There must be no doubt that the transformation of constitutional conservatism into a politics of populist reaction is attributable to the rapid societal changes of the past two decades. The ubiquitousness of smart phones, the totality of social media information, the sharp visibility of immigrant and LGBT populations, cultural backlash against perceived “woke” authoritarianism and the economic tumult of subprime mortgages and COVID have all contributed to this transformation. Throw in several years of historic inflation and the world now sits in the barrel of a second Trump presidency, much more aggressive than the last.
For the Marxist school, Trump’s re-ascendance was mighty predictable. Within the milieu of the aforementioned social changes, we have artificial intelligence revaluing labour and China revolutionizing global trade and renewable energy and “people seem to be occupied with revolutionizing themselves and things, creating something that did not exist before.” According to Marx, it is in times like these when many people “anxiously conjure up the spirits of the past to their service, in order to present this new scene in world history [with] time-honoured disguise and borrowed language.”1
The early returns of the second Trump administration have given us time-honoured symbolism in spades—military parades, the return of Mount McKinley and the freshly minted Gulf of America. The mass deportation orders are an echo of Eisenhower’s cringily-named “Operation Wetback” and Trump’s economic policy rests on an antiquated foundation of import duties, also known as tariffs.
Past and Present
American tariffs on imports now reach heights not seen in a century and this is very on-brand with Trump’s glorification of the past. 100 years ago, tariffs were a staple of independent governments looking to do two things at once: efficiently collect tax revenues at shipping ports while sheltering burgeoning industries from outside competition. Generally speaking, items that could be supplied domestically were subject to a tariff, while important raw materials supporting other industries might be exempt. Then came the Smoot-Hawley Act of 1930 that blanketed imports with an effective tariff rate of 47%. This sparked a global retaliation that froze international trade just as the West entered the Great Depression. The presidential administration of Franklin Delano Roosevelt began winding down many of these tariffs through bilateral deals shortly after taking office—but with so little capital circulating after a period of deflation, the harmful effects did not really reverse until the conclusion of World War II. From that point onward, the United States promoted a low-tariff, liberalized trade regime between capitalist countries.
The American posture on liberal trade was upheld through successive administrations but the current Trump White House has folded it in dramatic fashion. But how do these tariffs stack against the historical record?
We can see that the earliest application of tariffs were used to efficiently gather taxes at ports without the need for a sophisticated bureaucracy capable of calculating sales and income taxes. These tariffs do not appear to have had any disastrous consequences for the economy at the time—bearing in mind that this economy was much more simple and agrarian compared to today. Under the Smoot-Hawley Act, the American economy was much more industrialized and complex compared to years prior, and the tariffs were much steeper. It is seen as disastrous but only in hindsight; during the desperation of economic depression, throwing up a barrier to the outflow of capital made intuitive sense.
Trump’s rapidly evolving tariff regime does not overlay neatly on either of these historical examples. On the one hand, the effective tariff rate at the time of writing is 18.6%—quite mild compared to the Smoot-Hawley rate of 47%. On the other hand, the American economy is more complex than ever, with commodity production and financial capital often crossing dozens of borders before valorization. In the simple, low-tax colonial economies that were developing in the Americas over a century ago, tariffs were not so imposing. But dropping duties onto supply chains that were established during an era of liberalized trade is bound to cause blockages to the existing circulation of productive and financial capital. This will suppress consumption but the full extent remains to be seen.
A novelty between past tariff regimes and the Trump tariffs is the strategy inherent to each. Trump’s tariffs do not seem to amount to any sort of regime or logic—there is clearly an impulse to apply them universally, but the rates are up and down on a whim. Canada is threatened with tariffs over plans to recognize a Palestinian state. Brazil gets slammed with a 50% rate for court proceedings against the former president. India, likewise, is slapped with an identical 50% rate for buying Russian oil—while Russia’s other customers in Europe and China receive no consequences. Resulting is a geopolitical shot string, and the consequences to American hegemony will take years to reckon with. Suffice to say, the only constancy to Trump’s approach is uncertainty itself—and that’s the one thing multinational conglomerates and their army of lobbyists loathe.
Why Tariffs?
But Trump, consummate capitalist that he is, would not maximize market uncertainty or collapse American hegemony or create capital blockages and suppress consumption intentionally. In fact, the Trump White House believes that tariffs will have the opposite effects from those listed here: capital will consolidate at home, jobs and domestic consumption will boom and American hegemony will rejuvenate, the world dancing to Washington’s ultimatums, the market nurtured under the eagle’s wing. So how does this play out?
As with most everything concerning the motion of capitalism, Marx and Engels addressed this question of duties back in the Victorian era. Engels:
Protection is at best an endless screw, and you never know when you have done with it. By protecting one industry, you directly or indirectly hurt all others, and have therefore to protect them too…By taxing raw materials, it raises the price of the articles manufactured from them; by taxing food, it raises the price of labour. In both ways, it places the manufacturer at a disadvantage compared to his foreign competitor.
We see this observation playing out in real time. Food costs are up over the early months of the Trump administration and will increase further with tariffs. Producer inflation is soaring as the cost of economic inputs rise. Automakers are shedding billions, largely due to tariffs on necessary steel and aluminum. For the crown jewel in American capitalism’s catalogue of death—the F-35 stealth fighter—prices have rocketed upward thanks to the higher cost of raw materials. No sooner does Trump clamour for weapons sales and he raises the price of everything across the entire defence industry!
Marx, likewise, saw free trade as hastening a country’s “accumulation and concentration of capital” with workers being hurt by “greater use of machinery” in production. What this has meant for the United States is a bloated credit and debt system, a largely automated manufacturing sector and an abundance of monopolistic financial firms and multinational conglomerates that export their capital around the world looking to realize profits in the American market. It’s as if Trump’s tariffs are meant to throw wrenches into the wheels of the economy that are turning well, while doing nothing to jumpstart the others. The motivation for American protectionism is similar to what Engels described in England in 1888: “She is relatively losing ground, while her rivals are making progress.” America is losing its sole superpower status and “it is to stave off this impending fate that Protection, scarcely disguised under the veil of ‘fair trade’ and retaliatory tariffs, is now invoked with such fervour.”
Wither the Empire?
When Trump opened a trade war against China during his first term, the Chinese looked outward. Since U.S. tariffs came into effect in 2018, the value of Chinese exports has increased by 50%, they became the top automotive seller in the world and they are the top trading partner to 150 countries. Now that Trump has launched a trade war against the entire world, China sees an even greater opportunity. They have unilaterally implemented a zero-tariff policy for all of the world’s least developed countries plus the entire continent of Africa. As students of Marxian economics, China has taken steps to suppress the financial capital system that has ravaged the American Main Street, instead directing investments into the productive sectors of their economy and expanding its global Belt-and-Road Initiative. China has made moves to bolster trade with India, Vietnam, the European Union and Britain, while strengthening relations with Latin America and the rest of the Global South. Renewable energy and automation technologies—key pillars of a future socialist economy—are progressing at rapid speed. China is almost single-handedly lowering global emissions while the West languishes under the shock of American protectionism.
What are the future results of Trump’s tariffs? We will not know in the near term. Trump may not even live long enough to find out. But he probably won’t like the answer.
Thanks for reading!
Footnotes:
Karl Marx, The Eighteenth Brumaire of Louis Bonaparte. ↩︎