Neo-mercantilism in Action - Mexico, Canada, and China under Trump’s 2025 Tariffs: a trade perspective

Purpose The purpose of this paper is to examine how the 2025 US tariff policy targeting its principal trading partners (China, Canada and Mexico) departs from modern pro-trade economic policy and adopts an unconventional conservative stance on neo-mercantilism. It evaluates how President Trump’s use of an indefinite period of protectionism to maintain trade hegemony departs from the philosophical underpinnings of List and Hamilton. Design/methodology/approach Rather than attempting to perform empirical estimations (which, given the frequent changes in messaging by the USA, would quickly become outdated), the authors engage in a diagrammatic theoretical approach to elucidate the likely trade implications over time. Findings The long-run expectation of the policy is a contraction of domestic and global consumer welfare. The authors argue that if the policy aims are to reduce strategic dependence on China, support US firms to internalise operations, incentivise firms to relocate production within the USA, and insulate trade networks to align with the US policy agenda, then triggering a trade war through tariffs is unlikely to result in the favourable economic outcomes the Trump administration seeks to achieve. Originality/value Drawing on trade theory, the authors provide a critical analysis of the policy implemented by the Trump administration and offer a comprehensive discussion of its potential impacts.