Do Tariffs Really Benefit U.S. Workers?
U.S. president Donald Trump recently imposed sweeping tariffs[1] on goods imported from dozens of countries — U.S. allies and foes alike.
On April 9, Trump put a 90-day hold on the steepest of these protectionist measures against most countries. But he still left in place “only” 10% levies on 70 countries plus 145% duties on China — which retaliated by raising its own tariffs on U.S. exports to 125%. Trump backed off a bit after turmoil in the stock and bond[2] markets, the threat of a worldwide economic recession, and opposition to his tariffs by some of his close allies in the billionaire class, such as Elon Musk.
The trade war the Trump administration has unleashed, and the resulting destabilization of the world economy, pose the question: What’s in the best interests of working people, free trade or protectionism?
EDITORIAL
In his January 1848 “Speech on the Question of Free Trade,”[3] socialist leader Karl Marx warned working people and democrats not to be “deluded by the abstract word freedom!”
“Whose freedom?” he asked. “It is not the freedom of one individual in relation to another, but the freedom of capital to crush the worker.”
Under capitalist social relations, Marx explained, no matter whether free trade or protectionism happens to be the current government policy, the worker “goes to the wall.”
Marx delivered that speech nearly 180 years ago. His closest collaborator, Frederick Engels, wrote an introduction to its English-language translation about 140 years ago.[4] Since then, the structure of world capitalism has changed significantly, with the rise and consolidation of the global imperialist[5] order.
What hasn’t changed, however, is the correctness of Marx’s concluding words: that in judging the trade policies of one or another capitalist government, the position of the workers movement should be determined by what “hastens the social revolution.”
“In general, the protective system of our day is conservative, while the free trade system is destructive,” Marx pointed out in the conclusion of his speech. Free trade, he said, “breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone, gentlemen, that I vote in favor of free trade.”
The labor movement today needs to start with the interests of the working class, which is an international class.
In Trump’s 2nd Term: One-Man Rule & the Danger of Incipient Fascism (II), World-Outlook called for rejecting “the ‘America First’ outlook — advocated by Republicans and Democrats alike. Our motto should instead be ‘Workers and Farmers of the World First.’ A united working class is the only effective wall against the billionaires’ race to the bottom. It is the only class that can ally with other exploited producers, like family farmers, to lift the world out of the bloody wars and dog-eat-dog competition of the profit system.”
World-Outlook continued: “For the U.S. labor movement, that means grappling with the undeniable fact that it is impossible to protect ‘American jobs’ while ignoring the plight of our brothers and sisters in other countries.”
There is no blueprint good for all times, all situations, and all places. But regarding products coming into the United States, our position on free trade is simple: we’re for it. We’re unconditionally opposed to the U.S. government imposing protectionist barriers of any kind under any pretext on imported goods. And we’re opposed to Washington imposing embargoes that block trade with countries such as Cuba, Iran, or Venezuela — or, for that matter, even with other imperialist countries!
We must also expose the “free trade” demagogy of Wall Street financiers and other capitalists and politicians, who for decades pushed for globalization to profit from lower wages and fewer regulations abroad — devastating entire communities in the United States in the process. Many are now adapting — to one degree or another — to Trump’s protectionism to reverse the ongoing slide of U.S. capitalism from its previously unchallenged position as the world’s top economic power.
The trade policy of those who rule the United States, or any other imperialist country, is a national policy. Its aim is to advance the national interests of the exploiting class, including balancing the conflicting needs of industrial sectors that are vulnerable to competition on the world market to varying degrees. That’s what prompted textile and apparel quotas in the past. That was the reason behind the tariffs the Biden administration imposed last year on electric vehicles, solar panels, steel and other products that China sells on the world market at far cheaper prices than most U.S. companies.
The Biden administration, in fact, extended nearly all the tariffs Trump imposed on China in his first term and expanded some of them. That was after candidate Biden and the 2020 Democratic platform denounced Trump’s previous trade policies as “politically motivated trade wars that have punished American workers.” No wonder many Democratic politicians today are mealymouthed about Trump’s new tariff tornado.
As they have done for decades, the top labor union officials are taking their cue from the leadership of the Democratic or Republican parties. Most advocate protectionist measures to save “American jobs” in “their” particular industries. This includes Shawn Fain, the United Auto Workers (UAW) president, who, according to a March 26 UAW statement, applauded “the Trump administration for stepping up to end the free trade disaster” by imposing tariffs on imported cars and auto parts.
This will not help autoworkers, or those in any other industry, “bring back good union jobs to the U.S.,” as Fain claimed. This can only be done by union organizing, led by the ranks, and by linking up with auto and other workers in neighboring countries and beyond, on the basis of international solidarity and shared working-class interests across borders.
In the past, under the banner of free trade, the U.S. government has used so-called anti-dumping clauses, “environmental” and “labor standards” restrictions, “human rights” demagogy, and other measures to carry out aggressive trade wars not only against its imperialist competitors, but with special brutality against semicolonial countries.
Trump has now embraced the banner of aggressive protectionism. Under the pretense that trade deficits mean “unfair” treatment of U.S. businesses by friends and foes alike around the globe, the White House is unleashing an even more ferocious trade war that will likely spike inflation and burn a bigger hole in the pockets of working people at home, while also hurting fellow workers in other countries.
A resulting economic downturn, driven by such an “America First” campaign, may eventually lead to higher unemployment and a further deterioration in the working, living, and social conditions that candidate Trump promised to improve.
In addition, as World-Outlook pointed out in the article cited earlier, Trump’s “expansionist saber-rattling [indicated in his threats to take control of the Panama Canal and Greenland], attempts at resource grabbing reminiscent of the colonial era [shown in his push to take half the profits from mining of rare earths in Ukraine], and aggressive protectionism [emphasis added] could lead to new wars and possibly another world conflagration. This is more likely in an increasingly unstable world in which ultra-rightist forces have already ascended to power, or are knocking on its doors, in a rising number of ‘first-world,’ or more accurately imperialist, countries.”
It’s in the interests of the working class, in the revolutionary sense Marx described, to advocate that all goods coming into the United States be free of tariffs and non-tariff barriers of any kind. That’s what class-conscious workers should demand from Washington as well as the governments in Australia, Canada, France, Germany, the United Kingdom, Japan, or any other imperialist country.
Militant workers in semicolonial countries — most countries in the world today — would have different demands. Semicolonial countries, as well as those like Cuba where capitalism was overthrown in the past through popular revolutions, should have a right to use trade barriers to protect their national sovereignty against decades of imperialist oppression and exploitation advanced through debt slavery and other mechanisms finance capital uses to dominate the world.
But the U.S. working class cannot bend to protectionist pressures and abandon the needs of workers abroad who are super-exploited by the same capitalists that exploit us. We will never resolve the crisis we face until we recognize that our enemy lies at home, exercising governmental power through the twin parties of capitalism, and our friends are the billions of producers around the world.
NOTES
[1] Although they most often apply to imports, tariffs are a surcharge that a government can place on goods entering or leaving the country. They are calculated as a percentage of the declared value of the product before it crosses the border. When a tariff is imposed on a commodity — steel, for example — the business that imports that product must pay the government a tax when it receives the goods at the ports of entry. Tariffs are a barrier to free trade. They are most widely used to protect domestic industries or agricultural goods from foreign competition, and, for that reason, they are a protectionist measure.
[2] Bonds (also known as Treasury notes in the United States) are government loans to finance budget deficits. When there is volatility in the financial markets, the 10-year Treasuries are considered a safe haven for investors. Because their yield is among the most important interest rates in the world, they are a pillar of the international capitalist financial system.
The terms those who buy these bonds are willing to accept reflect their confidence — or lack thereof — in the issuing entity. That confidence is built on the perceived reliability of government promises. When the issuing entity is Washington, the bonds are backed by “the full faith and credit of the United States government.”
Today the market in U.S. Treasuries is approaching $30 trillion. Because of its gargantuan size it is not typically affected by volatility in the stock market. For that reason, the sharp shift in demand for Treasury bonds triggered by Trump’s massive tariffs highlighted the severity of the threat they pose to the stability of financial markets worldwide. The unusual combination of big shifts in the bond market plus a decline in the value of the U.S. dollar pointed to a move away from U.S. assets. As a debtor nation that depends on foreign capital to fund its massive budget deficits, these developments put the U.S. economy in a precarious position.
Because foreign investors are among the biggest holders of U.S. government debt, the Trump administration has little control over the defensive actions they may take. Japan, for example, holds more than $1 trillion of U.S. Treasury debt. China still holds $760 billion in Treasuries after reducing its holdings by more than a quarter of a trillion dollars since 2021. So, the Trump administration’s decision to start a trade war with major trading partners or competitors — who also happen to finance the U.S. government’s debt, while also threatening to explode its fiscal deficit with massive tax cuts to the rich, could crater global confidence in the U.S. dollar. This could eventually impact the solvency of the Social Security Administration and other U.S. agencies, as well as pension funds, which together hold a large portion of the total U.S. debt.
[3] “On the Question of Free Trade” was an address Karl Marx delivered before the Democratic Association of Brussels, Belgium, on January 9, 1848. At the end of 1847, Brussels had hosted a “Free Trade Congress,” which was designed to further the general Free Trade campaign British manufacturers were waging. In 1846, the English bourgeoisie repealed England’s Corn Laws and were ready to take their cause abroad. Marx asked for a slot to speak, but the Congress closed before his name could come up on the lists. So instead, Marx delivered his speech to the Democratic Association, of which he was among the vice-presidents.
[4] When the Free Trade question raged again in the late 1880s, Marx’s speech was reissued in English, with a lengthy introduction by Frederick Engels, another socialist leader and Marx’s closest collaborator. “Free Trade vs. Protectionism” is a question that remains periodically relevant as long as capitalism exists. Indeed, when the U.S.-Canada-Mexico trade negotiations took place in the early 1990s, even the New York Times felt compelled to quote Marx’s speech.
[5] Imperialism is the monopoly stage of capitalism. It became predominant at the dawn of the 20th century. Bolshevik leader V.I. Lenin gave this economic system the most apt definition in his famous work, Imperialism, the Highest Stage of Capitalism, written in 1916. Imperialism is marked by five basic features, Lenin said: “(1) the concentration of production and capital has developed to such a high stage that it has created monopolies which play a decisive role in economic life; (2) the merging of bank capital with industrial capital, and the creation, on the basis of this ‘finance capital,’ of a financial oligarchy; (3) the export of capital as distinguished from the export of commodities acquires exceptional importance; (4) the formation of international monopolist capitalist associations which share the world among themselves, and (5) the territorial division of the whole world among the biggest capitalist powers is completed.”
At the second congress of the Communist International in July 1920, a report on the work of the Commission on the National and Colonial Questions summarized the further development of imperialism this way: “The characteristic feature of imperialism consists in the whole world, as we now see, being divided into a large number of oppressed nations and an insignificant number of oppressor nations, the latter possessing colossal wealth and powerful armed forces. The vast majority of the world’s population…belong to the oppressed nations…This idea of distinction, of dividing the nations into oppressor and oppressed, runs through the theses.”
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Categories: Editorials, Labor Movement / Trade Unions, Marxism, US Politics
Comrades,
I appreciated your article Free Trade vs. Protectionism and would like to call to your attention the book : THE TRUTH ABOUT THE ’37 OSHAWA GM STRIKE https://www.barakabooks.com/catalogue/the-truth-about-the-37-oshawa-gm-strike/ The Oshawa strike was a concrete example of cross-border union solidarity that effectively launched the autoworker’s union in Canada.
Grant Hargrave
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