Special: Trump's New American (Mercantile) Empire Unfolds
"The U.S. strategy boils down to this: protect the home front, secure vital resources, and let others sort out their own problems. Trump’s comments on Greenland, Panama, Canada, and Denmark are just the opening US act in the larger geo-economic mercantile play."
Overview and Keypoint-Summary
This podcast is a quick breakdown of recent rhetoric and behavior coming out of Trump’s office. Specifically, we’re talking about his comments on Greenland, Panama, Canada, and Denmark (as it relates to Greenland).
First, I want to highlight a quote from a Goldman Sachs’ top institutional trader—the one whose perspective we follow most closely. Here’s what he said paraphrased:
"Some inflammatory comments from Trump on Greenland, Panama, Canada, and Denmark are a sharp reminder of the lingering uncertainty around foreign policy from his first term. While these remarks don’t have a direct market implication, they inject volatility—and volatility isn’t great for earnings multiples. That said, these comments should not be taken literally. The end state is still likely to involve more benign, negotiated solutions."
--Goldman Trader Rich Privorotsky (H/t ZH Premium)
From a market perspective, this is spot on. Volatility shakes confidence and compresses multiples. But to really understand what’s happening we need to zoom out and view this from a broader, secular perspective before assessing Trump’s recent comments.
Mercantilism: The Big Picture
Since COVID, Mercantilism has emerged as the key driver of global economic and policy decisions.
From Mercantilism('s) Rules:
For the past three years, nearly every government behavior and policy change has been tied to one key concept: Mercantilism. Now's a good time to revisit what Mercantilism really means.Textbook definition: Mercantilism emphasizes the importance of a favorable balance of trade and strong government control over economic activities to boost national power and wealth.
Let’s break it down in context of this current discussion:
Export More, Import Less: Success in this environment depends on exporting more than you import. Simple in theory, difficult in practice.
No Easy Credit: Cross-border credit isn’t flowing like it used to. Nations are no longer extending trust over long timeframes.
Supply Chain Reset: With restricted credit, supply chains are shrinking, becoming regional, and more expensive. Concepts like friend-shoring, on-shoring, and reshoring are now the norm.
On an accounting level, this means countries must run on current-account terms. No more "buy now, pay later" arrangements. Transactions are happening on a "debit card" basis—settled in real time. This lack of leverage introduces volatility into financial markets, leading to collateral shortages, falling bond prices, and a scramble for safe assets like gold and silver.
For nations reliant on leverage or with fragile economies—think Great Britain—this shift has been particularly brutal. The pound’s volatility reflects the difficulty of adjusting to a world with tighter credit and stricter trade balances.
What This Means for U.S. Strategy
Under Trump and before, U.S. policy has shifted toward securing its own region and reducing its global footprint. This is a hybrid of the Monroe Doctrine (keep foreign influence out of the Western Hemisphere) and Manifest Destiny (assert control over neighboring territories).
Here’s how it’s playing out:
Military Withdrawal: The U.S. is pulling back from global hotspots like the Middle East and Asia. Resources are being redirected to secure North and South America.
Supply Chain Realignment: Policies like on-shoring and reshoring are focused on reducing dependence on foreign production.
Trump’s rhetoric around Greenland, the Panama Canal, and Canada fits squarely into this strategy. Greenland is both a strategic military asset (missile defense) and a resource-rich territory. Panama is critical for controlling trade routes. And Canada and Mexico are vital economic partners that the U.S. wants firmly aligned within its sphere of influence.
Trump’s Role: Guided Missile, Not Loose Cannon
Trump’s approach may seem erratic, but it’s calculated. He’s not a loose cannon—he’s a guided missile. His negotiation style involves making bold, sometimes inflammatory statements to shift the conversation and get results. Think of his remarks as a salesman’s pitch for a broader U.S. strategy.
Take Greenland, for example. Trump’s comments may seem outlandish, but they signal a shift in U.S. priorities. Denmark (which oversees Greenland) is part of Europe, but Trump’s message is clear: The U.S. is looking to secure resources and strengthen its defense position, even if it means challenging old alliances.
The Big Shift
Zooming out, the U.S. is recalibrating for the 21st century. Two key mandates are driving this shift:
Rebuild Domestic Capacity: Onshore production and secure friendly supply chains.
Cut Global Commitments: Withdraw from costly foreign entanglements.
This strategy isn’t new. It’s been quietly in motion since at least the financial crisis, if not earlier. What’s different now is the pace of change. Post-COVID, this realignment is accelerating, and Trump’s rhetoric reflects that urgency.
What’s Next?
As the U.S. pulls back from global commitments, we’ll see more regional focus:
North America: Mexico becomes even more critical as a trade and logistics partner.
South America: Argentina, with its new leadership, has become a testing ground for U.S.-backed fiscal reforms.
Meanwhile, Europe and Asia will have to fend for themselves. NATO budgets are rising as Europe prepares for reduced U.S. military support. Japan is ramping up defense spending and coordinating with allies in the Pacific. These are the ripple effects of a receding American footprint.
The U.S. strategy boils down to this: protect the home front, secure vital resources, and let others sort out their own problems. Trump’s comments on Greenland, Panama, Canada, and Denmark are just the opening act in this larger geopolitical shift.
Full 30 minute Podcast and 10 minute Free Preview here
Free Posts To Your Mailbox
