Donald Trump loves tariffs. He must have read about William McKinley, a former Republican president who was also passionate about tariffs at the end of the 19th century but recanted before he was gunned down by an assassin.
Tariffs are all about national economic protectionism. The predecessor to them is mercantilism, which dominated European economic policy from the 16th century into the 19th.
Mercantilism was about establishing favourable trade balances for the home countries of Europe’s colonial empires. Great Britain, France, Spain, the Netherlands, and others made mercantilism the national economic policy, using it to build wealth, expand empires, and increase military power.
Mercantilism, like high tariff policies, protects domestic industries. The measure of mercantilist success was always about how much more was exported than imported, leading to more money coming into the country than going out.
Mercantilism was highly regulated with restricted imports. It promoted exports and used high tariff walls to block foreign goods from entering the home country and its colonies. Mercantilism encouraged European countries to establish colonies and seize whole continents for their raw materials. At the same time, it protected domestic industries, giving them an outlet for finished goods that found exclusive markets within the colonies. Large military expenditures were needed to police these mercantilist-built empires.
With colonies having little choice but to accept goods from the mother country, Great Britain’s mercantilist policy planted the seeds of future rebellion in the Americas, where smuggling became the counterweight to protectionism.
In essence, mercantilism was a zero-sum game that heightened political tensions between European states and eventually led to 20th-century wars.
How did mercantilist policy differ from the high tariffs that Donald Trump is imposing on countries around the world in the present?
It doesn’t.
When you consider the global impact of mercantilism in the past, going down the route of high tariffs in the 21st century is deja vu and likely to end badly for the United States and the rest of the planet.
In the post-World War II world, the United States encouraged the lowering of barriers to trade. It made sense. The damage of the war required nations to rebuild. Tariffs and trade barriers fell with free trade going global.
Not anymore!
High tariffs are a disaster waiting to happen. At the outset of the Great Depression, beginning in the fall of 1929, America established high tariff walls leading to economic collapse not just domestically but globally. Are we about to see a repeat?
Some experts believe so, with estimates that the gross domestic product (GDP) of the United States to fall by as much as 1-2% annually for the foreseeable future, trade volumes to decline by as much as 9% annually, and imports to shrink by up to 31%. Economists fear a recession because no one wants to use the “d” word.
American tariff walls will beget retaliatory walls set up by other countries. Supply chains developed during the period of falling trade barriers will no longer operate.
Domestic industries facing having to pay tariffs over and above imported material costs will either eat profits or pass the increase on to consumers. The result will mean everyone will be paying more.
What influence will high tariff policies have on the geopolitics of the 21st century?
We are already seeing the extortionist results in new deals being cut by foreign governments with the Trump administration. Tariffs are now weaponized to disrupt nations. Trump has talked about annexing Canada, Greenland, and the Panama Canal Zone, and if he cannot do it by persuasion, has stated he may do it through economic coercion.
Trump tariffs will heighten the tensions between the United States and China. The trade between the two in 2024 amounted to US$582.4 billion. The balance favoured the Chinese by $295.4 billion and was continuing to grow annually.
How will high tariffs affect those numbers? Already, in the first half of 2025, trade between the two countries has significantly dropped, impacting U.S. exports in the agriculture, energy, machinery and manufactured goods sectors.
Ultimately, high tariffs, a policy of economic nationalism that replaces its predecessor, mercantilism, will do little to revive American manufacturing and jobs, while creating confrontation with former global trading partners. It is a recipe for another world war, only this time involving weapons that will be far more lethal.
