Last week, on so-called “Liberation day,” the Trump administration announced gargantuan tariffs on dozens of commercial partners. The announcement was coupled with the threat of even higher tariffs for those countries that had preexisting import taxes or had taken other economic measures against American products. Some tariffs, such as those against Vietnam (46 percent!) were far higher than those imposed on U.S. imports. While a few countries view the tariffs as Trump’s attempt to force new trade negotiations, many, including China, are responding with retaliatory tariffs of their own.
With a speed that astonished friend and foe alike, Trump counterattacked by imposing a further 50 percent increase on Chinese goods and announced on Tuesday evening that at midnight, increases totaling 104 percent, would take effect. This was raised to 125 percent on Wednesday. In response the Chinese government has raised tariffs to a total of 84 percent as of Wednesday. The European Union is also set to approve new tariffs that would take effect next week.
Markets have responded chaotically to the news, dropping precipitously after the initial announcement on April 2, only to recover, fall again, and then recover dramatically again today when Trump announced he would be temporarily suspending some of the so-called “reciprocal” tariffs on most countries, with the exception of China. Those on Mexico and Canada, however, remain.
Despite this temporary recovery, there is still a growing consensus that a recession could be imminent if tariffs remain high or escalate even further — JP Morgan places the risk at 60 percent, Goldman Sachs at 45 percent. As always, capital is worried about its profit margins, but Trump’s brazen scheme will first and foremost affect the working class both at home and beyond the borders of the declining empire.
Trump’s tariffs, which violate the basic rules of imperialist globalization based on free trade, will have profoundly negative consequences if they remain in place — both for the real economy and the lives of millions, in particular the working class and the oppressed. Trump may back down further and instead attempt to use tariffs again as a form of extreme pressure to negotiate onerous conditions against the allies and commercial enemies of the U.S. alike.
Protectionist Policies Are Not a Solution to Neoliberalism
It may seem that the ongoing trade war started by Trump is being fought only on Wall Street, but this is not the case. This war is already materially expressed on the ground in Michigan, one of the states whose working class experienced first-hand the neoliberal offensive that left hundreds of thousands of workers in the rust belt in poverty. Workers there are already feeling the beginning of the consequences of these tariffs.
As is well known, 20 percent of Michigan’s economy is tied to the auto industry, which depends on parts and vehicles from Mexico and Canada, and on Chinese imports. This trade feeding Michingan’s economy is so dynamic that the state is the fifth largest importer and exporter in the United States.
Auto industry executives in Detroit are already accumulating stock of imported components, and fighting suppliers due to price increase. The headquarters of the big auto companies have been transformed into “war rooms” to strategize how to lower production costs which, of course, includes lowering wages and increasing workloads.
Workers at the big auto plants also have been preparing for scarcity and there’s fear of potential layoffs if demand falls due to price increases of vehicles. Red flags are popping up already. Just hours after the tariffs were announced, Stellantis laid off 900 workers at its factory in Indiana which sold supplies to factories in Mexico and Canada. The VIX index, which measures market volatility, surged.
Despite Trump’s Bravado, Tensions Brew Within the Administration
Until now, despite clear evidence to the contrary, the Trumpist coalition and Trump himself have tried to project the idea that there is unity in the palace. The important differences between the tech tycoons, MAGA, the cabinet, and other sectors have already reached the headlines. This week Robert Navarro and Elon Musk have traded insults online, with the administration trying to sell it as an exercise in openness. Big Capital turned to Trump thinking that this new administration would be “all bark and no bite” and gleeful about the cuts to social security and tax breaks for the super-rich. They dismissed the idea that Trump had deep political objectives tied to his tariff crusade.
While Trump has temporarily backed off on some of the proposed tariffs, perhaps placating some of his critics, it’s unclear whether or not discontent on Wall Street and within the ranks of the GOP will grow. Last week, the Senate voted on a resolution to end tariffs on Canada — four Republican senators supported the resolution. Republican Senator Chuck Grassley and Democratic Senator Maria Cantwell also introduced last week a bill to require Congress to be informed 48 hours before any tariffs go into effect and be subject to review by Congress in a 60-day period. They would expire if not approved. Bipartisan cooperation against the tariffs, however limited at this point, reveals some of the administration’s challenges and the GOP congressional majority, which has so far acted obediently but has its own agenda and substantial differences with Trump and Musk.
For weeks, Big Capital was mainly silent regarding tariffs but the harsh reaction of the markets and affectations over the real economy have pushed them to start being vocal. As the Wall Street Journal described a few days ago:
Now, after a three-day market selloff and warnings from Wall Street titans such as Bill Ackman and Jamie Dimon, more business leaders are openly voicing concern. Ken Griffin, a billionaire and top Republican donor who runs hedge-fund firm Citadel, called the tariffs a “huge policy mistake” at a Monday evening event at the University of Miami.
More important than the internal struggles in Trumpworld, made up of billionaires, neo-Nazis and obscurantists, are the many signs that the resistance against Trump has begun.
Tariffs Affect the Working Class, as Does Capitalist Globalization
On Saturday, hundreds of thousands of people took to the streets against Trump’s attacks on government institutions and in defense of Medicaid, Social Security, and other social services and entitlement programs. The impact of the tariffs certainly contributed to the high attendance.
Saturday’s massive demonstrations followed weeks of mobilizations which began last month across the country against the cuts, in defense of social security, and against the layoffs of public employees. We have also seen regular protests by migrants and their communities against Immigration and Customs Enforcement raids.
Disoriented and demoralized, the Democratic Party establishment has so far taken a wait-and-see approach to Trump’s first ten weeks in office. Over the last couple of weeks, however, it has shifted towards a slightly more confrontational stance. Former president Barack Obama himself called for an active defense of Americans’ “Democratic rights.”
Meanwhile, Bernie Sanders and Alexandria Ocasio-Cortez have been rallying under the slogan of “Fight Oligarchy,” as if the Democratic Party was not a party of the super rich as well, fostering illusions in the idea that the Democrats will actually put up a fight. Regarding tariffs, the Democratic Party advocates for the free trade of the past which impoverished the working class of the Rust Belt and allowed U.S. corporations to make millions in profits from cheap Mexican labor. But neoliberal relocation did not only go to Mexico or China or Vietnam, it also went to the American South where there are significantly fewer unions and bosses have more leeway to impose precarious working conditions
Trump is promising to use tariffs to bring industry and industrial jobs back to America, but any such scenario, if it actually did come to pass, would have to be founded on a program of increased exploitation and repression of working people and their organizations, including unions like the United Auto Workers. What all corporations want, after all, is cheap labor and they don’t really care if it’s American, Mexican, or Vietnamese.
In the face of these attacks, union leaders like Sean O’Brien and Shawn Fain are siding with Trump on tariffs, pitting the interests of the American working class against that of their class siblings across the world — especially across the southern border.
A cornerstone of Trump’s political support is the rejection of the neoliberal agenda by large swaths of the working class — coupled with the ineptitude of a Democratic Party that clings to the status quo. Below the surface of the tariffs and the tensions in the bipartisan regime lay the political experience of the working class in the United States. Those who voted for Trump with the hopes of improving their lives will be forced to face the dire reality that Trump’s strategy to resituate the U.S. internationally, his response to the steep decline of U.S. hegemony, relies, at its core, on attacks on remnants of the U.S. welfare state, more precarization of labor, and high levels of inflation and uncertainty.
In recent years, the regime has been able to channel discontent towards the ballot box, as was the case with Black Lives Matter in 2020. This time, however, the discontent with the Democratic Party runs deeper and the vanguard’s experience is greater. It is essential to deploy the broadest unity of labor, social movements, and the student movement to stop Trump and raise an independent perspective so that this time, it is the working class and not the Democratic Party that is strengthened by the resistance against the new right in power.