The imposition by the Trump administration of the highest US tariffs since the disastrous Smoot-Hawley Act of the 1930s is a declaration of war against the American and international working class.
Trump has claimed that “billions of dollars in tariffs are now flowing into the United States of America.” This is an outright lie—tariffs are internal, not money that flows in from abroad.
They are a tax on an importer of goods that is ultimately passed on to consumers in the form of higher prices.
Trump’s measures are already being paid by workers in the form of higher prices on all consumer goods. They will rapidly bring job cuts, worsening working conditions—safety in particular—and wage cuts as employers seek to compensate for the increase in the cost structure of US industry across the board.
A central purpose is to pay for the major handouts to the ultra-wealthy and the corporations via the tax cuts in the budget bill.
But the implications go well beyond this immediate aim. History does not repeat itself, but there are lessons to be drawn from it. The imposition of tariffs in the 1930s played a major role in triggering and then deepening the Great Depression, which led ultimately to World War II. The same objective logic is lodged within Trump’s economic war against the world.
The capitalist system was only reconstructed after the greatest bloodbath in history on the basis of the economic power of US capitalism. But that very development led to the undermining of the economic supremacy of the US, which saw its initial expression in the decision on this day in 1971 by US President Nixon to remove the gold backing from the US dollar.
A new monetary order was established based on the dollar as a fiat currency, without any basis in real value in the form of gold. But the underlying historic crisis of American capitalism continued to deepen, leading to a situation where, instead of being the industrial powerhouse of the world, it has been transformed into the epicenter of financial speculation and parasitism.
The US is now the most indebted country in history—$37 trillion and rising. Stretching back to the October 1987 stock market crash, followed by the crisis of 2008 and the near meltdown of the entire financial system in 2020 at the start of the COVID pandemic, it has been rocked by a series of ever-deepening financial crises, with more on the horizon.
The essence of the policies of the Trump regime is to seek to overcome this existential crisis through what its proponents call a “new global trading order” in which US imperialism has the position of an overlord over the global economy, handing out diktats to friends and foes alike under the threat that unless they comply, they will be economically crushed, accompanied by equally ruthless measures against the working class at home.
The tariff measures of the Trump regime are being carried out through two channels.
The blanket tariffs against countries—ranging from the lowest level of 10 percent up to 40 or even 50 percent—are being imposed under the International Emergency Economic Powers Act (IEEPA) of 1977, which Trump claims gives the president the authority to take such action because of the “national emergency” resulting from trade deficits.
This decision was ruled to be illegal by the Court of International Trade in May, but it is now being challenged on appeal by the Trump administration, first to a Federal court and possibly going to the Supreme Court, on the grounds that a reversal of tariffs would lead to a major financial crisis akin to the Great Depression.
Expressing the drive of the administration to proceed regardless, Treasury Secretary Scott Bessent has said that “the more deals we’ve done, the money coming in, it gets harder and harder” for the Supreme Court to “rule against us.”
In addition to the tariffs imposed under the IEEPA, there are tariffs on particular commodities, including steel, aluminum, autos, copper, computer chips, and, down the track, pharmaceuticals, on which Trump has threatened to impose a levy of 200 percent.
The objectives of the tariff war against the world have been outlined by Trump in statements and executive orders making clear that it is aimed at nothing less than the destruction of the post-war system, which, it is claimed, allowed the US to be “ripped off,” its industrial capacity weakened, and thereby its military capability undermined.
These orders have identified China as the central target, with continuous declarations from the administration, the Democrats, and the military-intelligence establishment that its economic and technological development is an existential threat that must be crushed at all costs.
The rationale for the Trump economic war was clearly set out in an essay by Jamieson Greer, the US trade representative, in the New York Times of August 7, entitled “Why We Remade the Global Order.”
The previous system, initiated in the immediate post-war period and continuing through to the establishment of the World Trade Organization in 1995, was “untenable and unsustainable,” with the “biggest winner” being China.
Greer hailed the so-called deal between Trump and the European Union at the end of July, announced at Trump’s golf course at Turnberry, Scotland, as an “historic agreement” and the model to be followed.
There was no “agreement.” The EU was simply told that unless it agreed to the terms dictated by the US, it would have a tariff of 30 percent imposed on its exports, delivering a massive blow to its economy, which is already experiencing near-recessionary conditions.
In addition to compliance with a 15 percent tariff, the US secured agreement for increased purchases of military equipment and energy while giving nothing in return and leaving open the possibility for further tariffs on individual commodities, including pharmaceuticals.
Reviewing so-called deals with other countries, Greer said commitments given were “actionable,” and the US would “closely monitor” the situation and “swiftly reimpose a higher tariff rate for noncompliance if needed,” describing tariffs as a “mighty stick.”
He noted that deals had also come with “significant investment commitments,” including $600 billion in the case of the EU and $350 billion from South Korea.
“These investments—10 times larger than the inflation-adjusted value of the Marshall Plan that rebuilt Europe after World War II—will accelerate US reindustrialization,” he wrote.
While there is no prospect of this perspective being realized, the intent is clear. With the threat of massive tariffs, the US will seek to draw in tribute from the rest of the world in the manner of a Mafia gangster.
While China is the main target of the new world order, the US has not been able to enforce its dictates so easily. After it tried a full-frontal assault with the announcement of tariffs of 145 percent, China retaliated by imposing export controls on rare earth and rare earth magnets, of which it has a near-monopoly, and which is critical for major sections of the auto and military industries.
These measures forced Trump to call a truce, now extended from the first week of August for another three months until November. The truce, however, is not the start of some resolution process, but will be used by the US to gather the resources needed to be able to resume the full-scale attack.
The extent of the onslaught against the working class at home is indicated by the initial figures of the costs of the tariffs now being incurred.
Major corporations have already taken significant blows. General Motors has said it has paid out more than $1 billion in tariffs on automotive parts in the second quarter. Stellantis has said tariffs on imports will cut $350 million from its bottom line, and Nike said its profits will be reduced by $1 billion.
Smaller industries confront devastating consequences. According to a report on Bloomberg, the US Chamber of Commerce has estimated that about 236,000 small business importers—those with fewer than 500 workers—bought goods worth around $868 billion in 2023. The chamber said that the combined annual tariff hit to these companies would be $202 billion, an average of $856,000 for each firm.
These massive amounts of money, and the even bigger sums to come, will be paid for by the working class as the effect of the tariff hikes flows through the entire economy, bringing rising prices and increased job destruction—that is the inexorable logic of the capitalist profit system.
The Trump regime maintains that tariffs boost jobs—another lie, refuted by hard data. Steel tariffs introduced in 2018 are estimated to have increased the number of steel jobs by 1,000. But the number of jobs lost in industries that use steel has been calculated at 75,000 because of the higher prices charged.
The issues before the US and international working class stand out in stark relief. The International Committee of the Fourth International and its affiliated Socialist Equality Parties call on workers to fight for an independent program against Trump’s economic and class war. The watchword must be “the main enemy is at home.”
That is, implacable opposition to the destructive economic nationalism of Trump must be matched by the equally determined opposition by workers in the rest of the world to the economic nationalism of their “own” ruling classes.
This is the foundation for the unification of the international working class and the development of a socialist program to confront the historic crisis of the global capitalist system, of which the Trump economic war is the malignant expression.
This crisis is rooted in the inherent contradiction of capitalism—that between the global economy and the division of the world into rival nation-states and imperialist powers—intensified to an enormous degree by the globalization of production over the past four decades.
US imperialism seeks to “resolve” it through a war against its rivals abroad and a war against the working class at home. The working class must resolve it through the fight for the program of internationalist socialism and the building of the necessary revolutionary party to lead this struggle. There is no third road.