When it comes to tariffs and trade barriers, the U.S. president is known to be extravagant. In response to the EU’s announcement of retaliatory measures for the U.S. tariffs on aluminum and steel, which include alcoholic beverages, Donald Trump responded by threatening astronomical punitive tariffs of 200% on European wine and sparkling wine.
Protectionist mistakes
by Tomasz Konicz
[This article posted on 4/6/2025 is available on the Internet, https://www.konicz.info/2025/04/06/protectionist-revenants/.]
The lessons that the bourgeoisie learned from the great systemic crisis of the 1930s have long been forgotten in Trump’s Washington.
Tomasz Konicz, 06.04.2025, Originally published on konicz.info on 03/28/25
Want some more? When it comes to tariffs and trade barriers, the U.S. president is known to be extravagant. In response to the EU’s announcement of retaliatory measures for the U.S. tariffs on aluminum and steel, which include alcoholic beverages, Donald Trump responded by threatening astronomical punitive tariffs of 200% on European wine and sparkling wine. So far, this escalation strategy has worked: when Canada’s Ontario province announced a 25% tax on electricity exports to the United States as part of the North American trade war, Trump immediately threatened to double U.S. tariffs on all Canadian metal imports to 50% – Ontario then withdrew its export tax.
Link: https://exitinenglish.com/2025/04/01/protectionist-revenants/
The U.S. actually has a strategic advantage in these trade wars because of its huge trade deficit ($918.4 billion in 2024). This is likely to tend to decrease in the course of the trade wars, while most of America’s trading partners are likely to see shrinking exports. Trump is speculating that he can ride out the short-term turbulence that the major protectionist turnaround will bring in order to achieve the hoped-for long-term return of a re-industrialization of the U.S. before the next election. In fact, the U.S. wants to reindustrialize itself at the expense of those countries and economic areas for whose export industries the U.S. trade deficits have thus far served as a credit-financed economic stimulus program.
In fact, the world economy, which is increasingly running on credit, also functioned like this in the neoliberal era: the U.S. resembled a black hole of the global economy, absorbing surplus industrial production and being able to borrow in the world’s reserve currency, the U.S. dollar, on the rapidly expanding financial markets. In the context of ever-growing deficit cycles, gigantic export surpluses flowed into the U.S. as the center of capitalism’s neoliberal financialization, while a flow of debt instruments and bonds began in the opposite direction, making China, for example, the largest foreign creditor of the U.S. for many years (currently it is Japan). The global total debt, which in the neoliberal era has increased faster than global economic output (from around 110% at the beginning of the 1970s to more than 250% in 2020), was the lubricant of globalization precisely through these deficit cycles.
This neoliberal construction of towers of debt, which gave rise to the illusion of financial-market-driven growth in the United States, spawned a veritable global financial bubble economy that became unstable with the bursting of the real estate bubble in 2008 and unsustainable with the inflationary surge that began in 2020. Trump is thus a product of the crisis, whose protectionism is supposed to provide an answer to the processes of social disintegration that accompanied deindustrialization and the collapse of the financial bubble economy. And it is no coincidence that the whole thing resembles the protectionism of the 1930s, when the world system was hit by the greatest crisis to date.
The internal barrier of capital, which gets rid of its own substance, wage labor, through market-mediated rationalization, is now openly apparent: since new economic sectors that would valorize mass wage labor are nowhere to be found, each economic area must try to protect its remaining industrial capacities, as everyone is trying to support their industries through exports. Trump wants a qualitative break with the credit-fueled crisis delay methods of the neoliberal era – and the contradiction is almost tangible, for example in Trump’s eternal zigzag. The system can only run on credit – and at the same time the consequences of this global deficit boom are no longer socially, economically and, above all, politically sustainable.
But what does Trump want? Ultimately, the White House is currently destroying the system of American hegemony established in the post-war period, since the U.S. can no longer or no longer wants to bear the costs of this hegemony. Instead, Trump is setting about building a U.S. empire that no longer relies on a global network of institutions and rules in the exercise of power, but will presumably assert itself through direct and ultimately military force. And that is not a sign of strength, but of weakness. Trump’s narrow-minded crisis-imperialist calculation, which perceives the deindustrialization of the U.S. as a result of fraud by foreign competitors, will be exposed as such when these competitors no longer see any reason to accept the U.S. dollar as the world’s reserve currency. The systemic cause of the geopolitical upheavals that are now shaking what is left of the “West” is the openly apparent internal limit of capital.
++++++++++++++++++++++++++
Into the Crisis One Tariff at a Time
====================================
Von Tomasz Konicz / 6. April 2025
With its protectionist tariff policy, the new U.S. government is ushering in the end of the age of neoliberal globalization.
Tomasz Konicz, 06.04.2025, Originally published in jungle world on 02/27/2025
Protectionism is likely to become the new normal. The first foreign policy reflex of the new U.S. administration was to instigate trade wars. At the beginning of February, just a few days after taking office, President Donald Trump imposed punitive tariffs on goods from China, Canada and Mexico.
Link: https://exitinenglish.com/2025/03/28/into-the-crisis-one-tariff-at-a-time/
At 25%, the import duties on goods from Mexico and Canada were much higher than for China, whose goods were subject to additional import duties of just 10%. The U.S. is by far the most important trading partner for all three countries, with each of them recording trade surpluses.
However, while the tariffs against China actually came into force, Trump suspended the implementation of protectionist measures against neighboring countries to the north and south of the U.S. for 30 days on February 3rd. At this point, the U.S. government entered into negotiations with Mexico and Canada, during which the threat of punitive tariffs remains in place. In fact, Trump has already been able to secure significant concessions: both Canada and Mexico agreed to tighten controls on their borders with the U.S. Mexico wants to mobilize around 10,000 troops to secure the border so as not to jeopardize the economic position of its northern border region as an extension of the U.S. workbench.
In fact, Trump’s alleged economic protectionism is a geopolitical instrument of power that can be used to extort concessions. In the case of Mexico, which is particularly susceptible to economic pressure from the U.S. because of its increased economic dependency on them as a result of the U.S. nearshoring strategy, the aim is for better defense against migration movements. Canada, on the other hand, is apparently actually being forced to integrate more closely into the U.S. economy – the foreseeable struggle for the resources in and trade routes through the rapidly thawing Arctic make Trump’s bizarre annexation demands regarding Canada and Greenland at least understandable.
China immediately announced retaliatory measures: Tariff increases now introduced there include 15% on energy sources and 10% on agricultural machinery, spare parts for trucks and similar products from the U.S. However, the Chinese government has the short end of the stick in such trade wars. In 2024, the U.S. trade deficit amounted to the gigantic sum of $918.4 billion, of which China alone accounted for $295.4 billion. Even if both sides initially suffer economic disadvantages in a trade war, especially in the current stagflative crisis phase, for example in the form of higher inflation, an escalation would always hit the economy with the export surpluses harder than the deficit country, which can at least hope to substitute imports burdened by tariffs through increased domestic production.
The European Union is in a similar situation, having aligned itself with the export-focused German economic model since the euro crisis and achieving a trade surplus of 235.5 billion euros with the U.S. in 2024. Around 20 percent of all EU exports go to the U.S., its most important sales market. The special tariffs of 25 percent on steel and aluminum, which Trump issued in mid-February, were immediately described by the EU as illegal. It saw “no justification for imposing tariffs on its exports,” according to the EU Commission, which threatened countermeasures to “protect the interests of European companies, workers and consumers from unjustified measures.”
Only Trump’s First Salvo in the Transatlantic Trade War
This was effectively only Trump’s first salvo in the coming transatlantic trade war, as only a few manufacturers in the EU are substantially affected by this. The EU’s trade surplus is primarily generated with cars made in Germany, machinery and pharmaceutical products – on February 18th, Trump consequently threatened punitive tariffs of 25% on cars, semiconductors and pharmaceutical products. Added to this is the EU’s agricultural sector, which is incurring the wrath of the U.S. government due to some EU trade restrictions – for example against the infamous chlorinated chicken. The EU agricultural sector knows exactly what to expect. At the turn of the year, agricultural exports from the EU to the U.S. climbed to their highest level in 15 years. “Mountains of butter, pyramids of cheese and lakes of milk” are currently being laid out for export in anticipation of the coming trade barriers, reported the Austrian newspaper Der Standard.
Trump has already indicated to media representatives that his government is working on a comprehensive protectionist offensive that is likely to hit the EU particularly hard. In principle, the upcoming U.S. tariffs are to be imposed on individual EU countries and not on the entire economic area in order to promote divisive tendencies in the EU, make a joint EU counter-strategy more difficult and reward countries governed by Trump’s ideological allies, such as Hungary, with exemptions. The U.S. Department of Commerce is currently drawing up a list of countries that use “unfair trade practices” in order to impose “reciprocal tariffs” on them.
It is almost certain that Germany’s beleaguered car manufacturers will face new burdens, as the EU car import tariffs of 10% are far higher than those in the U.S. (2.5%). The spreading panic was already evident in the public announcement by VW CEO Oliver Blume that he intends to hold direct talks with the U.S. government. The German mechanical engineering industry is also likely to face tariff increases. If the trade conflict with the U.S. escalates, forecasts predict an additional economic slump of up to 1.5% of gross domestic product for Germany in particular.
What Retaliatory Measures Remain for the EU?
Bourbon, jeans, Harley-Davidsons, peanuts – what retaliatory measures are left for the EU? Brussels and Berlin are certainly aware that the EU is at a disadvantage in trade disputes due to its export surplus. So far, leaders have signaled a compromise proposal and a counter-threat to the U.S. government. The EU appears to be prepared to buy larger quantities of liquid gas from the U.S. and to reduce tariffs on U.S. vehicles in order to reduce the U.S. deficit.
Building on the protectionist experience gained during Trump’s first presidency, the EU had already issued a regulation at the end of 2023 that allows for swift retaliatory measures should “economic coercion” be used against the currency area. This time, it is not just about the import of goods, but also services. This could cause difficulties for U.S. IT giants such as Alphabet, Meta and Amazon in particular, who have very quickly come to terms with Trump’s authoritarian efforts.
However, in terms of economic policy, one can hardly speak of an about-face turn in U.S. policy. It is more a further intensification of the previous restrictive trade tendencies, as Joe Biden’s administration also continued the protectionist measures from Trump’s first term in office in a modified form – especially in the form of the economic stimulus programs that benefited domestic producers. And it is precisely in the increasing protectionism that the crisis process becomes evident. The fight for trade surpluses is a concrete expression of the inner barrier of capital choking on its productivity, which has so far been overcome within the framework of neoliberal deficit economies, especially in the U.S.
Trump now appears to be ushering in the final break with the era of neoliberal globalization, which gave rise to gigantic deficit cycles fueled by speculative bubbles. The U.S., with the dollar as the world’s reserve currency, forms the center of this financial bubble economy, in which U.S. trade deficits act as a global economic stimulus program – until the accompanying deindustrialization led to widespread social disruption and political instability in the U.S., which in turn elevated right-wing populist forces to the White House. In their second attempt, they now seem more determined than ever not only to drive forward fascization in domestic policy, but also to stage a revival of the devastating protectionism of the 1930s, which exacerbated the crisis at the time.
Originally published in jungle world on 02/27/2025