The Economics of the New Monroe Doctrine

 The Economics of the New Monroe Doctrine

President Donald Trump’s recent actions, particularly regarding territorial ambitions in Canada, Greenland, and the Panama Canal, seem to breathe new life into the Monroe Doctrine of 1823. This doctrine, originally proclaimed by President James Monroe, asserted that the United States would consider any interference in the Western Hemisphere by other great powers as an act of hostility. Trump’s rhetoric suggests that a similar hemispheric policy is taking shape under his leadership, with a focus on autonomy, self-reliance, and economic security within the Americas.

A Hemispheric Strategy with Economic Backing

This vision of a US-dominated Western Hemisphere is not new within Trump’s inner circle. Project 2025, a collection of ideas about US governance aligned with Trump’s views, advocates for "re-hemisphering" supply chains as part of a broader strategy to enhance US economic security. The idea is to promote economic stability and growth in parts of the Americas that are currently struggling, reducing reliance on the rest of the world while strengthening domestic economies.

John Bolton, during his time as National Security Advisor, emphasized the continuing relevance of the Monroe Doctrine, claiming it was "alive and well." This ideological shift aligns with a larger strategy to consolidate US dominance in the Western Hemisphere.

Geopolitical and Economic Advantages of the Western Hemisphere

There is a strong economic argument behind the vision of a more self-contained, US-centered Western Hemisphere. As of 2023, the region's nominal GDP exceeded $36 trillion, far surpassing East Asia’s combined economic output, which struggles to break the $27 trillion mark even when including Japan, South Korea, and Taiwan. Additionally, the Western Hemisphere’s per capita GDP is significantly higher than East Asia’s, suggesting a stronger economic foundation.

Moreover, the Western Hemisphere has a lower level of dependence on global trade. For example, the trade-to-GDP ratio for countries in the Western Hemisphere is less than 10%, while East Asia’s ratio exceeds 40%. This geographic and economic self-sufficiency presents geopolitical advantages, positioning the region as a stronger, more isolated economic entity, potentially less vulnerable to outside forces.

Challenges to the Hemispheric Vision

Despite these advantages, Trump's vision of a dominant Western Hemisphere faces notable challenges. Economically, the region is less integrated than East Asia, with intra-regional trade accounting for only about 15% of total imports. This lack of integration could hinder future growth, as economic integration is a crucial driver of long-term strength. The Western Hemisphere’s reliance on external markets for intermediate goods complicates efforts to create a truly self-contained economy.

Politically, the strategy is also problematic. While Trump has allies in countries like El Salvador and Argentina, many others, including Brazil, Chile, Peru, and Venezuela, maintain strong trade relationships with China. Securing these countries’ cooperation with US-led regional dominance will be difficult. Additionally, Trump’s preference for coercive tactics, such as using tariffs to pressure Mexico and Canada or threatening Colombia’s President over immigration policies, risks alienating potential allies in the region.

The Global Consequences

A vision of international order based on regional spheres of influence raises significant questions for global stability. For example, countries like Japan, South Korea, Taiwan, and Ukraine—whose geopolitical and economic security is heavily tied to global integration—could find themselves at a disadvantage in a world divided into spheres of influence. The global economy would also likely suffer from the inefficiencies of a fragmented international system.

However, Trump may be willing to accept these consequences if the US and the Western Hemisphere emerge as the dominant economic and geopolitical forces. For Trump, power is a relative game. As long as the US retains its influence over the Western Hemisphere, he might be content with a less efficient global economy, provided it strengthens his vision of American supremacy.

Conclusion: A Bleak Vision for the Future

Trump’s idea of a reasserted Monroe Doctrine, centered around the Western Hemisphere, presents a stark and troubling outlook for global governance. The vision of a self-contained and US-dominated region may offer short-term economic and political benefits for the US, but the long-term consequences—both domestically and globally—could be destabilizing. The push for regional spheres of influence, rather than a more integrated and cooperative global system, risks creating a fragmented world that could ultimately harm economic stability and international relations. Yet, for Trump, this may be the price worth paying to ensure the US’s supremacy in the Americas.