What are Trump's Tariffs?

Tariffs have been put forward as an economic balm for the US by President Trump. It is not so clear what exactly he means by tariffs, or whether he will stick to this policy, but we can make a stab at an explanation.

Most economists regard tariffs as a bad thing, but they are usually short on explanations why.

Tariffs seem to be understood by the new US administration as a way to bring in money, to, in a sense, punish foreign producers who undercut US prices, and to encourage the manufacture and purchase of US made goods and services.

But tariffs are usually placed upon the importer of the foreign goods, not the exporter, and this means in this case the US side, because the exporter is a foreign market, and their prices cannot normally be set by the importing country (the US here). Tariffs are therefore imposed at the point of the local importer. This has consequences: it usually leads to a rise in prices for the imported goods, because the importer now needs to make more money to cover costs.

It is possible that this could encourage more local production and help the local competition for this market, but there are usually good reasons for the foreign produced product being cheaper which may not be able to be repeated locally, it of course depends on many factors, but in any case this is unlikely to happen quickly. So, the immediate result of tariffs would be the inflation of prices in the US.

US citizens are already complaining about high inflation and the cost of living, and this is likely to make things worse.

Tariffs can be understood as a part of economic protectionism, and so perhaps of socialism, but in the capitalist economy it cannot really be socialist unless you also subsidise the local industries that you want to support with help from the government (or go the full route and nationalize them). However, this is obviously not the policy in the current US, where the federal government is under attack for being wastefully ‘too socialist’ or ‘woke’. Trump supports the free market inside the US apparently but is not a free marketeer globally.

The hope of this government is that tariffs will help boost local US productivity, somehow left unexplained, in the context of simultaneously stimulating other aspects of the market. The big idea, not a very new one, is to give tax cuts to the rich, who are described here as the ‘wealth creators’ (not oligarchs), and hope that these invest and employ people. Mere hope is not a great policy.

Unfortunately, this is what already failed to happen, by and large, in the last economic crisis when money was printed and interest rates were held very low, and which has led us to this crisis. Investors, of course, may not invest, instead they might squirrel away their wealth, which they are likely to do if they sense a crisis and if there is market uncertainty and volatility.

Meanwhile in the US there is also a parallel attack on illegal or undocumented immigrants, the cheaper labour that the US enjoys. This attack seems to be the partner with tariffs as a mooted solution to the economic crisis. Immigrants and refugees are said by the administration to be stealing US jobs and bringing in harmful drugs and criminality. The wall of tariffs mimics Trump’s border wall supposedly keeping out the immigrants.

However, it is the ruling class that benefits from employing this cheaper and easier to manipulate labour force. And now they also benefit from deflecting any possible blame for the crisis onto these vulnerable people and the ‘weaknesses’ of those on the left who are supposed to have ‘let them in’. It is quite despicable for the rich and powerful to target these unlucky people in this way, but they do it with the help of their media.

The rich class must feel that they have especially lost out on capital since the last crises and the pandemic and wish to claw back this apparently missing wealth and are seeking someone and something to blame for the problem other than themselves and the economic system. This is also an extension of the laying of the blame for the high cost of living on other countries and other persons, old allies and old enemies alike.

The last president, Democrat Joe Biden, did not remove most of Trump’s earlier tariffs, so this policy is not only that of this administration, but of the US bourgeoisie as a whole.

Tariffs are unlikely to stay isolated to one country. Other affected countries will have to respond in some way, the most likely being with their own tariffs, leading to a freezing up of the global capitalist market. The US is the world’s biggest economy though, so perhaps the US administration sees this fact as a buffer in the sense that it is likely to hurt others more than them.

But this can mean a trade war will result. A trade war can lead to greater friction between nations politically, and even eventually to actual war. One can already notice a more aggressive US policy towards foreign parties.

 

 

European Leaders are Gobsmacked on Greenland

European leaders are gobsmacked, today apparently, by Trump’s threat to take over Greenland, which is ‘owned’ by Denmark, a member of the European Union. The European Commission president, Ursula von der Leyen, and the European Council president Antionio Costa, said nothing on the subject, despite many opportunities to mention this earth-shattering matter in public.

We are clearly living in interesting times (a Chinese curse), where all of our dear western leaders sacred human values are being shown up by circumstances in which they are forced to blatantly contradict them.

First there is the attempted genocide in Gaza, fuelled by support and weaponry from the US, carried out under the leadership of President Joe Biden while complaining about the lesser Russian atrocities in Ukraine. Then, the greatest western democracy, the USA, gives us the spectacle of a ‘choice’ between two fascists, one a self-confessed Christian Zionist fascist, Biden, whose mental faculties appeared to be fading (was this a ruse by which future US politicians could excuse these war crimes?), and the other, well, called Donald Trump.

As we know, Trump won, because at least he was not currently a genocidal maniac. Now we are in a period of the reverberations that this result causes. Apart from the richest man in the world, Elon Musk, giving a Hitler salute in celebration, twice, just to be sure the neo-Nazis get it, miraculously there is a ceasefire in the Israel/Gaza conflict. But USAid has suddenly been halted everywhere by Trump decree, including Ukraine, which is in the middle of a war that the US and NATO helped instigate. On top of this, UNRWA is to be shut down in Israel by Israel’s government. Millions of people rely on this aid simply to stay alive.

And then there is Greenland.

New US President Donald Trump wants Greenland. Seriously. He is not joking. Denmark, its colonial power, is a member of NATO as well as the European Union. You may recall that an attack on one NATO country is to be treated as an attack on all, but the USA leads this military alliance, and it would seem totally weird if NATO were to even talk about defending Denmark against the US, this is clearly not what is meant to happen. So, there is silence on the matter.

Clearly NATO is not really meant to support ALL sovereign borders, especially not those desired by the US. And this follows close on the heels of the general rejection by the US and western elites of all those other great global humanist institutions, such as the International Criminal Court and the International Court of Justice, in the wake of Gaza war crimes.

How did US democracy, so controlled and channelled, lead to this strange result, Trump, the EU politicians must be wondering. Well, the US class struggle has certain internal social needs that do not always coincide neatly with its outward imperialist tendencies. So Ukraine is now in another crisis, there is some doubt over the willingness of the EU to even in a small way conflict with Trump’s hands-off attitude towards this war, despite their recent rhetoric of continued support for Ukraine against Russia’s invasion.

Ukraine is not a member of NATO. Russia does not want it to become a member of this military alliance. Why? Because this has been the traditional route for invading fascist forces into Russia, and in the last world war they lost over 22 million people. And many of the Ukrainian elite are fascists. Whilst this fact does not make it sensible for Russia to make Ukraine or any other nation an unwilling satellite of Russia, or justify it, whether Russia is capitalist or socialist, it helps explain the conflict.

But the EU is deliberately deaf to this argument, capitalism west, east, and south is currently suffering inflation, and this is dangerous for it because it plainly shows the flaws in its beloved economic system. So, the western ruling class media has it that the cause of this severe economic malady is the war, and what caused this unfortunate outcome is evil people like Putin. This neatly turns reality on its head – because capitalist inflation, imperialist expansion, and economic crisis is generating these conflicts. This must of course be kept hidden lest people start to blame the ruling classes.

We have been here before, in the late 1930s. On this history, however, there is now a battle going on for how to remember it, as there would be. The effort of the far right, aided and abetted by the neo-liberals and capitalist globalists, is to use their media to describe communists as the perpetrators of the Holocaust, the German Nazi’s as the unsung heroes of the war, defeated unjustly, and liberals as the unwitting idiots who made the mistake of appeasing socialism. As the far right becomes more acceptable by the media state apparatuses, this, seemingly ridiculous, interpretation of history, becomes ever more the norm.