By Finghín Kelly, Socialist Party Ireland. 28 April 2025
Trump’s so-called “liberation day” announcement, massively jacking up tariffs on goods entering the United States, was met with a major sell-off of shares around the globe, with trillions wiped off the stock markets as capitalists put their money into cash and safer assets.
Pointing to an undermining of confidence in the stability of US capitalism, there was also a fall in the value of the dollar, and more recently, pressure on the price of US debt. These developments could trigger profound knock-on complications for the world economy, which is likely to see a sharp decline in trade, growth, and further financial crises.
In an about-turn, however, Trump announced a postponement of the tariffs for 90 days on most states, although an increased base 10% tariff will remain. Essentially, the bond markets forced him to blink.
However, the massive 145% tariffs on Chinese goods remain. China in turn has responded with a 125% tariff on US goods. This represents a major escalation in the ongoing trade war and rivalry between the US and Chinese imperialism – a trend central to the crisis that global capitalism is currently facing.
America first chauvinism
The announcements of the tariffs were accompanied by chauvinist ‘America First’ rhetoric about the US being exploited in world trade, and how the tariffs were part of bringing industry and jobs back to the US. There was also a slew of bigoted racist slurs from Trump – highlighting how these economic policies go hand in hand with whipping up racism.
It remains to be seen exactly how US tariffs on other capitalist blocs will pan out. There is due to be a period of negotiation between Trump’s regime and other capitalist states and trading blocs in the coming months.
There has been much commentary in the media, especially in the run up to the announcement and in the immediate days afterwards, that Trump would back down, that he would be open to negotiation, and that this was an initial play or a negotiating tactic.
This postponement may superficially be seen to be confirmation of that analysis. Trump had spoken about being open to talks. However, there was also push back from sections of big business in the US.
A fear of domestic inflation and the pressure on US bonds were also factors in Trump’s backdown. However, it would be naïve to think that Trump will back down from this policy fundamentally.
US capitalism in crisis
Trump clearly has a particularly uncontrolled, maverick, dictatorial style which can put sections of US capitalism at unease. There are also indications of elements of chaos within Trump’s inner circle. Trump is a representative of a more populist and nakedly reactionary and ultra-nationalist wing of US capitalism.
However, his policies on tariffs are not completely divorced from an underlying shift by US capitalism away from free trade and towards a more protectionist approach. This shift has been there since the 2008 crisis and has escalated in recent years, including under Biden’s regime and began before Trump first took power under Barack Obama.
This shift away from free trade has its roots in the geopolitical situation and the emergence of China as a major economic and military competitor. Although more complicated for Trump to engage in an immediate brutal confrontation, there is also an increase in competition with European capitalists.
Capitalism internationally has been in the doldrums since the 2008 financial crisis, experiencing sluggish growth and major political instability, which is increasing its competitive nature.
In this geopolitical terrain there is a desire by significant sections of the US capitalist class to strategically shift production to the US. Trump may be trying to do this in a crude way, but it is very much linked to this wider strategic move by American capitalism of protecting its interests and undermining its competitors.
No re-birth of “American dream”
There seems to be an acceptance by Trump and his supporters that there will be a certain economic pain from this shift.
This would not be the first time in the history of capitalism that there has been a conscious implementation of destructive economic policies to implement a historic shift. This was seen in the birth of neoliberalism, when US President Ronald Reagan implemented the so-called ‘Faulkner shock’, which saw massive interest rates and the destruction of manufacturing industry in the US.
This strategic shift was seen by neoliberals as ‘creative destruction’; for the vast majority it brought about the real destruction of jobs and millions of livelihoods. Although it must be noted that Trump’s approach is decisively more erratic.
His approach will mete out pain on working-class people. This can undermine significant support for him. It’s noteworthy that there were important protests taking place against Trump’s attacks on people’s rights ahead of the tariff announcement. Although this can put pressure on Trump, the regime seems prepared to implement its economic policy come what may.
No support for capitalist policies
It is a disgrace that many trade union leaders in the US have come out in support of Trump’s policies. These policies will not see benefits for working-class people. It will lead to inflation which will hit low- and middle-income workers the hardest.
The whipping up of nationalist and racist rhetoric that go hand in hand with Trump’s economic policies will also see an impact. US capitalism will also not recreate the conditions of the past. Any relocation of industry will be based on less labour intensity, low pay, and poorer conditions. It will not transform the Rust Belt.
These union leaders forget an important lesson from history, namely, that it was working-class struggle, not the existence of manufacturing itself, that resulted in workers in the US winning higher wages and decent conditions. In fact, capitalist magnate Henry Ford ran a brutal authoritarian regime on the floor of his factories.
Trade unions in the US and internationally should not be backing their respective capitalist governments in trade wars – workers will always be the losers in such wars as tariffs are passed on to them via higher prices, and growing competition will mean a race to the bottom in wages and conditions.
Instead, there needs to be a response from trade unions to say that working-class people should not pay one cent for the chaos of capitalism and the clashes between its powers.
Failure of FDI model
Although it has been exaggerated by the government, here in Ireland, there is a real danger to jobs. Sectors that will be most likely hit will be food and drink and pharmaceuticals. There is also a generalised threat from an increasingly likely global recession.
The government has been very clear that it intends to implement neo-austerity policies in the face of an economic crisis. Already it has announced that electricity credits will be ended, that there will be no €1,000 reduction in third-level fees, and they have put their plans for a “living wage” on hold.
Working-class people need to prepare for this crisis. Those in sectors that are most likely to be hit especially need to get organised from below in a fighting trade union movement.
Not one cent should be taken from public services such as disability, housing, and education. Every job should be defended and any attempt by employers to exploit the crisis to attack wages and conditions must be pushed back. The books of companies threatening job cuts must be opened, and job-shedding companies should be brought into public ownership.
A trade war and opportunistic profiteering is likely to see renewed inflation. A cost-of-living crisis has to be resisted with political pressure to force the government to implement price controls, levies on the profiteers and double-digit pay rises for workers to beat inflation.
Unions need to end their irrelevancy. They need to boldly organise workplaces and link up with working-class communities. Where there are no unions, or they are inactive, workers themselves need to get organised and discuss how they can resist the threats and link in with others.
They must also demand that in the context of a potential threat to the Windsor Framework, part of the post-Brexit agreement between the British government and the EU, there is no attempt to harden the borders on the island of Ireland or on the Irish Sea.
Break with the capitalist market
The economic model of relying on foreign direct investment, with corporations paying low or no tax here, has hit a wall. It is not a model that has worked for the majority. The domestic economy which employs most people has been stagnant.
There may be vast billions flowing through Irish brass plate operations, but there is chronic unaffordable housing and public services are in acute crisis.
Capitalism is a chaotic system that has waste and destruction baked into it. This latest economic crisis is exposing this. We need to build an alternative way of running society. A socialist system would ensure a stable future for all.
The vast wealth and resources that exist would be taken out of the hands of capitalists and brought into democratic public ownership. This would allow for resources and effort being poured into providing for people’s needs, while developing environmentally sustainable production.