Trump's Tarifs

Neo-Mercantilism and Class War * Freebie

Morning Comrades.

I wrote this dispatch back in December for the patreon’s of this project- considering the immaculate stupidity of Trump’s populism and its infantile understanding of reality, or rather, what they’re selling to rob the entire country blind, I am sending this one out to everyone for free. I figured a basic introduction to what is happening will not hurt anyone, so here we are. I’ve edited and updated a few parts but essentially it is the same newsletter from December.

Back in 2016 when Trump became US president for the first time, the majority of his campaign and subsequent presidency was built around the America First concept, and aside from the underlying insidious racism and notwithstanding the ineptitude of the enforcement thereof we are right back where we started almost ten years ago. It is fair to say that this second term will be more focused on policies that will be extremely harmful to essentially everyone not in the Trump Club, and that includes those that voted for him, only because of experience I would wager and yet it is important to expose his intentions, apparent blunders which they aren’t and what they mean.

Just recently Trump publicly said the following:

“The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER. We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful U.S. Economy,”.

As per usual, it is important to to understand the difference between what a bourgeois politician says and ultimately does, yet this statement reflects not a deeply flawed understanding of the world, an insight into the capitalist natural character ( violence and bullying ) but also an intentional misleading of the public, whether or not they voted for him. With that, let’s get into what Tariffs are, what they mean for the working class and a brief look into the cultural historical backbone to this practice called Mercantilism.

What Are Tariffs and How Do They Work?

A tariff is a tax or duty imposed by a government on imported goods. The primary purpose of tariffs is to increase the price of foreign products, making them less competitive with domestically produced goods. Tariffs are typically justified as a means to protect domestic industries, reduce trade deficits, or retaliate against unfair trade practices by other countries. There are two main types of tariffs:

1. Specific Tariffs: A fixed fee imposed on each unit of an imported good, such as $50 per ton of steel.

2. Ad Valorem Tariffs: A percentage-based tax levied on the value of an imported good, such as 10% of the total cost of a car.

How Tariffs Function in Practice

When a government imposes a tariff, it creates a chain reaction:

1. Increased Cost for Importers: Domestic companies that import goods must pay the tariff, increasing their costs.

2. Price Inflation for Consumers: Importers pass these higher costs onto consumers in the form of higher prices for goods.

3. Reduced Demand for Foreign Goods: Higher prices make foreign goods less attractive, reducing their demand.

4. Retaliation: Foreign governments often respond with their own tariffs, targeting exports from the initiating country.

For example, during the Trump administration, a 25% tariff was imposed on imported steel. U.S. companies that relied on steel for production, such as automakers, faced significantly higher costs, leading to increased prices for vehicles and reduced competitiveness in global markets.

How Tariffs Hurt the Working Class

While tariffs are often marketed as tools to protect domestic jobs, their economic impact disproportionately harms the working class. A Marxist analysis highlights three primary mechanisms by which tariffs exacerbate class inequalities:

1. Increased Cost of Living
   Tariffs directly raise the price of imported goods, from everyday essentials like food and clothing to durable goods like electronics and automobiles. For example, Trump's tariffs on Chinese imports led to price increases on consumer products such as washing machines. These higher prices hit the working class hardest, as they spend a larger proportion of their income on necessities. Wealthier individuals, who have greater discretionary income, are less affected by these price hikes.

2. Job Losses in Downstream Industries
   Tariffs intended to protect one industry often harm others that rely on imported materials. For instance, tariffs on steel and aluminum raise production costs for industries that use these metals, such as construction and manufacturing. A study by the Peterson Institute for International Economics estimated that Trump's steel tariffs cost 75,000 jobs in industries using steel, far outweighing the 25,000 jobs potentially protected in steel production. Workers in these downstream sectors, particularly those in non-unionized and precarious positions, bear the brunt of these economic disruptions.

3. Export Retaliation and Economic Slowdown
   When other countries retaliate with tariffs on U.S. exports, it directly impacts industries reliant on global markets, such as agriculture. During the U.S.-China trade war, China's tariffs on American soybeans and pork devastated U.S. farmers, many of whom were working-class producers operating on thin margins. Retaliatory tariffs erode export demand, shrinking job opportunities in affected sectors and deepening economic insecurity.

4. Concentration of Benefits Among the Capitalist Class
   The industries that benefit from tariffs are often capital-intensive and dominated by large corporations. For example, steel producers saw increased profits following the imposition of tariffs, as domestic competition diminished and prices rose. However, these gains did not translate into widespread job creation or wage increases for workers. Instead, they were funneled into dividends for shareholders and executive bonuses, exacerbating wealth inequality.

Tariffs as Bourgeois Politics

Tariffs are a tool wielded by the capitalist state to manage contradictions within the global capitalist system. While presented as a pro-worker policy, tariffs primarily serve the interests of the national bourgeoisie, shielding domestic capital from foreign competition while shifting the costs onto the working class. This dynamic can be understood through the following observations:

1. Global Capital’s Inherent Contradictions
   Capitalism’s reliance on globalised production to maximise profits clashes with nationalistic efforts to insulate economies from foreign influence. Tariffs represent a reactionary attempt to resolve these contradictions, favouring domestic capital at the expense of the international working class.

2. Alienation and Misplaced Blame
   Tariff policies exploit workers' alienation under capitalism, redirecting their frustrations with economic precarity towards external scapegoats, such as foreign competition or globalisation. This tactic diverts attention from systemic inequalities perpetuated by capitalism itself, reinforcing nationalist ideologies that benefit the ruling class.

3. The Illusion of Economic Sovereignty
   By framing tariffs as tools for reclaiming economic sovereignty, capitalist states obscure the reality that economic power remains concentrated in the hands of transnational corporations and the global elite. The working class, burdened with higher living costs and job insecurity, gains little from these policies.

Mercantilism and its Critique

Mercantilism refers to an economic theory and practice dominant in Europe from the 16th to the 18th centuries, emphasizing the accumulation of wealth, primarily gold and silver, as the foundation of national power. Central to mercantilist thought was the belief that global wealth was finite, creating a zero-sum economic game where one nation’s gain necessitated another’s loss. This framework encouraged policies designed to increase exports and restrict imports, aiming to achieve a favorable balance of trade.

Mercantilism is distinguished by its emphasis on strong state intervention in the economy, such as employing tariffs. Governments in the past actively supported domestic industries through subsidies that they no longer do, imposed tariffs to protect against foreign competition, and established monopolies. This system was underpinned by colonial expansion, which provided raw materials to the mother country and served as captive markets for manufactured goods.

Much of Trump’s rhetoric can be understood within this construct, even if his past actions make clear that he solely uses this rhetoric to misconstrue his real intentions, like a robber baron meets mobster, his own personal enrichment by any means necessary.

Modern Mercantilism under "America First"

Donald Trump's presidency (2017–2021) represented a resurgence of mercantilist rhetoric, encapsulated by the slogan "America First." His administration's economic policies, particularly the imposition of tariffs on Chinese goods and renegotiations of trade deals like NAFTA (renamed USMCA), sought to revive domestic manufacturing and reduce trade deficits. Trump's fixation on tariffs as a tool for economic nationalism reflected a fundamental misunderstanding of their mechanisms and long-term consequences.

Trump's Past Policies

Trump's past tariff policy reflects a commodified misunderstanding of global trade, reducing complex international supply chains to simplistic nationalist binaries. Marxist theory critiques such economic nationalism for obscuring the realities of capitalist production, which relies on international labour exploitation and globalised markets. Tariffs, instead of reviving domestic production, merely shift the costs of protectionism to consumers and small businesses, intensifying class contradictions.

Trump's rhetoric framed tariffs as punitive measures against foreign producers, particularly China. However, the reality is that tariffs are paid by domestic importers, who often pass these costs onto consumers. Trump's policies ignored the capitalist imperative to maximize profit, which drives corporations to seek cheaper labour and production costs abroad. By attempting to isolate the U.S. from global supply chains, Trump's policies exacerbated economic inefficiencies rather than addressing the root causes of deindustrialization..

We can and should situate Trump's policies within the broader contradictions of late-stage capitalism. The U.S., as a declining hegemon, faces structural challenges that tariffs cannot resolve. These include the overaccumulation of capital, the falling rate of profit, and the global shift of manufacturing to regions with cheaper labour. Tariffs cannot reverse these systemic trends but instead create friction within a global economy increasingly reliant on transnational cooperation.

Moreover, Trump's mercantilism ignored the interconnected nature of global capitalism, where U.S. corporations benefit from cheap labor in the Global South. By disrupting these supply chains, tariffs undermine the very foundations of U.S. economic dominance, accelerating its decline relative to emerging powers like China.

Trump’s "America First" policies represent a reactionary response to the crises of global capitalism, rooted in a neo-mercantilist worldview. However, this approach fails to grapple with the realities of 21st-century globalized production. The contradictions at the heart of Trump’s mercantilism, highlighting how his policies exacerbate class tensions and undermine U.S. economic stability. The path forward lies not in protectionism but in addressing the systemic inequalities of global capitalism.

The more you know.

As always, thank you for your time and attention.

Yours, warmly,

Steven