From Pax Americana to America First
On the Return of Mercantilism
U.S. foreign policy under Donald Trump is characterized by the “America First” doctrine and a questioning of America’s traditional role as guarantor of the international order. Pax Americana—the U.S.-led world order that since 1945 has rested on military protection, open trade, and rules-based liberalism—is no longer taken for granted. Trump appears instead to view the world as an arena of great-power competition over resources, territory, and influence.
Greenland and the New Realpolitik
One current example of changed U.S. policy is Trump’s approach to the war in Ukraine; another is his claims on Greenland. Greenland does not need—and cannot reasonably—be conquered by force, but such claims undermine confidence in both NATO and the broader treaty-based world order and can furthermore be perceived as legitimizing other great powers’ territorial demands. At the same time, Trump’s rhetoric reveals a deeper shift: under his leadership, the United States is moving away from liberal hegemony and toward a modern form of mercantilism.
Paradoxically, the expansionist rhetoric and realpolitik view of the U.S. as a transactional great power that need not follow international law is an expression of the fact that American hegemony is approaching its end. By breaking rules that the U.S. itself has promoted, neglecting soft power, and depleting international standing, Trump himself is accelerating the end of U.S. dominance and contributing to a multipolar world—exactly what challengers led by China desire. At the same time, the policy can be seen as a desperate attempt to preserve American superiority at a time when that position is being challenged, not least by China itself.
The Return of Mercantilism
Mercantilism—the idea that the state should actively maximize exports, minimize imports, secure raw materials, and use all means (tariffs, diplomacy, military pressure) to strengthen the national economy—was the dominant economic doctrine before the liberal era that can be said to have begun after World War II. Pax Americana was built on the opposite: free trade, multilateralism, and a dollar-dominated global economy in which the United States assumed the role of global guarantor in exchange for other countries indirectly financing American deficits.
As the United States now abandons this model and instead uses tariffs, security threats, and transactional diplomacy to force more favorable terms, the old order is breaking down. Several observers have described Trump’s policy as a return to mercantilism and as a cause of Pax Americana’s approaching end, but also as a consequence of that end. The parallel to Pax Britannica is clear: the British Empire, too, in its final decades began shifting from free trade to protectionism—a policy that accelerated its relative decline while being intended to preserve British positions.
Pax Britannica: The Historical Parallel
The concept of Pax Britannica was introduced toward the end of the 19th century as a parallel to the classical Pax Romana, which denotes a stable period of internal peace in the Roman Empire from Augustus in 27 BC to the death of Marcus Aurelius in AD 180. Pax Britannica represents the stability under British colonial dominance from the end of the Napoleonic Wars in 1815 until World War I.
Before the Napoleonic Wars, Britain had pursued mercantilist policies, but in the 19th century it was so superior in productivity and military strength—thanks in large part to early industrialization—that it benefited from free trade. Toward the end of the century, however, other great powers, primarily the United States and Germany, began competing with Britain in productivity, leading to a return to mercantilism.
America’s Path to Hegemony—and Away from It
World War I marked the end of Britain’s global dominance, even though the country was among the victors. Instead, the United States emerged as the leading nation, but until World War II it chose an isolationist and mercantilist foreign policy. Isolationism was broken only by the attack on Pearl Harbor, which brought the U.S. into the war.
Thanks to its economic superiority and productivity, American interests were best served by free trade and stability. For a long time, the United States was able to dictate international rules through the UN and WTO. The peak of American dominance and peace was reached when the Cold War ended and the Soviet Union dissolved. One major communist power remained, however. Through state-controlled capitalism, China today challenges the United States on many fronts.
Trump Before Trump: Japan and 1980s Trade Policy
As early as the 1980s, Trump criticized Japan for systematic and unfair protectionism and argued that the United States should respond with high tariffs on Japanese goods. At the time, his ideas received little support, but today the situation is different.
Global free trade has not only disadvantaged the American Rust Belt as industrial production moved to countries where it is more profitable. Free trade now threatens the American economy as a whole—at least according to economists aligned with the administration. Today, it is no longer only the working class in old rusty industrial cities that views globalization and the deindustrialization of American society critically.
Mar-a-Lago Accord: Neomercantilism in Practice
In November 2024, economist Stephen Miran launched a neomercantilist and transactional proposal that he named the Mar-a-Lago Accord—a deliberate allusion to the 1985 Plaza Accord, when five leading industrial nations agreed to a coordinated depreciation of the dollar. The idea is that the United States should use tariff threats and threats to withdraw military security guarantees as leverage to force allies and trading partners to strengthen their currencies, accept a weaker dollar, and possibly restructuring their holdings of U.S. Treasury securities into long-term bonds with lower interest rates—while assuming that the world will continue to use the dollar as its reserve currency. Unlike the Plaza Accord, which rested on voluntary cooperation, multilateralism here is replaced by pure transactionalism: military protection in exchange for economic concessions on currency and trade issues.
It is above all small export-dependent countries with a large neighbor that have benefited from free trade and a liberal, rules-based world order. However, merely condemning Trump and the new American policy achieves little. To understand this policy and adapt to it requires seeing the structural problems that drive it.
Why This Policy Now? Three Structural Drivers
First, free trade and globalization have created clear losers in the United States. The industrial Midwest and parts of the South have been hard hit by competition from low-wage countries. The working class in these regions forms the core of Trump’s voter base. Reindustrializing the United States is therefore not just economic policy—it is a social and political necessity to maintain legitimacy with this group.
Second, the West—especially after the pandemic and the energy crisis—has awakened to its dangerous dependence on China, not only for consumer goods but above all for critical raw materials such as rare earth metals, graphite, and other inputs for green technology and defense. In addition, China challenges the United States in a range of central areas: high technology, artificial intelligence, global infrastructure, and even military capacity. Trump sees this as a strategic vulnerability that must be broken through friendshoring, tariffs, and incentives for domestic production.
Third, the United States has lived with chronic trade deficits for decades, partly financed by the dollar’s status as the world’s reserve currency. This provides advantages—low interest rates, the ability to borrow cheaply—but also disadvantages: a chronically overvalued dollar that makes American exports expensive and contributes to deindustrialization. The growing federal debt furthermore makes dependence on foreign buyers of Treasury securities increasingly precarious.
Consequences for Europe and Allies
Trump’s response is mercantilist: use the tariff weapon to reduce deficits, force a weaker dollar, and compel other countries to bear a larger share of the cost of American hegemony. For U.S. allies, including Finland, Sweden, and other NATO members, this means a new reality. Security guarantees are no longer a given but a bargaining chip. The increased emphasis on friendshoring, state incentives for critical supply chains (e.g., rare earth metals and semiconductors), and demands for higher defense spending underscore this transactional and neomercantilist logic.
This does not mean that the United States will abandon NATO or Europe in the short term. But it does mean that relations will become more transactional: higher defense spending, acceptance of American trade terms, and perhaps even concessions on currency and debt issues.
Realism Facing a New Era
If one merely condemns Trump’s policy, one risks missing its point. Neomercantilist policy is a response—albeit controversial and risky—to real problems: globalization’s losers, strategic dependence on China, trade deficits, and unsustainable debt growth. For countries like Finland, the wisest course is to cultivate relations with the United States with open eyes: understand Trump’s objectives, negotiate clearly about security guarantees, and at the same time diversify dependencies and strengthen domestic industrial capacity. It may also become necessary to choose between the United States and China in order to secure American protection. Being a safe and friendly location for strategically important production is not a form of Finlandization, but a rational way to orient oneself in a new multipolar world.
Pax Americana may be approaching its end, but the United States will not disappear from the world stage. Its role, however, is changing: from liberal hegemon to transactional great power. Adapting to this reality is not capitulation to it, but meeting it with realism.