Donald Trump is increasing his war on the economic attacks with a proposed bilateral US-Mexico trade deal that replaces the US-Mexico-Canada North American Free Trade Agreement (NAFTA). This forces Mexico to make new concessions, while demanding of Canada, if they are to join, substantial changes to their economic relations – to the benefit of the US.
Peter Windeler – ISL, Britain
Early this year Trump announced that tariffs would be placed on imports of steel (25%) and aluminium (10%) with effect from 23rd March. China has accused the US of launching the biggest trade war in history with US imposed tariffs of $50bn on China covering steel and aluminium imports. China has retaliated by placing tariffs on soya beans, cotton, corn, tobacco and cars.
This signifies that capitalism was unable to negotiate its rules between countries. The World Trade Organisation fixes the rules of trade and the latest round of negotiations, the “Doha Round”, has been unable to get agreement despite taking seventeen years. The net result may be an overall drop in world growth of 1% and a lowering of US growth by 5%.
But tariffs will have conflicting results inside the US making its position worse –stoking the fires of future conflict.
Donald Trump is not alone in wanting to impose tariffs on steel. George W. Bush tried the same measures in 2003 and the American equivalent of Jeremy Corbyn, Bernie Sanders, a Vermont Senator, who ran for the Democratic presidential candidate, has said that he supports the tariffs.
While Trump says that, “…trade wars are good, and easy to win”, a Princeton Professor argues that the US has declared war on the trade system.
Trump promised in his Presidential election campaign to impose tariffs, this was welcomed in the “rust-belt” states of Ohio, Pennsylvania and Indiana. But his stance has led to the resignation of his top economic advisor, Gary Cohn.
Even a high profile company like Harley-Davidson is closing its Kansas City factory as trade tariffs will increase the cost of US production. Now many more big companies are threatening to move production to international plants.
In the UK, where the steel industry has been fighting for survival, tariffs may prove fatal because 7% of production (350,000 tons) is exported to the US.
Other countries that will be affected are the rest of the EU, Brazil, Japan and South Korea.
The prospect of a deepening trade war, slowing growth and emerging debt crisis in some countries exposes the great fault lines of imperialism post 2008.
What Trump is trying to do, in conflict with some powerful sections of US business, is to re-structure the world economy for the benefit of US big business and to increase its monopoly, as happened after the crisis of 2008 – that is an even greater centralisation of finance capital. But all production, wherever in the world, must follow the law of productivity of labour. Steel is being produced outside of America more efficiently – essentially with higher labour productivity. Economic nationalism will lower productivity.
Trotsky, in the 1930s when discussing the economic nationalism of Germany and Italy, compared the attempts to solve the problems of capitalism with nationalism as being like the legend of Procustes, the Greek robber who either stretched or chopped his captives’ legs, to fit his bed where he forced them to lay.
Tariffs will also lead to inflation as the costs of production increase but their value does not. Inflation is an expression of the disordered internal relations within capitalism.
Trotsky spoke of the US as the most perfect type of capitalist development. It had a large internal market and technological and economic superiority compared to its main rivals in Europe.
The tendencies for monopoly and control by finance capital continued in the post war period. And after the 2008 crash, in spite of all the talk about banking regulation, the banks have become even more powerful.
“The consolidation of the banking industry after the financial crisis of 2008…between 1992 and 2017, the number of commercial banks in the Unites States has decreased from 11,463 to 5,796 or approximately -49%…there is a total of 122 large and giant banks that collectively control 82% of all commercial bank assets…the four largest US banks hold about a 41% share of total bank assets in 2017.”¹
The US still has economic might and military strength. And has sought to solve economic problems by political, economic or military means (in the post war period in local, regional or proxy wars).
The US has used the crisis over North Korea to set up a missile system, which can keep a close watch over the whole of China. Capitalist logic is that military war or the threat of it accompanies trade war.
But even with such concentrated power the situation has changed. The US’ technical edge has been dulled, compared to China, Japan, and a host of newly industrialised nations.
Trade war: no solution for workers
Workers in the UK should not side with the advocates of trade war.
The increasing instability in the world, the EU and UK will mean the ruling class will combine austerity with Brexit and the effects of trade war, under the slogan “we are all in it together”, to make workers pay for their crisis.
The only real solution is for the masses of the world to make the multinationals correspond to human needs.
At the moment Trump is attempting to act like Archimedes and uses America as the spot where he will turn the world over –however, his efforts will prove fruitless.
Only the working class can defend itself, and its best and only lasting defence is a mass struggle for socialism and destruction of ruling class power.
A successful workers revolution in one country, would inspire similar events around the globe. Very quickly, with cooperation, production can be organised to meet everyone’s needs.
Notes
¹ lavozlit.com/what-is-imperialism-a-marxist-understanding-part-1/
Trump intensifies trade and class war
