Trump’s tariffs an attack on the working class
The Trump administration announced enormous tariff hikes on 2 April, taking them to the highest level in a century. These are a threat to the working class and a weapon in America’s hands as it prepares for a military confrontation with China.
Donald Trump’s tariff announcement caused financial panic, with stock markets crashing as investors pulled their money out, fearing that world trade would tank. When the bond markets moved in, threatening to force up interest rates on debt held by corporations, governments and mortgage holders, Trump was compelled to pull back, implementing a 10 percent tariff on most countries and pausing the higher rates for 90 days. Nonetheless, even at 10 percent tariffs are at their highest for decades. Given Trump’s erratic moves in the past few weeks, anything might happen in three months.
Trump’s main motive is to punish countries with which the US runs big trade deficits. He says that US trading partners have ripped off the US for years and he is going to fix this by making imports from those countries more expensive. That was why in the original plan, tariffs were highest on countries with which the US ran the biggest deficit.
Trump also sees tariffs as a way to encourage companies that have offshored production to bring it “home” to the US and to force overseas companies to invest and produce in the US. In particular, the president wants to rebuild the US manufacturing base in the service of military preparedness. Former President Joe Biden tried to do that with big subsidies. That had only limited success. Trump is using tariffs to try to force US business to invest more at home.
Trump is also promoting tariffs to generate a federal revenue stream that will allow his administration to eliminate capital gains tax and pay for the renewal of regressive income tax cuts due to lapse in 2027.
Many economic commentators and mainstream politicians have attacked Trump’s tariffs, saying they will harm American capitalism and the interests of the American state. But this means nothing for the working class. These figures just want to patch up the existing trade system in the hope that the capitalists maintain their fortunes.
Much more important is the devastating impact these tariffs will have on the working class.
First, they exacerbate the cost-of-living crisis. Tariffs make workers poorer by increasing the price of imported goods, most obviously Chinese-made goods, that many low-income households depend on. They also give US producers the opportunity to immediately raise prices on their goods, as they will be under less pressure from imports.
Trump’s tariffs will shift the burden of taxation from the rich to the working class by taxing consumption and lowering taxes on investment incomes. Poorer households spend all their income (and more) and have no or few investments, so are the worst affected.
Trump’s tariffs plan feeds into a right-wing conspiracy that blames scheming foreigners, rather than America’s own billionaires, for US economic problems and the loss of blue-collar jobs.
Many trade union leaders representing blue-collar workers unfortunately buy into this argument. They argue that workers must form a bloc with American capitalists to lock out imports through tariffs and quotas, a strategy known as protectionism.
Protectionism leads the labour movement in the wrong direction. Rather than fighting the capitalists by striking and occupying their factories to protect jobs, the union leaders jump into bed with the bosses, selling their members out in the name of “saving the industry”.
If “saving the industry” involves cost-cutting, as it invariably does in the cut-throat capitalist world, the union leaders will line up with the bosses to demand workers’ pay this price. This has been the long and sordid history of protectionism in some of the few industries where American unions still have a foothold—auto, steel, chemicals, rubber—and the workers have seen their jobs sold down the river. Far easier for the union bureaucrats to join company delegations to Washington to lobby for tariffs than to mount a fight for jobs.
The tariff trap is alive today. Shawn Fain, the leader of the US United Auto Workers, who appears at anti-Trump rallies condemning the president’s attacks on trade unions and public sector jobs, has applauded Trump’s tariffs as “a major step in the right direction for autoworkers and blue-collar communities across the country”. How are workers meant to fight Trump’s attacks if their leaders are at the same time praising their enemy?
Protectionism also contributes to the kind of nationalist tub thumping that very easily translates from economic competition to military competition. This is increasingly obvious with Trump’s announcement that wound back initially very steep tariffs on Washington’s allies while ratcheting them up on China, which now faces a tariff of 145 percent. The Chinese ruling class is responding in kind. Tariffs are just one element of a broader military build-up by the US against its imperialist rival and contribute to growing racism towards Chinese Americans at home.
This is why socialists oppose all the demands to Buy American, Buy Canadian or Buy Australian so beloved of trade union leaders. It leads us into class collaboration and jingoistic nationalism rather than class struggle and international working-class solidarity.
But if we oppose these tariffs as an attack on the working class and increasing imperialist tensions, this does not mean we support free trade. Free trade and protectionism are simply two different strategies the capitalists use to advance their interests, sometimes leaning towards one, at other times to the other.
If tariffs are currently being introduced by the US to give it an edge in its competition with China, so did the US use free trade for decades to help American companies make money and to advance US power far beyond its borders. Free trade was the flag flown by American gunboats—and British and French gunboats before them—to force open new markets in Africa and Asia. Free trade was the banner flown by the US when it created the post-World War II international financial system that has favoured its capitalists and crushed poorer countries for decades.
Contrary to what Trump says, the US has not been a victim of free trade but its architect and major beneficiary. It was American multinationals and American governments that offshored production to low-wage countries to boost their fortunes starting in the 1980s. The job losses that resulted were not the responsibility of cheating foreigners but America’s own capitalist class. The US is a victim of no-one.
It is only now when it faces a growing threat from China, whose economic take-off it initially sponsored, that the US is retreating from free trade.
Business and governments never have our interests in mind when they choose between free trade and protectionism, only their own.
The working class cannot rely on any scheme capitalist governments devise to protect their interests but must fight against all capitalists and governments, free traders and protectionists alike.
The recent chaos emanating from the White House and New York financial markets demonstrates how much control capitalists and governments have over our lives and how little we have.
The world is being held to ransom by an increasingly authoritarian US president and the big financial institutions that run the bond markets. Whether or not we have a trade war, whether the world economy tips into recession, what happens to unemployment, whether inflation escalates and whether mortgage rates go up or down, are all decided by tiny numbers of people. Trump is nominally elected but with the political system in America so beholden to big financial interests the democratic process is totally compromised. The financiers are elected by no-one but work herd-like to punish or reward governments as they see fit.
Recent developments have made clear that you can have democracy, or you can have capitalism, but you can’t have both.
