When the theatrics and fantastical hyperbole now indelibly associated with the Trump presidency are set to one side, the tariff war launched on April 2 boils down fundamentally to an attempt to appropriate to US capitalism a larger share of value from the world economy at the expense of its ‘trading partners’, “friend and foe alike” as Trump himself puts it.
No new value will be created from the import tariffs, a tax on incoming goods collected by the US Customs and Border agency on behalf of the federal government at 330 air, sea and land ports of entry into the country. Instead, even at the average tariff rates currently in place after Trump’s April 9 panicked ‘pause’ about-turn in the face of failing US bond markets, an extra $3.4 trillion would be in line to be grabbed by the American state to 2034.
That still is ‘only’ a small fraction of world gross domestic product (GDP), the sum of all goods and services produced – less than half of one percent – but it is what the tariff war declaration signifies that is most important. From being the world’s sole hegemonic power following the collapse of the Stalinist regimes in Russia and Eastern Europe from 1989-1991, and being able to mould the institutions of international relations in its own interests under the banner of ‘globalisation’, the US is now the great disrupter. Not as a result of rising strength but as a convulsive reaction to its diminishing position in a new, multi-polar world.
Over thirty years on, the US imperium inaugurated in the 1990s – president George HW Bush’s triumphalist ‘New World Order’ – has created the conditions for it to be turned into its opposite. Unleashed, US multinationals roamed the globe for the most advantageous arrangements, shifting production overseas while retaining the bulk of the vast profits made, through IP and technology licensing monopolies, marketing etc – and booking nearly two-thirds of foreign earnings in tax havens by 2022, twice as much as in 2000. The ‘silicon six’ tech companies, for example – Amazon, Meta, Alphabet, Netflix, Apple and Microsoft – generating $11 trillion in revenues during the past decade, paid an average of 16.1% in corporation taxes compared to a US domestic average of 29.7%.
Meanwhile, manufacturing employment in the US fell by five million between 1997 and 2024 (one of the largest drops in history anywhere) as China rose from ascendency in 42% of 120 global manufacturing sectors in 2005 to 67% by 2019. Following the logic of the system to maximise profits above all else, US capital really was helping to build up its rivals and undermine itself.
The result is today’s disparity between the USA’s predominance still in military spending and in the world financial system – through the international role of the dollar – and its declining position in global trade, with its share of final demand for imports falling from 22% in 2000 to just 15% in 2020. Now the US state seeks a “global economic re-ordering” in the words of the hedge fund billionaire and Treasury Secretary Scott Bessent. Not to scale back its privileges as the world’s still mightiest power but for them to be paid for with new tributes.
The fact that the tariff wars will hit some of the wealthiest US companies as well as exporting countries – witness Elon Musk’s public diatribe against Trump’s ‘tariffs guru’ trade advisor Peter Navarro referenced in this month’s Global Warning column on page ten – is no source of comfort to the workers’ movement, in the US and internationally. Whenever there is a re-alignment of values under capitalism – whether through an economic downturn, new trade deals, or the conflicted re-allocation of capital in moves to a carbon net-zero economy – the one constant is and will be the attempt by the capitalists to accomplish it at the expense of the working class.
The emergence of the post-Stalinist new world order saw US male hourly wages driven down, to less today in real terms than in 1975. Across the OECD advanced capitalist countries, workers’ share of GDP has not returned to the 52% it was in 2000 (except in 2020 when Covid collapsed economic activity but wages were partially sustained by furloughs etc). The workers’ movement must prepare for battle in the new era of tariffs and a multi-polar world trade fragmentation, with its own independent, internationalist class position.
Who does ‘protectionism’ protect?
The socialist and trade union movement from its earliest days has never supported the ‘free movement of goods, services and capital’ – or labour – as a point of principle but instead has always striven for the greatest possible degree of workers’ control, the highest form of which would be a democratic socialist society with a planned economy. It is why, for example, trade unions have historically fought for the closed shop, whereby only union members can be employed in a particular workplace, a very concrete form of ‘controlling borders’ not supported by the capitalists.
The first workers’ government that engaged in sustained economic relations with other powers, the soviet government established in October 1917, did so from the foundation of a state monopoly of foreign trade, a ‘workers protectionism’ (the short-lived 1871 Paris Commune never reached the position the Bolsheviks did in 1917 and after). Although limited by the hostility of the capitalist governments ranged against it, the early soviet state did participate in the world market – including, in the 1920s, the involvement of US consultants and engineers on the Dneprostroi hydro-electric dam project, which became the third-largest power plant in the world with the first generator provided by General Electric. But this was as part of an economic plan including the state monopoly of trade that defended workers’ interests, in Russia and internationally.
Often trade links came from exchanges of workers’ delegations. One example was a scheme to finance clothing manufacturing factories in Russia through the US International Garment Workers’ Union. Later, in 1930, as the Great Depression unfolded in Europe and America and unemployment soared, Leon Trotsky, the co-leader with Lenin of the October revolution but by then forced into exile in Turkey, raised the call for trade credits for Western manufacturing imports – offering the prospect of jobs for the unemployed – to be integrated into the first five year plan in exchange for the increased Russian agriculture and raw materials production they would facilitate. Such economic agreements, he suggested, should be monitored by “interested labour organisations (trade unions, shop stewards committees, etc)” to ensure workers’ interests were met on all sides; another reason why the demands were rejected by the Stalinist bureaucracy that could tolerate no check on its rule and which, moreover, had consolidated its power under the ‘theory’ of ‘socialism in one country’.
Certainly, it is unlikely that a ‘delegation of interested workers’ would have recommended tariffs be imposed against the penguins of the Heard and McDonald Islands as Trump announced on April 2! But the Trump administration, of course, is implementing not workers but capitalist protectionism.
The fundamental difference is that Trump’s tariffs still leave in place the free exercise of the private ownership of the means of producing the goods and services we consume – of what is produced and where, what prices and wages are set, and how capital is allocated to realise profit for its owners – within the general laws of capitalist competition. Trump posits that investment and jobs will ‘flood back’ to the US but tariffs can only ever be the most indirect form of regulation.
Already, instead, the capitalists’ price-gouging has begun, with Sony increasing PlayStation 5 prices globally including in non-tariffed countries, to prevent price arbitrage opportunities between different markets and to recover lost margins in the US from its global sales. What looms is a repeat experience, on a vastly greater scale, of what happened after tariffs on washing machines imported to the US were introduced by the first Trump administration in 2018. The prices of domestic brands, not subjected to tariffs, also rose, as did those for dryers – with no tariffs at all! – as every ‘competitor’ tested the margins.
In fact, even the most direct form of state intervention, nationalisation of individual enterprises or particular sectors of the economy, can only be a step towards securing the interests of the working class against the capitalists, albeit an extremely important one to immediately preserve productive capacity including the accumulated skills and technique of the workers. The Scunthorpe steelworkers had the correct instinct to stop executives from the Jingye owners of the British Steel plant gaining access to the site, suspecting industrial sabotage, while parliament sat in Westminster on April 12 to take directive powers over the company. But it is also a reality that the officials from the Department of Business and Trade who subsequently arrived will still be administering the steelworks within the confines of capitalism and its demands for workers to pay for crises of the system, even if the plant is fully taken over by the government.
The class struggle will continue as long as capitalism does. And the workers’ movement will need to develop its programme to one that can overturn the system, and the political means to realise that.
Lessons from Syriza, and Corbynism
An important part of preparing for the struggles to come is to learn from the experiences, including the mistakes, of the movements that developed in the first revival in the post-Stalinist era of basic socialist ideas on a mass scale. These included the initial victory of Syriza in Greece in January 2015, the rise of Corbynism in Britain in the same year, and the other parties and movements that arose after the great financial crash and subsequent recession of 2007-09 struck hard at the ideology and institutions sustaining capitalism.
A critical factor in the defeat of both Syriza and Corbynism, however, was how they approached the issue of international negotiations, with obvious significance for a new era of trade wars. As Hannah Sell explains in her article on page twelve, looking back ten years to the Syriza government of Alexis Tsipras, its initial promise was broken by its failure to effectively confront the troika powers of the European Commission, the European Central Bank and the IMF as they attempted to impose an exemplary brutal austerity on the Greek working class. Without implementing measures like nationalisation of the banks, capital controls and a state monopoly of foreign trade, backed up by a mass mobilisation, the Syriza government had no means to resist the troika or issue a resonant appeal to the European working class for support.
Jeremy Corbyn’s first retreat too was on the issue of the European Union (EU), abandoning his previous opposition to the neo-liberal club of 28 capitalist nation states in the 2016 referendum in order to head off threatened resignations – by the now Starmer hatchet-men Hilary Benn and Pat McFadden! – from his first shadow cabinet. But in his immediate response to the referendum outcome Corbyn unequivocally accepted the result and, in subsequent statements, correctly identified it as “a vote by the people of left-behind Britain against a political establishment that has failed them”. (The Guardian, 8 July, 2016) What was needed, he argued, was to “negotiate a new relationship with the EU… that protects jobs, living standards and workers’ rights… an end of EU-enforced liberalisation and privatisation of public services – and for freedom for public enterprise and public investment, now restricted by EU treaties”.
The 2017 general election saw Corbyn increase Labour’s vote from one election to the next by the greatest amount since 1945, both in absolute terms (adding 3.53 million votes) and percentage share (plus 9.6%), including a switch by one million voters who had backed Nigel Farage’s UKIP in 2015. But it wasn’t sustained. Instead of boldly striking out at the neoliberal character of the EU treaties and institutions, and declaring that a government he led would take whatever socialist measures were necessary to safeguard workers’ interests regardless of the current EU rules – and that would be the basis on which he would negotiate, thereby transforming the whole debate – he did everything possible to conciliate with the pro-capitalist, pro-EU right-wing of the Parliamentary Labour Party. This included retaining Sir Keir Starmer as the shadow Brexit secretary, even as Starmer sought to effectively commit Labour to reversing the 2016 referendum result. Corbyn’s pro-working class, anti-austerity message was fatally blurred.
The new era will contain dangers for the unity of the workers’ movement but new opportunities too – to build the forces for a socialist and internationalist alternative to capitalism across the globe.