Behind Trump’s spiralling tariff war: An interview with Marxist economist Michael Roberts
Michael Roberts is a Marxist economist who worked in the City of London for more than 40 years and writes on economic issues at The Next Recession. He is also the author of The Long Depression: Marxism and the Global Crisis of Capitalism and Capitalism in the 21st Century: Through the Prism of Value (with Guglielmo Carchedi).
In this interview with Federico Fuentes for LINKS International Journal of Socialist Renewal, Roberts explains the recent raft of tariffs announced by US President Donald Trump on April 2, which Trump dubbed “Liberation Day” but was described by the Wall Street Journal as “the dumbest trade war in history”. Roberts outlines how they fit into Trump’s broader project to reassert US global hegemony, and what a left response could look like.
Could you explain the significance of, and motivation for, Trump’s new tariffs? Are they likely to achieve what Trump wants?
Trump’s tariff rises on US imports of goods is the largest in more than 130 years, taking the effective average tariff rate to more than 25%. This will severely hit goods exports to the US from poor “Global South” countries, which are not exempt. On the contrary, a country such as Vietnam faces a tariff hike of 45%, while China faces a tariff hike of 59%. All countries are getting a 10% tariff hike, even if the US does not have a trade deficit with them.
Trump’s administration claims these tariff hikes are needed to end the “robbery” of US manufacturing by other countries through “bad practices”, unfair taxes, quotas and subsidies. The aim is to cut or eliminate the US trade deficit and force foreign manufacturers to invest and sell directly in the US. The aim is also to enable US domestic manufacturers to replace foreign-made goods with US manufactures — and thus “Make America Great Again”.
This is nonsense. The US started running a trade deficit with other countries in the 1980s because US manufacturing shifted its operations to the Global South and Canada in order to take advantage of cheap labour and the latest technology. Much of the goods exported to the US come from US companies based in Mexico, Canada, China, etc. Vietnam exports millions of shoes to the US, made in 59 US-owned Nike factories there. Tesla makes most of its electric cars in China. US manufacturing costs at home are way higher than abroad, not only because labour is more expensive, but because productivity abroad is rising much faster with new technologies, particularly in China.
What these tariffs will do is, first, cut imports of needed goods for US consumers and businesses, and/or raise their prices. So, the US economy will be hit. Second, if there is retaliation — as there will be — then US exports will suffer accordingly, resulting in hardly any change in the deficit. A spiralling trade war will lower growth, raise inflation and lead to recession in the US and other economies already on the brink.
Do US capitalists support Trump’s tariffs?
The ruling elite in finance and big business are in shock. They hoped Trump was just using tariff hikes as a weapon to negotiate concessions on trade, investment and technology. That is only partly true. They now realise these tariffs are likely to stay. As a result, the US stock market plunged. The stock prices of the top social media and tech companies — the so-called Magnificent Seven — fell even further, and even the US dollar dropped. Mainstream economists are virtually unanimous in condemning Trump’s tariffs.
But as yet, there have been no political moves by the ruling elite against him, even though opinion polls are negative towards Trump. They fear the Trumpist factions. The Democrats have been silent, investment banks have been quiet and oil companies have been encouraging. Only US farmers are wailing for fear of retaliation by China and other countries on US agro-exports. Here, Trump has been hinting at a bailout package. He has also avoided tariffs against Canada and Mexico on auto imports (as much of these are from US companies based across the border). For the moment, the ruling elite is paralysed.
How do these tariffs fit into Trump’s broader foreign policy, particular the growing confrontation with China?
There is some method in Trump’s madness. He wants to preserve the US as the hegemonic power in the world, but no longer by trying to “police” the world, as the Democrats did. Trump wants to return to the Monroe Doctrine. In 1823, then-US president James Monroe proposed that European colonists stay out of Latin America and leave the Western hemisphere to the US. By the end of the 19th century, Latin America had become its “backyard”. The US then extended its imperialist ambitions across the Pacific to the Philippines, and took on a rising Japan, which eventually led to Pearl Harbor and the US’ entry into World War II.
Today, Trump wants to dump Europe and let them deal with Russia, while enabling Israel to look after the Middle East and deal with Iran. The aim is to allow the US to focus on intensifying attempts to strangle the Chinese economy and force an eventual “regime change” to convert China into a US puppet, as Japan has become. Unfortunately for him and this Monroe+ Doctrine, it may be too late to stop China’s rise, even with 60% tariff hikes.
For most of the past few decades, the US was the driving force behind what is often called “globalisation”, which sought to bring down trade barriers. Do these tariffs spell the end of “globalisation”?
The globalisation wave of the 1990s and 2000s ended with the Great Recession of 2008-9. During the 2010s, global trade as a share of world GDP stagnated, particularly global goods trade. Trump’s tariffs will only worsen that. In the globalisation decades, US multinationals moved their production abroad and pocketed their profits in purposely-built tax havens. Capital flows accelerated between the major economies, but also increased the exploitation of the Global South. But in the Long Depression of the 2010s and into the 2020s, capital flows have also subsided.
If Trump’s tariffs point towards further economic decoupling, could this create space for Global South countries to pursue more autonomous development strategies?
Some argue that “decoupling” — that is, relatively decreasing trade and capital flows between Global South countries and imperialist core countries — will allow major Global South countries to introduce more progressive economic “industrial strategies”, escape the grip of imperialism and start “catching up”. I am sceptical. US imperialism has weakened in the past few decades. This partly explains Trump’s rise. But the US is still the dominant financial power (the US dollar still rules) and the world’s largest military power. It still has the backing (mostly) of the other imperialist countries.
The alternative BRICS group [led by Brazil, Russia, India, China and South Africa] is diverse politically and economically, and has no real financial or military sway. Most BRICS countries are run by autocratic dictatorships (Russia, China, Iran, Saudi Arabia) or weak neoliberal capitalist regimes (South Africa, India) that do not represent working-class interests. Breaking with imperialism and pursuing independent economic development would require public ownership of the major sectors of these economies, planned state-led investment, working class democracy and an internationalist foreign policy.That does not exist, even in China. Instead, BRICS leaders strongly oppose such policies.
Trump has framed his tariffs as a way to “bring jobs back” and “protect US workers”. What position should working class forces take towards these tariffs and talk of retaliatory tariffs from other countries, whether in the Global North or South?
Many US trade union leaders are backing the tariffs in the belief this will deliver more jobs and revive domestic industries. This is mistaken because the tariffs will only cut US exports, accelerate inflation and drive the US towards recession. Moreover, Trump is preparing huge tax cuts for the rich, to be paid for by huge government service, medicare and welfare cuts. US labour leaders should: oppose all service cuts, demand higher taxes on the rich and big business, and call for the takeover of the banks and the Magnificent Seven, together with developing a state-led investment plan to boost jobs and productivity. Labour leaders should oppose nationalist, protectionist and anti-immigrant policies, and look to form alliances and establish joint policies with workers in other countries.
In the Global South, workers’ leaders should not only oppose the tariffs but demand the end of capitalist control over their economies. They should link up with workers’ organisations in the Global North to establish joint policies for free trade, ending oppressive debt burdens and effective climate control measures, as global warming is already decimating areas globally.