Trump, Protectionism, and Imperial Conflict in Global Capitalism
Interview With Michael Roberts
May 13, 2025
The Trump administration has seized power in Washington, carrying out class war, scapegoating oppressed groups, and radically restructuring the US state. Paired with this domestic program, it has initiated a new grand strategy of America First unilateralism, imposing unprecedented protectionist tariffs, threatening annexation of sovereign countries, and pursuing transactional competition with other great powers over the division of the world into spheres of influence. Spectre’s Ashley Smith interviews Michael Roberts about Trump, the rule of his fellow oligarchs, and their impact on the trajectory of the United States, global capitalism, and great power competition.
Michael Roberts is the author of The Long Depression: Marxism and the Global Crisis of Capitalism (Haymarket, 2016) and, with Guglielmo Carchedi, Capitalism in the 21st Century (Pluto, 2022). He is also coeditor of World in Crisis: A Global Analysis of Marx’s Law of Profitability (Haymarket, 2018) and Marx 200: A Review of Marx’s Economics (Lulu, 2020). He writes regular commentary and analysis on his blog, The Next Recession.
As you say, Trump 2.0 is different from his first term. Trump’s support still comes first and foremost from the MAGA crew ensconced in the ranks of the Republican Party—small businesspeople, television presenters, real estate agents, and a layer of outright fascists who back Trump to the hilt in anything he does, with the aim of rule by demagoguery, racism, ending “woke” (as they see it), and the repression of protest.
But now it also comes from a bunch of billionaire oligarchs not integrated into the financial and big business world of Wall Street. Elon Musk and his ilk are wild and dangerous cowboys who seek to grab as much US wealth for themselves—Trump is one of them. During Trump 1.0, the owners of the tech and social media monopolies were not Trump supporters. But they were stunned by Trump’s victory and his immediate attacks on the status quo (and possibly on them). So, they quickly moved behind him.
However, the wider sections of finance and big business are not so sure that Trump’s regime will benefit them; they have a more internationalist view—that is, profits are made more from investing abroad rather than in the United States. The bankers and hedge funds remain at arm’s length ready to sell US financial assets if Trump’s actions threaten to destroy their wealth. For now, they hope that the tariff tantrums will not be applied too severely and Trump will carry through his tax cuts on corporate profits and reduce government spending, so they are not in open revolt.
Speaking to the US Congress after one hundred days in office, Trump claimed that the new tariffs on imports from the biggest trading partners of the United States would cause just “a little disturbance.” On April 2, which Trump called “Liberation Day,” he proposed what are called “reciprocal” tariffs on all countries sending goods exports to the United States. Using a crude formula for each country (the size of the US goods trade deficit with each country divided by the size of US imports from that country, then divided by two), Trump’s team arrived at the tariff hikes for each country. This formula is nonsense for several reasons. First, it excludes services trade, where the United States runs surpluses with many countries. Second, a tariff of 10 percent has been imposed even for countries where the United States runs a goods surplus. Third, it bears no relation to any actual tariff or nontariff barriers that a country has on US exports. And fourth, it ignores the tariff and nontariff barriers (of which there are many) that the United States itself has on other countries’ exports.
Trump’s aim was clear. He wants to restore the US manufacturing base within the country. Much of the imports into the United States from countries like China, Vietnam, Europe, Canada, and Mexico are from US companies based in those countries selling back to the United States at a lower cost than if they were based inside the country. Over the last forty years of “globalization,” multinational companies in the United States, Europe, and Japan moved their manufacturing operations into the Global South to take advantage of cheap labor, the absence of trade unions or regulations, and the use of the latest technology. But countries in Asia have dramatically industrialized their economies as a result and so gained market share in manufacturing and exports, leaving the United States to fall back on marketing, finance, and services.
Does that matter? Trump and his crew think so. Their eventual strategic aim is to weaken and strangle China to precipitate “regime change” and to take full hegemonic control over Latin America and the Pacific—to restore the Monroe Doctrine’s proposed US control over the Americas and the Pacific. To do that, the United States must have a strong and overwhelming military force. Trump has announced a record military budget of $1 trillion a year. But US arms manufacturers cannot deliver on that budget. So, US manufacturing must be restored at home. Biden was keen to do this through an “industrial policy” that subsidized tech companies and manufacturing infrastructure. But that meant a huge rise in government spending that drove up the fiscal deficit to record levels. Trump reckons that imposing tariffs to force US manufacturing companies to return home and foreign companies to invest in (rather than export to) the United States is a better (that is, cheaper) way. He reckons that tariff hikes can increase manufacturing, spend more on arms, and reduce taxes for corporations while cutting back on government civil spending and keeping the dollar stable.
Is this going to work? It seems that some analysts, even leftist ones, think it might. It’s true that many semivassal states of US imperialism will probably try to concede to Trump’s terms—already South Korea and Japan are attempting to, as is the United Kingdom. But that won’t be enough to turn things around.
Those who think Trump can succeed argue that the United States has successfully opted to change the balance of global economic forces in its favor in the past. To pay for its imports and its capital investments abroad, Nixon took the United States off the gold standard in 1971 and established the dollar as the hegemonic currency with the “exorbitant” privilege of being the only issuer of this currency. But that did not stop the United States from losing market share in manufacturing through the 1970s.
And then in 1979, the then Federal Reserve chairman Paul Volcker hiked interest rates to 19 percent to control inflation, which led to a deep slump both in the United States and globally. The dollar rose so much that US manufacturing began to move its locations abroad; it was the beginning of the neoliberal period. In 1985, the United States got other trading nations to agree to strengthen their currencies against the dollar through the so-called Plaza Accord. This eventually destroyed the industrial leadership Japan built up in the 1960s and ’70s, but it did not work in restoring US manufacturing at home.
It is not going to work this time either, especially just through tariff hikes. US manufacturing can only compete in world markets if it has superior technology, and can thus sharply reduce labor costs in production. Although the United States still has the second largest manufacturing sector in the world at 13 percent of world output (after China at 35 percent), US manufacturing employment has fallen sharply since the end of the golden age in the 1960s, mainly because US manufacturing profitability declined and technology replaced labor—not because of trade liberalization. Indeed, Trump’s team is talking about increasing manufacturing capacity at home through robots and AI, and so will deliver few extra jobs in the sector. So much for Trump’s claim that he was “proud to be the president for the workers, not the outsourcers; the President who stands up for Main Street, not Wall Street.”
The reality is that Trump cannot turn the clock back to make the United States the leading manufacturing economy in the world. That ship has sailed. Globalization has meant that the manufacturing value chain is now global, with components and raw materials spread across the world. As the Wall Street Journal pointed out: “Even if US-manufactured exports increased enough to close the trade deficit—an extremely unlikely event—and if employment grew proportionately, our manufacturing-workforce share would climb only from 8 percent to 9 percent. Not exactly transformational.”1Jared Bernstein and Dean Baker, “Tariffs Won’t Bring a Boom in American Manufacturing,” Wall Street Journal, March 26, 2025, https://www.wsj.com/opinion/tariffs-wont-bring-a-boom-in-american-manufacturing-risk-recession-trade-policy-d37c7dca.
If Trump wants to restore US manufacturing, the sector needs massive investment at home, and US companies, already experiencing relatively low profitability outside the Magnificent Seven, are unlikely to oblige, except for military hardware paid for in government contracts. The reaction of Trump’s erstwhile advisor Musk to the tariff hikes is symptomatic of the reaction of US big business: Musk attacked Trumpist advisor Navarro, calling him a “moron” and “dumber than a sack of bricks” after Navarro suggested the Tesla boss’s opposition to tariffs was self-interested (which it is).2Tweet by Gorklon Rust (@elonmusk), X, April 8, 2025, 9:47 a.m., https://x.com/elonmusk/status/1909604085025956133; Tweet by Gorklon Rust (@elonmusk), X, April 8, 2025, 9:52 a.m., https://x.com/elonmusk/status/1909605316121198860.
Trump and his MAGA team believe that all these shocks are a price worth paying to restore US manufacturing hegemony. Once the dust settles, America will be great again, they argue. The destruction of world trade will have a “creative” outcome (at least for the United States). But this is a delusion. Trump’s slump will only confirm that trend.
Despite the inevitable failure of tariffs as a solution to reindustrializing the United States, Trump seems set on going through with his protectionist strategy. This can only be a trigger for a new slump both in the United States and in the major economies. It’s a trigger because already the major economies had been slowing to a crawl, even the United States. Usually when a recession is in the offing, government bond prices rise as investors look to a “safe haven” from a stock market crash. But this time, bond prices and the dollar rate are also diving—as fears of rising inflation and worries about the security of holding dollar assets take over.
So worried is the International Chamber of Commerce in the United States, that it reckoned that the world economy could face a crash similar to the Great Depression of the 1930s unless Trump rows back on his plans. “Our deep concern is that this could be the start of a downward spiral that puts us in 1930s trade-war territory,” said Andrew Wilson, deputy secretary-general of the ICC. So, Trump’s measures may go well beyond “a little disturbance.”
Contrary to Tooze’s view, I think there is method in this madness.3Adam Tooze, “Chartbook 363 Stockholm syndrome in Mar-A-Lago: The belief that “something must be done” and the sanewashing of economic policy in the age of Trump,” Chartbook (substack), March 19, 2025, https://adamtooze.substack.com/p/chartbook-363-stockholm-syndrome. On the external front, Trump aims to “Make America Great Again” by raising the cost of importing foreign goods for US companies and households and so reducing demand and the huge trade deficit that the country currently runs with the rest of the world. He wants to reduce that and force foreign companies to invest and operate within the United States, rather than export to it.
Despite Trump backing off for now from implementing his bizarre reciprocal tariffs imposed on every country in the world (including the penguin-only inhabited islands of Heard and McDonald, two thousand miles southwest of Australia), the tariff war is by no means over. The ninety-day “pause” ends in early July.
Trump backed down because the bond market was showing signs of severe stress that could lead to a credit squeeze, particularly for hedge funds that own a significant stock of US bonds. If bonds dived there might well have been bankruptcies for many companies, especially the heavily indebted so-called “zombie” companies that constitute about 20 percent of all companies in the United States. Bankruptcies could then ricochet through the economy, leading to a financial crash and slump.
That was not the only problem for Trump. The 125 percent tariff hike on imports from China potentially priced out exports of high-tech consumer goods by US companies based in China. US companies like Apple—who are the main exporters of iPhones and other goods out of China—would have been hit hard. Roughly 90 percent of Apple’s iPhone production and assembly is based in China. For instance, if you take an iPhone, less than 2 percent of its costs go to Chinese workers making the phone, while Apple makes an estimated 58.5 percent gross margin on its phones. Disrupting that supply chain would hit the United States more than China. US companies screamed and so Trump had to back down again. Now all consumer tech products imported from China, which are 22 percent of all US imports from China, are exempt.
The faulty logic of Trump tariff tantrums is also revealed by the fact the components going into iPhones and iPad are still subject to the tariff hike, just not the final product. According to the US National Association of Manufacturers, 56 percent of goods imported to the United States are actually manufacturing inputs, with a lot of that coming from China. Price rises there will feed through to many final products. The exemptions offered to consumer technology goods apply only to reciprocal tariffs. All imports from China, including goods exempt from reciprocal levies, are still subject to an extra 20 percent tariff. Moreover, Trump plans tariff hikes on semiconductor imports, which will hit the likes of Apple.
The United States imports a lot of basic goods from China: 24 percent of its textile and apparels imports ($45 billion), 28 percent of furniture imports ($19 billion), and 21 percent of electronics and machinery imports ($206 billion) in 2024. A 100 percentage-point increase in tariffs seems certain to show up in higher prices for businesses and consumers. So instead of hurting China, Trump’s tariffs will hit the US economy even harder. China actually has very little dependence on exports to the United States. They make up the equivalent of less than 3 percent of its GDP. US consumers and manufacturers will suffer sharp rises in prices—and indeed that is the experience of previous tariff programs.
In the current US case, the significant drop in crude oil prices is already putting the profitability of US oil production in jeopardy. US farmers are losing badly in world markets as China switches its food and grain purchases to Brazil. Already, the US share of China’s food imports has collapsed from 20.7 percent in 2016 to 13.5 percent in 2023, while Brazil’s grew from 17.2 percent to 25.2 percent in the same period. Now Brazil’s beef sales to China climbed a third in the first quarter of 2025 compared with a year earlier, while US agricultural shipments to China sank 54 percent.
China accounts for 7 percent of US goods exports, or 0.5 percent of US GDP. According to Pantheon Macroeconomics, the hit to US exports from aggressive Chinese retaliation will outweigh any boost to GDP from the cancellation of “reciprocal” tariffs. Trump and his MAGA advisors argue that the tariffs revenues will be used to cut taxes to corporations and so boost investment. But according to the latest estimates from the Tax Foundation thinktank—before Trump raised the stakes with a 104 percent tax on Chinese imports—tariffs would raise about $300 billion a year on average, significantly short of Trump’s $2 billion a day claim and basically peanuts compared to the loss of real incomes from the tariff measures.4War,” Tax Foundation, May 9, 2025, https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/.
You refer to the economic arguments presented by Miran, Trump’s White House economic advisor. Miran argues that all the countries running a trade surplus with the United States must compensate the United States for its “sacrifice” in providing the dollar for trade and investment. But as Keynesian guru, Larry Summers, retorted: “If China wants to sell us things at really low prices and the transactions mean we get solar collectors or we get batteries that we can put in electric cars and in return we send them pieces of paper that we print, do you think that’s a good deal for us or a bad deal for us?”5“Tariffs, Decline, and the Promise of AI,” YouTube video, 112:56, posted by “University of Austin (UATX),” April 9, 2025, https://www.youtube.com/watch?v=Sy-fn5MWFIk.
Back in 1959, Belgian-American economist Robert Triffin predicted that the United States could not go on running trade deficits with other countries and export capital to invest abroad and also maintain a strong dollar: “If the United States continued to run deficits, its foreign liabilities would come to exceed by far its ability to convert dollars into gold on demand and would bring about a “gold and dollar crisis.” Triffin argued that, when a country whose currency is the global reserve currency held by other nations as foreign exchange reserves to support international trade is forced to supply the world with its currency in order to fulfill world demand for these foreign exchange reserves, that leads to running a permanent trade deficit.
But both Triffin and Miran have the story back to front. The United States has been able to get cheap imports for decades and run a trade deficit to do so because countries exporting to the United States have been prepared to take dollars in payment and indeed invest back those dollars into US government bonds or other dollar instruments. The trade surplus countries are not “forcing” deficits on the United States; it’s just that US exporters cannot compete at least in goods trade (by contrast, the United States runs a large surplus in services trade). Luckily for US companies and consumers, the surplus countries will take dollars in payment, up to now. If they did not, then the US economy would be in real difficulty—just like many poor countries of the world without an internationally accepted currency are—and be forced to devalue the dollar or borrow at higher interest rates.
Under capitalism, there are always trade and capital imbalances among economies, not because the more efficient producer is “forcing” a deficit on the less efficient, but because capitalism is a system of uneven and combined development, where national economies with lower costs can gain value in international trade from those less efficient. What really worries the US capitalists is not that surplus countries are “forcing” them to issue dollars; it is that China is closing the gap on productivity and technology with the United States and thus threatens the economic dominance of the United States.
Nevertheless, some mainstream economists accept Miran’s ludicrous argument and the Triffin fallacy. The very much in vogue Chinese-based economist Michael Pettis argues that the likes of China have established trade surpluses because they have “suppressed domestic demand in order to subsidise its own manufacturing” and so forced the resulting manufacturing trade surplus “to be absorbed by those of its partners who exert much less control over their trade and capital accounts.” So, it is China’s (and until recently also Germany’s) fault that there are trade imbalances, not the inability of US manufacturing to compete in world markets compared to Asia and even Europe. Assuming no world governance and international cooperation on currencies, Pettis agrees with Miran: “The United States is justified in acting unilaterally to reverse its role in accommodating policy distortions abroad, as it is doing now. The most effective way is likely to be by imposing controls on the US capital account that limit the ability of surplus countries to balance their surpluses by acquiring US assets.” So not only tariffs on China’s imports, but also controls on their purchases of dollar assets.
In essence, this is just another way of devaluing the dollar in order to weaken China’s export advantage and boost the United States—a “beggar-thy-neighbor” policy in disguise. Miran-Pettis offer a policy to lower the value of the dollar in the same way that Nixon did in 1971 in taking the dollar off the gold standard and the US did similarly with the so-called Plaza Accord in 1985, which forced surplus nations like Japan to hike interest rates and boost the yen, thus reducing Japanese exports. Now the answer to China’s export and manufacturing success is apparently to wipe out its dollar assets and weaken the dollar.
But this policy won’t work. It did not save the US manufacturing sector in the 1970s or in the ’80s. As profitability fell sharply, US manufacturers located abroad to find better profitability in cheap labor economies. And this time, if the dollar is weakened, domestic inflation will rise even more (as it did in the 1970s) and, far from returning home to invest, US manufacturers will try to find other locations abroad, tariffs or no tariffs. If the dollar falls in value against other currencies, dollar holders like China, Japan, and Europe will look for alternative currency assets.
Does this mean dollar dominance is over, and we are entering a multipolar, multicurrency world? Some on the left promote this trend. But there is a long way to go before the dollar’s international role is trashed. Alternative currencies don’t look like a safe bet either as all economies try to keep their currencies cheap to compete—that’s why there has been a rush to gold in financial markets. The so-called BRICS are in no position to take over from the US dollar. This is a loose grouping of diverse economies and political institutions, with little in common except for some resistance to the objectives of US imperialism. And contrary to all the talk of the dollar collapsing, the reality is that the dollar is still historically strong against other trading currencies, despite Trump’s zig zags.
What will end the US trade deficit is not tariffs on US imports or controls on foreign investment into the United States, but a slump. A slump would mean a sharp fall in consumer and producer purchases and investment and thus engender a fall in imports, reducing the external deficit. So, Trump can end the external deficit by having a slump at home.
Prices in US shops will soon be rising sharply as imported consumer goods from Asia rise in price, and commodity and components imports do the same for US companies. Many of Trump’s highest tariffs are focused on countries such as Vietnam (food, consumer goods) and Taiwan (semiconductors). The Yale Budget Lab thinktank forecasts a 4 percent increase in the price of vegetables, fruits, and nuts, many of which are imported from Mexico and Canada. Overall, the Yale Budget Lab estimates US households will spend an average of $3,800 more each year from 2026 as a result of tariff-induced inflation.
The “war against inflation” is also being lost by the US Fed. The Fed’s target is 2 percent a year for US personal consumption expenditure price inflation. In March, core consumer expenditure prices (excluding food and energy) were still up 2.6 percent a year. At its latest meeting, the Fed reckoned that “the risks of higher unemployment and higher inflation have risen.” In other words, there is a “whiff of stagflation” in the air. And the impact of Trump’s import tariff hikes is still to be felt. Indeed, the US Federal Reserve is now in a serious dilemma. Should it keep interest rates steady to try and control inflation, or lower them to try and avoid a slump?
Trump is demanding interest-rate cuts, but the financial elite want inflation kept down. Fed chair Powell will resist Trump and support the financial sector—at least for now. But if a slump in Main Street begins to emerge, he will cut rates fast. For now, the US economy seems stable, but it’s like a ball balancing on a precipice.
While Trump has broken with the neoliberal policies of “globalization” and free trade in order to “Make America Great Again” at the expense of the rest of the world, he has not dropped neoliberal policies for the domestic economy. Trump wants to free his US public limited company (PLC) from any restraints on making profits. For Trump, the sole objective is profits, not the needs of society in general. That means no more wasteful expenditure on mitigating global warming and avoiding damage to the environment. The US corporation should just make more profits and not be concerned with such “externalities.”
Trump sees the United States as just a big capitalist corporation of which he is chief executive. Just as he did when he was the boss on The Apprentice, he thinks he is running a business and so can employ and fire people at his whim. He has a board of directors who advise and do his bidding (US oligarchs and some MAGA economists and politicians). The traditional institutions of the state are a hindrance. So, Congress, courts, state governments, and so on are to be ignored or told to carry out the instructions of the CEO.
Like the real estate agent he is, Trump thinks the way to boost his corporation’s profits is to make deals to take over other corporations or to make agreements on trade to ensure maximum profits for his corporation. Like any big corporation, Trump PLC does not want any competitors to gain market share at his expense. So, he wants to increase costs for rival national and continental corporations, like Europe, Canada, and China. He is doing this by raising tariffs on their exports. He is also trying to get other less powerful corporations to agree to terms on taking more of US corporations’ goods and services (health companies, arms, food and energy, and so on) in trade agreements (such as the United Kingdom). And he aims to increase the US corporation’s investments in profit-making sectors like fossil fuel production (Alaska, fracking, drilling), proprietary technology (Nvidia, AI) and, above all, real estate (Greenland, Panama, Canada, Gaza).
All corporations want to pay less taxation on their income and profits, and Trump aims to deliver that for his US corporation. He and his “advisor” Musk took a wrecking ball to government departments, their employees, and any spending on public services to “save money,” so that Trump can cut costs—meaning, reduce taxes on corporate profits and high-paid super-wealthy individuals who sit on his US corporation board and carry out his executive orders.
But it’s not just taxes and the costs of government that must be dismantled. The US corporation must be freed of “petty” regulations on business activities like safety rules and working conditions in production; anticorruption laws and laws against unfair trading measures; consumer protection from scams and theft; and controls on financial speculation and dangerous assets like bitcoin and cryptocurrencies. There should be no restraint on Trump’s US corporation to do what it wants. Deregulation is key to Making America Great Again.
Trump has directed the Department of Justice to pause all enforcements under the Foreign Corrupt Practices Act (an antibribery and accounting practices legislation intended to maintain integrity in business dealings), for 180 days. Trump aims at eliminating ten regulations for each new regulation issued to “unleash prosperity through deregulation.” He has fired the head of the Consumer Financial Protection Bureau (CFPB) and directed all employees to “cease all supervision and examination activity.” The CFPB was created in the wake of the 2007–08 financial crisis and is tasked with writing and enforcing rules applicable to financial services companies and banks, prioritizing consumer protection in lending practices.
Trump wants more speculative tokens and crypto projects (as launched by his sons), and has started his own meme coin. Newly proposed changes to accounting guidance would make it much easier for banks and asset managers to hold crypto tokens—a move that pulls this highly volatile asset closer to the heart of the financial system.
Yet, it’s only two years since the United States was on the brink of its most serious set of bank failures since the financial storm of 2008. A clutch of regional banks, some the size of Europe’s larger lenders, hit the skids, including Silicon Valley Bank, whose demise came close to sparking a full-blown crisis. Silicon Valley Bank’s crash had several immediate causes. Its bond holdings were crumbling in value as US interest rates pushed higher. With just a few taps on an app, the bank’s spooked and interconnected tech customer base yanked out deposits at an unsustainable pace, leaving multimillionaires crying out for federal assistance.
Taxes will be cut for big business and the rich, but the aim will also be to reduce the federal government debt and cut public spending (except for arms, of course). This year, the US budget deficit will be almost $2 trillion, of which more than half is net interest—about as much as the United States spends on its military. Total government debt outstanding now stands at $30.2 trillion or 99 percent of GDP. US debt as a percentage of GDP will soon exceed the Second World War peak. The Congressional Budget Office estimates that by 2034, US governmental debt will exceed $50 trillion—122.4 percent of GDP. The United States will be spending $1.7 trillion a year on interest alone.
Trump has let Musk loose to massacre federal government spending, close down departments (possibly closing the Department of Education), and sack thousands of public employees to “reduce wastage.” The problem for Musk is that most of the “wastage” and spending is on “defense,” but he will no doubt plough on reducing civilian services and even “entitlement programs” like Medicare.
Trump aims to “privatize” as much of the government as he can. “We encourage you to find a job in the private sector as soon as you would like to do so,” the Trump administration’s Office of Personnel Management’s said. As Trump sees it, the public sector is unproductive, but not the finance sector, of course. “The way to greater American prosperity is encouraging people to move from lower productivity jobs in the public sector to higher productivity jobs in the private sector.” Of course, these great jobs were not identified. Moreover, if the private sector stops growing as the trade war intensifies, those higher productivity jobs may not materialize anyway.
In the 1930s, the attempt of the United States to “protect” its industrial base with the Smoot-Hawley tariffs only led to a further contraction in output as part of the Great Depression that enveloped North America, Europe, and Japan. Big business and their economists condemned the Smoot-Hawley measures and campaigned vociferously against them being implemented. Henry Ford tried to convince then President Hoover to veto the measures calling them “an economic stupidity.” Similar words are now coming from the voice of big business and finance, the Wall Street Journal, which called Trump’s tariffs “the dumbest trade war in history.” The Great Depression of the 1930s was not caused by the protectionist trade war that the United States provoked in 1930, but the tariffs then only added force to the global contraction, as it became “every country for itself.” Between the years 1929 and 1934, global trade fell by approximately 66 percent as countries across the world implemented retaliatory trade measures.
Trump’s strategy is the culmination of what has happened to the world economy after the Great Recession and the ensuing Long Depression of the 2010s. China did not play ball in opening up its economy to the West’s multinationals. That forced the United States to switch its policy on China from “engagement” to “containment.” And then came the renewed determination of the United States and its European satellites to expand its control eastwards from Europe to ensure that Russia fails in its attempt to exert control over its border countries and permanently weaken Russia as an opposition force to the imperialist bloc. This led to the Russian invasion of Ukraine. And it led to the horrendous destruction of Gaza and the millions of Palestinians living (and dying) there.
Globalization and cooperation between capitalist countries will only return if and when capitalism gains a new lease of life based on enhanced and sustained profitability. That seems unlikely to happen this side of another slump and maybe more war. We can echo the words of Christine Lagarde, president of the European Central Bank: “The single most important factor influencing international currency usage is the strength of fundamentals.”6Christine Lagarde “Central Banks in a Fragmenting World: Speech by Christine Lagarde, President of the ECB, at the Council on Foreign Relations’ C. Peter McColough Series on International Economics,” European Central Bank, April 17, 2023, https://www.ecb.europa.eu/press/key/date/2023/html/ecb.sp230417~9f8d34fbd6.en.html. This means that the heavy military and financial dominance of the United States and its allies stands on the chicken legs of relatively poor productivity, investment, and profitability. That’s a recipe for global fragmentation and conflict.
The long depression can only be turned into a long boom with wartime-like measures, namely massive government investment, public ownership of strategic sectors, and state direction of the productive sectors of the economy. John Maynard Keynes himself said that the war economy demonstrated that “it seems politically impossible for a capitalistic democracy to organize expenditure on the scale necessary to make the grand experiments which would prove my case—except in war conditions.”
Labor leaders should not be fooled into supporting tariffs as a way to “save jobs or domestic industry.” The story of McKinley’s tariff propaganda of the 1890s proves that. Trump referred to McKinley when announcing his executive orders to raise tariffs. “Under his leadership, the United States enjoyed rapid economic growth and prosperity, including an expansion of territorial gains for the Nation. President McKinley championed tariffs to protect US manufacturing, boost domestic production, and drive US industrialization and global reach to new heights.” This is a travesty of the history of tariffs.
In 1890, McKinley as a congressional representative proposed a range of tariffs to protect US industry. This was adopted by Congress. But the tariff measures did not work out well. They did not avoid a severe depression, which began in 1893 and lasted until 1897. In 1896, McKinley became president and presided over a new set of tariffs, the Dingley Tariff Act of 1897. As this was a boom period, McKinley claimed that the tariffs helped to boost the economy. Called the “Napoleon of Protection,” he linked his tariffs policy to the military takeover of Puerto Rico, Cuba, and the Philippines to extend the US sphere of influence—shades of Trump. But early in this second term as president he was assassinated by an anarchist who blamed McKinley for the suffering of farm workers during the recession of 1893–97. Protectionism never saved jobs or boosted workers incomes.
Another diversion for labor is the idea that increased military spending will create jobs for workers in the arms industries. Above all, military Keynesianism is against the interests of working people and humanity. Are we in favor of making arms to kill people in order to create jobs? This argument, often promoted by some trade union leaders, puts money before lives.
Keynes once said: “The government should pay people to dig holes in the ground and then fill them up.” People would reply, “that’s stupid, why not pay people to build roads and schools?” Keynes would respond saying, “Fine, pay them to build schools. The point is it doesn’t matter what they do as long as the government is creating jobs.” Keynes was wrong. It does matter. Keynesianism advocates digging holes and filling them up to create jobs. Military Keynesianism advocates digging graves and filling them with bodies to create jobs. If it does not matter how jobs are created, then why not dramatically increase tobacco production and promote the addiction to create jobs? Currently, most people would oppose this as being directly harmful to people’s health. Making weapons (conventional and unconventional) is also directly harmful. And there are plenty of other socially useful products and services that could deliver jobs and wages for workers (like schools and homes).
The way to raise living standards and meet social needs is not through import tariffs or military spending, but through public investment in industry, technology and public services. And the way to ensure workers obtain good jobs with training and proper pay is by organizing unions to fight for them. Public investment can only be successful if it is based on public ownership of the major financial institutions and big businesses. A plan for investment and production could then provide full public services, adequate pensions, universal healthcare and education without debt, as well as support for small businesses to provide proper wages and working conditions.
US labor needs to build links for joint action with workers in the rest of the Americas and Europe, as well as in Asia. The future for working people in the United States does not lie in trying to destroy the economies of other countries, but in building workers’ organizations in every country that can gain political power to remove the control of capital globally and end nationalism, militarism, and imperialism.