It seems that colonies are for making money off of Tariffs - at least for AI Spain it seems to work. By the end of my last game they were making 31% of its income from Tariffs. They also had a naval force limit of 424 which I assume mostly came from CNs which allowed them to support a fleet of 317 light ships (38% income from trade).
This!
If you are a trading nation in the Mediterranean sea, I agree forget about colonization.
I cannot agree.
1. Colonization mean not only America, but also Africa, Asia and Oceania - you can collect there, or tranfer trade to Mediterranean sea, and then collect there
2. Capture one province in Western Europe, and you can collect there.
3. Capture one province in America ,and collect there.
4. Take colonies, and give less income, manpower and allies to your potential enemies. Also you take other colonial nations from your enemies for even more income.
Maybe it is harder, but still profitable.