By Peter Delsing, PRMI in Belgium. 8 April 2025
The tariffs announced by US president Donald Trump last week sent shock waves through stock markets, governments and business headquarters. Working class and poor families worldwide will be the hardest hit by this trade war. Tariffs on goods imported into the US have leapt from about 2% to more than 20% – a tenfold increase!
German car manufacturer Volkswagen has announced it will add an “import fee” to the price of its cars sold in the US. The working class in the US in the short term will be confronted with higher prices: a new rise in inflation after the pandemic shock of prices increasing by 20%.
Collapsing consumer and business confidence – and the plunging stock markets – also point to a rise in layoffs, if the new tariffs are not revoked or reduced sharply.
Even if the sky high tariffs are in the end reduced either based on deals imposed on other countries, or because of the disastrous economic consequences, the economic uncertainty of Trump’s start-stop protectionist policies might be enough to provoke a recession. Economist Nancy Lazar estimated that the US economy would contract 1% in the second quarter: “It’s an immediate hit to the economy.”
Stellantis, the car manufacturer, announced a pause of production in its factories in Canada and Mexico because of the tariffs. Its management stated that, as a consequence of the pause, 900 workers will be laid off in the US.
According to Business Insider the tariffs could cost the US auto industry $80 billion. They could “slash Detroit’s Big Three’s earnings by up to 60%, thanks to an additional $5,000 input costs per vehicle”.
Astonishingly, this is one of the US industries which Trump is claiming to “protect”. A month earlier the car industry was granted a temporary exemption after negotiations with its bosses.
According to news reports, they informed Trump about the inevitable disruption to supply chains if the tariffs were enacted. It’s the company which imports which pays the tariff, not the foreign company which is exporting the goods. Yet a month later Trump imposed them anyway, in an attempt to implement his so-called “economic revolution”.
Burning down the house to cook a steak
For most workers, young and poor people in the US and worldwide it will be felt as an economic disaster, leading to layoffs and even more loss of purchasing power.
The tech companies paid millions for the “inauguration” of Trump. It was nothing more than a bribe to escape the wrath of the autocrat in the White House.
Now, it seems, not only foreign countries but also companies in the US will be under pressure to make a deal with the fanatical king in Washington if they don’t want to see their profits undermined by tariffs.
The new tariffs don’t make sense as economic policy – as capitalist trade wars never do. They are though an enormous extension and concentration of Trump’s political and economic power. The capacity to decide the fate of countries and businesses is now in his hands.
Trump’s method using these tariff walls, as a commentator put it, resembles “burning down the house to cook a steak”. His attempt to force a “big change”, as his vice-president Vance stated, in the relationship of forces between nations – and classes – with brutal imperialist and protectionist methods threatens to plunge the world economy into crisis and recession.
Behind the rupturing of the old world order and the chaos there is an attempt at imperialist redivision of the world’s markets and spheres of influence. The desired annexation of Greenland and the Panama Canal can be understood in this way.
Protectionist changes by US ruling class spiral out of control
The US ruling class during Trump’s first term and the Biden government which followed it changed its approach to the international economic order. They consciously sabotaged trade arbitration within the World Trade Organisation.
It started implementing protectionist tariffs and export control policies aimed at limiting the power of its state capitalist and imperialist rival China. What emerged was a new bipolar world order dangerously divided among the main antagonists: competing US and Chinese imperialism.
The change to an age of protectionism and heightened imperialist conflict – with the rise of proxy-wars, growing militarism, etc. – marked the end of the previous age of neoliberal globalisation.
Neoliberal globalisation and “free trade” had been the preferred regime of capital accumulation after the profitability crisis and the structural crisis of capitalism in the 1970’s.
The ruling classes in the US and later Europe increasingly moved away from this approach from the mid-2010s onwards. This was a symptom of deep capitalist crisis and slow growth in western capitalist economies, the rise of a new imperialist competitor in the form of ex-stalinist China.
It was also due to the need for state intervention to keep capitalism afloat after the crises of 2008 and 2020, and as a response to right wing populist, far right but also left wing populist forces challenging the neoliberal capitalist order.
Turning away from neoliberalism and globalism
Ruling classes worldwide have tried to prevent a turn to protectionism and trade wars – similar to the 1930s – as a response to the crisis of their system since the 1970s. Indeed from the 1970s they relied on neoliberalism, based on free trade and globalisation. As a consequence, they deepened exploitation of the working class, piled up mountains of debt and turned Russia, Eastern Europe and China into capitalist regions of exploitation.
Marxism has always warned that as the capitalist crisis deepens, a new turn to protectionism and inter-imperialist conflict would be inevitable. Through the Trump regime this change to protectionist policy is now proving its ability to spiral out of control, made worse by Trump’s personal, egomaniacal and dictatorial traits.
The capitalist class in the US either supported Trump or was prepared to accept him despite his confused ramblings, authoritarian approach, racism, transphobia and hateful rhetoric against oppressed groups, the fascist sympathies of Musk, Bannon and large parts of this administration. After all he promised them tax cuts and deregulation, and thus potentially higher profits. These capitalists must be alarmed now.
Someone has to stop him!
The S&P 500 stock market lost more than 10% in two days after Trump’s announcement! Several countries – among them the US itself, but also Mexico, Vietnam, etc. – may go into recession because of the tariff hike.
The falling stock markets and the tariff shock are pushing capitalist politicians to try to contain Trump: Democrats and a small number of Republicans are proposing to make Congress responsible for tariff policy.
The Republican Ted Cruz – normally loyal to the Trump cabal – warned that these tariff policies could turn into an electoral “bloodbath” for his party. A top executive at the US bank Goldman Sachs was quoted, anonymously, in the New York Times reflecting the changing mood among ruling elites towards Trump: “Someone has to stop him”.
The authoritarian, bonapartist stick is wielded principally against the working class: depriving federal workers of their jobs and income with Doge, attacking union rights, arresting pro-Palestinian activists and the right to protest. But the authoritarian measures of Trump as would be dictator now also extract a price from the ruling class itself.
Moreover, Trump’s far right attack on workers’ rights and against the oppressed might, as the whip of counter revolution, provoke mass protests against billionaire rule. Mass demonstrations of tens of thousands in cities across the US on 5 April show a glimpse of this growing anger from below.
Strategy of submission leads to retaliation by bigger capitalist powers
China and Asian countries such as Vietnam, Thailand, and Bangladesh were among the hardest hit by the new wave of US tariffs. Western multinationals and Chinese companies diversified their supply chains after the pandemic and after previous tariff hikes on China. If the tariffs persist, catastrophic mass layoffs and the closing of companies might occur in poorer, neocolonial Asian countries.
Nike for example produces 50% of its footwear in Vietnam. Will they move from the country to prevent a blow to their profits? Or will these companies try to negotiate a reduction or exemption with Trump?
The capitalist economist Peter Schiff ruled out that Nike would move its factories to the US as “that would cost more than the 40% tariff”. He suggested that Nike would sell its products to other countries, such as China, and that its footwear would become much more expensive in the US.
Smaller countries without much economic power will most likely look for an agreement with the Trump regime. Vietnam already offered to drop its tariffs on US imports and requested the US to do the same for exports from Vietnam.
Stronger powers try to resist
But events show that bigger economic powers will not yield to Trump’s protectionist arm twisting easily. In Canada the Liberal Party shot up electorally based on aggressive protectionist counter measures and a buy Canadian rhetoric. Its new Prime Minister Mark Carney announced a 25% tariff on US cars and trucks and called for a new global trading order “without the US”.
Trump’s tariff shock has led imperialist enemies such as China and Japan, together with South Korea, to coordinate a joint response. Japan got a 24% tariff while China’s tariff was raised from 20% to 54%! For specific goods this could even be higher.
China, as the world’s second imperialist super power, responded with a 34% tariff on US imports. It even decided to introduce export controls on a new range of rare earth minerals. This will allow it to slow down exports of these minerals to the US, and possibly other western countries, potentially causing big problems in certain technological, defence and industrial sectors. China controls more than 90% of the world’s rare earth minerals processing and production.
The Chinese regime calculates that the average consumer in the US will quickly feel the impact of Trump’s tariffs on everyday consumer products from China. While US exports to China at the same time are mainly machinery, equipment, etc. for which it hopes to find alternative trading partners.
The escalation between the US and China, as the world’s most important super powers, shows the dangerous tit for tat character of this developing trade war.
The European Union was hit by a 20% tariff on its exports to the US. Its bourgeois politicians are attempting to hit back with tariffs aimed at exports from Republican states.
The French Prime Minister Macron called for a pause on investment by European companies in the US until things have been “clarified”. The EU could also target tech services from the US. There are initiatives to “buy European” and also an attempt to introduce a European payment system.
Workers need to resist
While stock markets and – if we don’t resist, protest and strike massively – living standards will plummet in this crisis, the working class and the poor worldwide cannot support any side of this developing, disastrous trade war. It is the product of capitalism and its crises and no solution can come from the capitalists.
We need to stand for international solidarity of the workers and oppressed, against the nationalism of the different ruling classes and for mass action and strikes against the profit hungry bosses, against their system and against procapitalist protectionism.
Supporting protectionist tariffs or procapitalist boycotts will divide the international working class. It will deepen the economic crisis. We need to build mass opposition from below, for mass action – also on an international scale – and strikes against layoffs and for public ownership of these companies under democratic workers’ control.
The support by the American union UAW (United Auto Workers) and its president Shawn Fain for Trump’s tariff policies is a big mistake. Unfortunately, it shows the inadequate policies of those who try to reform the capitalist system.
Workers will need to relearn the lessons of the class struggle, combative unionism and the struggle against all types of oppression and discrimination – based on gender, skin colour, etc.
The precarious worker, the single mother, the low-paid younger worker or the industrial worker, the oppressed and discriminated because of their skin colour, gender,… around the world: the exploited and oppressed need to close ranks, organize in combative unions and class based parties of struggle.
We need to fight for decent and well paid jobs, for well funded public services and against oppression.
For these struggles to be ultimately successful, we will need to broaden them into a fight against the capitalist system itself.
Only when the working class owns and controls the workplaces and factories and runs them democratically – under a system of democratic socialist planning – can the permanent insecurities and attacks on our living standards be overcome.
Join the Project for a Revolutionary Marxist International to jointly organize these struggles and provide a revolutionary socialist perspective to the working class and the poor in their struggles against the capitalist system.