Few predicted the pace at which the second Trump administration would pursue a far more aggressive foreign policy agenda this past month. Within 24 hours of the extraordinary capture of Venezuelan President Nicolás Maduro, the Trump administration intensified its pressure campaign on Greenland, insisting that the United States “badly need[ed]” to annex the island. Notwithstanding Greenland’s status as an autonomous territory of US ally Denmark, Trump even implied that military force could be applied to place it under direct US control.
In both crises, President Trump repeatedly cited securing US access to the raw resources of both Venezuela (in the form of its oil) and Greenland (in the form of its critical minerals) as one of several justifications for his increasingly forceful approach. This emphasis on securing limited resources at all costs correlates directly with a neo-mercantilist worldview in its most extreme form, which essentially believes that all territory and its resources are effectively up for grabs in a “might makes right” world.
Although the Trump administration eventually ruled out using force to annex Greenland, its recent belligerency has deeply threatened the post-World War II global international security system. Yet, the actual perspective that guides this behaviour is not as radical a break from bipartisan foreign policy consensus as it may seem on the surface. In fact, even during the Biden presidency, neo-mercantilism remained a fixture of US foreign policy, which was especially noticeable during the implementation of the Inflation Reduction Act (IRA). Accordingly, the international community should expect the United States to continue pursuing some form of neo-mercantilist foreign policy in a post-Trump world, albeit not necessarily as aggressively as the second Trump administration has practiced.
In essence, like its early modern predecessor, neo-mercantilism envisions international affairs as a series of zero-sum geoeconomic equations, with any material gain in one state usually coming at the expense of another. This view especially extends to control over raw materials around the world, such as fossil fuels and critical minerals needed for energy technologies, as these resources (and by extension, the total value that can be extracted from them) are finite. This is the main reason why mercantilism and neo-mercantilism heavily favour maximizing exports while minimizing imports. Essential aspects of neo-mercantilism thus include dirigisme (especially in imposing protectionism) and a consistent drive to secure access to critical resources.
This neo-mercantilist perspective is what drove both the Biden and Trump administrations to take a more assertive stance against perceived strategic rivals and economic competitors abroad, primarily China. Much of this stance was realized through the imposition of tariffs and export controls in trade with China.
As such, even when asserting a break from the first Trump administration’s unilateralism, the Biden administration built upon this geoeconomic posturing by keeping its predecessor’s tariffs and export controls in place and later implementing the IRA, which offered far-reaching tax credits to domestic and foreign companies that invested in US production of clean energy technologies. The establishment of an industrial strategy to make US clean energy technologies more competitive in global markets was particularly aimed at challenging China’s dominance in global clean energy technology trade and investment flows. That said, the IRA was perhaps too effective in bolstering the US green technologies manufacturing sector, as it caused close US allies, especially those in the European Union, to protest that the IRA’s clean energy subsidies created unfair competition against them and were against World Trade Organisation (WTO) principles. Even with the establishment of a US-EU IRA Task Force to smooth over these tensions, the European Union eventually developed the Green Deal Industrial Plan partly in response to the IRA.
Notably, even as the second Trump administration scrapped much of the clean energy aspects of the IRA, it now pushes for a new industrial policy to invigorate other US manufacturing sectors on a scale of dirigisme that will likely far outpace the clean energy subsidies of the IRA. This is particularly evident in the numerous trade deals it negotiated with other states to prevent the imposition of US tariffs on their imports, as the conditions for these agreements consistently included clauses for enormous foreign investment into US manufacturing infrastructure. For instance, Japan has committed to investing $550 billion into a US government-controlled corporate vehicle that would direct investments and redistribute returns. The ultimate goal of these investments would be to fund the reindustrialization of the United States to dramatically increase its exports.
Nonetheless, there are two significant differences with how these administrations approached neo-mercantilism. First, whereas the Biden administration was especially adamant that the United States must retain access to the critical minerals required for the US manufacturing of clean energy technologies, the Trump administrations’ consistent insistence that “climate change is a hoax” suggests that the latter’s interest in critical minerals merely stems from a desire to keep those materials out of the hands of perceived strategic and economic rivals like China and even the European Union. This is a fundamental driver for the second Trump administration’s abandonment of the clean energy industrial policy elements of the IRA, its campaign to seize Venezuelan oil despite how the United States has been a net oil exporter since 2020 due to fracking innovations, and its haphazard approach to challenging China’s dominance of global critical mineral supply chains by threatening allied territory like Greenland.
Second, the Biden administration viewed securing allies’ access to critical resources as a vital element of US national security, whereas the Trump administrations view any non-US access to such resources—even by allies—as a potential security issue. The Biden administration notably sought to find common ground on securing critical minerals with allies among the G7 and other groups with the establishment of mineral security partnerships. This stands in stark contrast to the second Trump administration’s much more aggressive push to annex Greenland and Canada, even though such actions would warrant the end of NATO; the administration believes that whatever critical minerals present there would be more valuable than any strategic alliance, like NATO, that the United States stands to benefit from. Confusingly, the administration has not taken a consistently aggressive stance either, with an executive order released amid transatlantic tensions around Greenland pushing for more US trade agreements with foreign partners to ensure greater US access to critical minerals. In essence, the second Trump administration seemingly believes that the main benefit that allies offer to US interests is the funding of the United States’ reindustrialization, with the threat of tariffs used as leverage to demand more foreign investments.
If the only difference between immediate post-Trump administrations will be the extent to which they may pursue neo-mercantilism, then what are the main takeaways for US partners? The primary one would be that any trade relationship with the United States would need to account for US domestic pressure to increase US manufacturing capacity, and this includes seeking more foreign capital for this purpose. This prioritization of industrial policy is a commonality between the Biden and Trump administrations, as evidenced by the IRA and the trade agreements the second Trump administration negotiated to lift tariffs. All these actions emphasized that foreign capital would be used to bolster US domestic industrial capacity.
However, the other significant factor to consider is how much the United States may value that industrial investment to begin with. A future Biden-like presidency would welcome such investment for clean energy and other emerging technologies. This could possibly come with more incentives like the formation of more mineral security partnerships for mutual benefit. On the other hand, a future Trump-like presidency would more likely pursue hardline unilateral neo-mercantilist policies, threatening to impose tariffs on countries unless they offer more investments into US reindustrialization. Consequently, even if an ally were to offer significant industrial investment, such offers may be rebuffed as that administration may view the critical resources that are within the ally’s territory as too essential to remain outside of direct US control.
US partners should therefore continue developing derisking strategies that, while not inherently meant to distance themselves from the United States, would ensure that they can easily increase trade with each other should the United States pursue a more aggressive foreign policy again. This should be part of a broader campaign to develop resiliencies against future US neo-mercantilist actions, as even administrations that would be more diplomatic in their stances are likely to craft neo-mercantilist policies that may (unintentionally) prove detrimental to US allies.