Trump aims to boost US primacy through trade wars, but the cost to workers on either side will be high, and we need working-class internationalism instead, argues John Clarke

Trump’s plans to impose a 25% trade tariff on Mexico and Canada have been postponed for at least a month, following tense last-minute negotiations. Both targeted countries offered measures to address the issues of border security that the president had raised as an ostensible reason for the tariffs. Trump posted on social media that ‘I am very pleased with this initial outcome, and the Tariffs announced on Saturday will be paused for a 30-day period to see whether or not a final Economic deal with Canada can be structured. FAIRNESS FOR ALL!”

There is now a great deal of uncertainty about whether a trade war has merely been postponed or whether Trump is reconsidering the use of his sweeping measures. Just last week, he had indicated that nothing could be done to avoid the tariffs and specifically declared that efforts to placate him on border security would have no effect. He has reversed this position but the increased use of tariffs remains a strategic priority for the Trump administration.

Global initiative

The tariff threat was not withdrawn in the case of China, the main global rival of the US. As the Guardian reported, Trump ‘fired the opening salvo of his trade war, imposing tariffs on China on Tuesday that sparked instant retaliation from Beijing, amid fears for the global economic repercussions.’ The countermeasures from China included ‘export controls on a raft of critical minerals’ and, likely, the situation will now escalate dangerously.

The harsher approach isn’t limited to hated rivals and neighbouring countries and it’s clear that we are dealing with a truly global initiative. The threat of tariffs has been hurled at the EU and leaders of its member countries have responded accordingly. Emmanuel Macron declared this week that if ‘our commercial interests are attacked, Europe, as a true power, will have to make itself respected and therefore react.’ Though they were careful to propose negotiations and to stress common interests, several European leaders warned that a Trump-initiated trade war won’t be a one-sided affair.

Trump sees the use of tariffs as an economic form of gunboat diplomacy that can be used to obtain compliance from lesser powers on any number of issues. When, at the end of January, Colombia raised objections over the degrading treatment being inflicted on deported migrants and blocked US military flights bringing deportees back into that country, Trump used the threat of a 25% tariff to overcome these objections.

Given the emphasis that Trump places on tariffs, the question arises of why a sudden note of hesitation has emerged, at least in the case of Mexico and Canada. In this regard, there are some significant clues, not the least of which is the reaction of the markets. Forbes reported on 4 February that the ‘U.S. stock market sold off Monday morning as Wall Street digested President Donald Trump’s tariffs on Canadian, Chinese and Mexican goods set to go into effect Tuesday, before recovering some after Trump announced the Mexican levies won’t start for at least a month.’

This market turbulence is unlikely to have been any fleeting development. Goldman Sachs predicts ‘a 2% to 3% total hit to corporate earnings directly from the tariffs and a further ding as policy uncertainty causes the market to reassess the historically lofty price-to-earnings ratios now enjoyed by American stocks.’ We may be sure that Trump’s inner circle were anxiously discussing these ominous developments as the tariff deadline drew near, especially Elon Musk, since ‘Tesla was particularly battered.’ Trump may not cancel the show but he is experiencing first-night nerves.

The scale on which Trump wants to implement tariffs is vast and fraught with major economic and political implications. According to Michael Roberts, the ‘current planned tariffs would affect $1.3trn worth of US trade, with 43% of all US imports affected.’ Along with the more modest measures Trump took during his first presidency, they ‘would reach levels not seen since 1969, just before the international tariff reductions of GATT and the WTO during the ‘globalisation’ decades of the end of the 20th century.’

Roberts goes on to argue that overall, ‘increased tariffs and other protectionist measures by all sides in retaliation will weaken world trade and economic growth. World trade growth showed some recovery in 2024 after contracting in 2023. Trump’s tariffs will stop that recovery in its tracks.’ Indeed, the intense disruption generated by a major trade war could produce far greater impacts than the ‘supply shocks’ that followed the pandemic, which resulted in a global cost-of-living crisis.

It’s clear that some industries would face particularly severe consequences. Just before the tariffs on Canada were due to take effect, the CBC noted that auto parts ‘manufacturers in southwestern Ontario say punitive tariffs imposed by the American government could bring automotive production to a halt by the end of this week and will have devastating impacts on the overall supply chain.’

Strategic shift

Yet, despite adverse impacts, great uncertainties and Trump’s own erratic qualities, the use of tariffs won’t be curtailed so easily. The new administration sees it as an invaluable tool in several ways. Roberts suggests that ‘Trump aims to make America “great again” by raising the cost of importing foreign goods for American companies and households and so reduce demand and the huge trade deficit that the US currently runs with the rest of the world. He wants to reduce that and force foreign companies to invest and operate within the US rather than export to it.’

Trump also believes that ‘with the extra tariff revenues, the government will have sufficient funds to cut income taxes and corporate profit taxes to the bone (indeed, Trump says he wants to abolish income tax altogether).’ On the international stage, he sees tariffs as a means of defeating rivals, obtaining greater tribute from allies and bullying lesser powers into compliance. The Washington Consensus has never really been optional but, with Trump, there will be no polite fiction.

Writing for Counterfire, Lindsey German recently pointed out that the turn to tariffs ‘underlines how much the world is moving away from the globalised trade which defined the neoliberal era of the past four decades. The free market has failed, leaving more and more people in poverty, seeing growing inequality between the vast majority and the super-rich, and creating a political crisis in the richest and most powerful Western countries … One feature of this is a growth in protectionism, as countries seek to limit or prevent competition from rivals.’

It is hardly coincidental that this belligerent turn has been initiated by Trump, with his refrain of ‘Make America Great Again.’ This slogan unintentionally captures the reality that the dominant global power is losing ground against its rivals and is desperately seeking the means to contain its decline. We may question just how effective this approach will prove to be but we must consider the impacts it will have on working-class populations and the responses that are called for.

Trade wars will lead to economic instability and job losses, even as the cost of living is driven up. Workers in the US shouldn’t believe that they have any stake in Trump’s efforts to shore up US dominance and, in the countries on which he imposes his measures, it will be important to reject patriotic ‘trade-war fever’ and the assurances of political leaders that we are all in this together.

The former governor of both the Bank of Canada and the Bank of England, Mark Carney, is presently running to replace Justin Trudeau as leader of the Liberal Party. He recently told the BBC that ‘President Trump probably thinks Canada will cave in but we are going to stand up to a bully, we’re not going to back down. We’re united and we will retaliate.’ The notion that working-class people and central banker Carney should pursue a shared ‘national interest’ is absurd.

Yet the president of Canada’s largest private-sector union, Lana Payne, while she acknowledged that tariffs would hurt workers on both sides of the border and called for strengthened social programmes, took up the same theme as Carney. She stated that ‘I believe Trump has underestimated Canadians. He has failed to realize that he has enraged and united an entire nation that is ready to fight to defend every last job in this country.’

The creation of a tariff wall will require powerful and united social action to ensure that weakened systems of social provision are enhanced in order to meet the impacts of inflation and job loss. Rather than cheering on retaliatory tariffs and linking up with business interests and their political representatives, working-class movements should unite across borders to oppose trade wars on the basis of our shared interests.

We must realise that the economic warfare that Trump is pursuing is produced by factors that can generate even more deadly forms of rivalry and, ultimately armed conflict. In such a situation, an independent and internationalist working-class strategy is essential.