Trump’s trade war will worsen crisis-ridden capitalism

Editorial from the April-May edition of the Socialist – the paper of Socialist Party Scotland

“Deluded, bonkers, pathetic, complete drivel, flat-out nonsense”. These were just some of the angry descriptors that appeared in the Economist magazine’s editorial the day after Trump announced his ‘Liberation Day’ tariffs on April 2. The Wall Street Journal brutally accused the US president of engaging in the dumbest trade war in history.”

That these two, and the vast majority of the other bourgeois journals of record internationally, responded with such initial venom says much about how aghast the majority opinion of the capitalist classes felt towards Trump’s “economic vandalism”.

If anything has underlined the entirely new period facing world capitalism it’s Trump’s protectionist actions – which mark a decisive break with the so-called ‘rules based system’. Rules that allowed for the maximum exploitation of the global working class in the drive for profit. Against the backdrop of stagnating economic growth, growing divisions among the capitalist powers have become more and more evident.

barriers to development

This underlines our analysis that while capitalist globalisation extended the world market for goods and services to an unprecedented degree, while creating an enormously strengthened proletariat numerically as a result, it did not overcome the national barriers which constrains the productive forces.

Alongside private ownership of the means of production by a tiny elite, it is the fact that the national capitalist classes are forced to compete against each other for often declining market share that is driving the emergence of the multipolar world. Trump’s protectionist actions will enormously strengthen that tendency. In the wake of Trump’s Make America Great Again tariff campaign some of the ‘august’ journals of capitalism like the Financial Times have been advising capitalist governments to increase trade among themselves and bypass the US.

Labour prime minister Keir Starmer says he will take action in the “national interest” to defend the UK economy. Which means he will prioritise the profits of British capitalism, not the interests of workers.
It is vital that the trade unions in Britain and internationally reject that idea. There is no national capitalist interest that benefits the working class.

Workers’ interests are diametrically opposed to that of Starmer and the capitalist elite he represents. Bosses in Britain and internationally will use the trade war as an excuse to shed jobs and cut terms and conditions. The trade unions must go on the offensive to demand no job losses, and the nationalisation of those companies who threaten job cuts and closures.

The same is true of Trump. While he claims to defend the interests of US workers, and that some workers will support Trump’s campaign, the actions will not bring jobs or resolve the cost of living crisis that stalks tens of millions in the US. 63% of Americans had a negative view of the government’s economic policy before Liberation Day.

Just 25% said they expect their finances to look better in five years than today. While there can be some illusions that this will change, the reality is that Trump’s plan to cut taxes for the super-rich and big business shows his priorities.

Starmer’s Treasury minister Darren Jones told the BBC that “Globalisation, as we’ve known it for the last number of decades, has come to an end.” In truth, globalisation – which underwent a seismic acceleration in the wake of the collapse of Stalinism in 1990/91 and which saw US capitalism emerge as the dominant power at its unipolar centre – ended a long time ago.

Particularly in the aftermath of the the 2007/08 great recession, the US underwent an accelerating period of decline. The rise of state capitalist China is now its great economic and geopolitical rival. Which is why US capitalism, Trump in his first term and Biden after, ratcheted up the trade wars with China. And this explains why the tariffs on China are, after Liberation Day, 65%. In fact South East Asian countries have among the highest tariff rates in the world.

This decline is in part reflected by the US share of world trade which is currently just over 10% (down from over 14% in 1990.) In contrast, the EU share of world trade is 29% (down from 34% in 1990) while the BRICS countries now have a 17.5% share, dominated by China with almost 12% of that figure, up from 1.8% in 1990.

China responded the day after Trump’s announcement with a 34% counter tariff on US imports into China. The CCP leadership offer no way forward for the Chinese working class of course
There is no question that Trump’s actions – driving tariffs up to a headline rate not seen in the US since 1909 and possibly igniting a global trade war – will dramatically increase the recessionary and inflationary trends in an already beleaguered world capitalist economy.

And it will be workers in the US who will be among the most affected by increased prices as imports become more expensive. As will sections of US capitalists who rely on cheap “inputs” from China, Vietnam, Taiwan, Mexico etc. to complete their commodities to sell on to US consumers.

Even if the tariffs are short-lived – or Trump retreats on some of them – the instability that they have engendered and its impact of the world economy will be permanent.

In the initial days following Liberation Day more than $5 trillion was wiped off stock market capitalisation values internationally. Apple, who rely massively on production from China and South East Asia, lost over $300 billion in share value.

Trump’s stated aim is to bring manufacturing ‘home’. To force, at the barrel of the tariff gun, US and other multinationals to invest more in the US. He wants to “reset” the world economy to end the enormous trade deficits that the US is running with other capitalist nations.

failing system

This is a pipe-dream. Capitalism is a failing system. Trump and emergence of other right populists reflect that political instability.

It represents the decline of US capitalism and the capitalism system as a whole internationally.
Above all it poses the need to build mass working class parties internationally armed with the ideas of socialism to end that system and forge a harmonious socialist world based on democratic planning and public ownership of the economy.