Tariffs and Imperialist Confrontation

As is customary in the bourgeois world, the narration of events always needs someone to blame: the big boss who upsets the established equilibrium, destroys the status quo, makes imminent risks of war, whether military or commercial, flash before our eyes, and lays the foundations for other upheavals.

It was up to “Tsar” Putin—president for life of a weakened imperialism—to rise to this honor in the war fought in Ukraine. It was up to the cutthroats of Hamas and the warmonger Netanyahu. It was up to the hundred “chiefs” and sub-chiefs in a convulsing world. Finally, the former defendant Trump, implicated in a hundred financial scandals, a bankrupt and unscrupulous magnate who wants to “Make America Great Again” and threatens military and economic havoc, has comfortably appeared on the scene of the most powerful imperialism in the world. He is also ready to put them into practice.

We communists consider all these supposedly “great men” to simply be mouthpieces for other forces and political forms that are at the basis of—or behind the scenes of—world affairs.

But to summarize and simplify the explanation, we too will refer to the big names. That is, those who—for better or for worse—seem to be responsible for the dynamics between states.

In the United States the federal political personnel and president has changed after a hysterical electoral show. This show was staged by a very powerful publicity machine that has the sole purpose of disorientating and directing those who still believe in these liturgies towards the political solution that world conditions actually needed.

Because of the crises between the imperialisms, as well as the economic and financial crisis, the previous political group had to be changed. All these crises required a different attitude from the apparent and hypocritical benevolence of those who had previously managed them. A new mask was needed. This mask would show a ferocious face, hurl threats at enemies and allies, and it would impose the primacy of the United States without any sense of hypocrisy.

Whoever capitalism needed to succeed, succeeded.

There has long been a large collection of dossiers and critical issues on the desk of the American presidency.

These are the reorganization of geopolitical boundaries threatened by emerging powers, the control of raw materials essential for capitalism, the maintenance of the military power  absolutely necessary to sustain a stratospheric debt that can never be paid and therefore must increase year after year, and a commercial war to maintain or expand their markets and support national production.

Financial, geopolitical and commercial crises are the three roots of the creeping world crisis of capitalism.

The new tenant of the White House has made his allies and certain enemies alike feel the weight of his strength in a brutal and unscrupulous way.

In his first real decision, he threatened and then started a trade war between the United States and the rest of the world, confident that he could afford it.

The previous administration had taken a hands-off approach to tariffs on imported goods and left only a limited part of the duties that Trump had decided in his previous term in force. This was when he imposed duties of 25% on steel and 10% on aluminum. The European Union reacted to this by increasing the import duties on alcohol and motorcycles produced in the USA.

Under Biden, a system of European quotas for access to the American market had been agreed to and the retaliations stopped.

Instead, Trump has openly declared for all signs of a real trade war.

He first announced a considerable tightening on steel and aluminum towards Canada, Mexico and China. Then, he granted a one-month moratorium, and finally on February 11th he signed an executive order for the rest of the world.

American imperialism has returned to wielding the tool of tariffs on steel and aluminum—strategic components for capitalist production.

Tariff increases on imports from Canada and Mexico have shaken the global steel industry, which was initially uncertain as to how this initiative would nullify the already negotiated trade agreements established in the US-Mexico-Canada Agreement.

This was an agreement that President Trump renegotiated from NAFTA—made in the ’90s—during his first term, from 2017 to 2021.

At the present time, aluminum and steel imports into the United States have reached a value of 50 billion dollars.

The country imports aluminum mainly from Canada ($9.5 billion), the United Arab Emirates ($1.1 billion), and Mexico ($690 million).

Steel is imported from Canada (11 billion), Mexico (6.5 billion), and China (5 billion), and to a lesser extent from Brazil and other producers.

In general, the purpose of duties is to protect and strengthen national production at the detriment of imported products.

But aluminum and steel are basic products for many other industries, construction, transportation, aeronautics, and military equipment, and their availability is essential for capitalistic production.

These products are therefore particularly critical.

President Trump’s decisions were initially only threatened, but an additional duty of 10% has already been imposed on all Chinese imports. This will presumably be added to the 25% already imposed in the past on steel from China. China, however, did not immediately respond harshly. Instead, it limited itself to taxing imports from the USA to the value of 14 billion, against US duties that affect Chinese products to the value of 525 billion dollars.

There is also another underlying strategic objective that is implicit and connected to this clampdown on imports.

The American production system is in a slow but steady decline, and the recent policy applied under the Biden administration has imposed significant tax incentives on foreign companies to relocate their production to the US.

Important European companies have already started to take this initiative to escape the grip of duties and other commercial restrictions that the world’s leading military power is implementing to defend its economic system.

The punitive measures on trade—even towards reliable historical allies who should therefore be protected in some way—as well as the simple enunciation of further constraints and barriers by the president, also have the aim of threatening to cut off companies that do not produce directly in the United States from the huge American market.

It’s a brutal warning not only to European producers, but also to Canada. In Canada, many manufacturing companies are already American-owned but their imported goods compete with goods produced in America—even if their profits flow back to the States through other channels.

February’s executive order caused great concern in the exporting states, but the general response was in no particular order. Everyone basically called for negotiations in order to reach an agreement on the two products.

America’s closest allies, Australia and Canada, are even calling for the abolition of tariffs.

Of course, for Canada, the issue is more critical, since Trump is demanding that it be incorporated into the American federation, and the tariffs also serve as an element of political pressure.

Those who had already imposed duties on the import of American goods, such as India, proposed to lower their duties.

Europe has announced countermeasures, but has been careful not to make explicit statements about them.

It is already in a state of financial distress: Europe has had to buy Liquified Petroleum Gas from American tankers at a price considerably higher than what it paid for gas from Russia, excluding regasification costs. We should note that talking about “Europe in general” is an incorrect generalization because Europe is only a political-economic simulacrum of states that exclusively aim for their own political and economic advantage.

If there was ever a need to further evaluate the current state of subjection to the most powerful imperialism, this is the clearest demonstration.

But there is also another strategic objective in these decisions on trade.

Trump’s decisions are mainly aimed at hitting China, which produces a greater quantity of these two materials than the rest of the world.

China used to employ most of its steel and aluminum production in the domestic market, but recent difficulties in domestic demand had reduced consumption. This led to an increase in exports at reduced prices, even to Canada and Mexico. In turn, these two exported to the United States.

A typical mechanism of capitalism—perhaps fraudulent on an “ethical” level—but used in many other circumstances. Consider Russian gas, which after being sold to some countries that don’t recognize the sanctions imposed on Russia, then returns with a different “label” for European consumers.

This masked dumping maneuver (selling below cost because the purchase was made  below cost) by Canada and Mexico has put the American steel industry in serious difficulty. Moreover, the American steel industry is developing in regions that are politically critical due to electoral results.

If the industrial sector of transformation into consumer goods benefits from this import situation, another national sector suffers.

But this is the nature of capitalism.

Even if it is not yet clear how the trade war that the USA is starting against the rest of the world will evolve, when all is said and done, the world of Capitalism is showing tremendous difficulties in maintaining its global structure and indicating what its future will be.

Either war between states or social revolution.