantilists of old were also business people – and all of them mistook the country as being a for-profit company. Very few of them were self-consciously philosophical. Each of them, like Trump, refused to reason deeply about economic interactions and, thus, defaulted into the incoherent absurdity that is mercantilism.