The ruling class doesn't care about free markets or free trade - all they have ever wanted is control, writes Grace Blakeley.
Trump has imposed, or threatened to impose, tariffs affecting trillions of dollars worth of world trade and investment. There’s the 25% tariffs on foreign made cars, the 25% Canada and Mexico tariffs, and now the 10% baseline tariffs on *all imports* to the US, including from America’s allies.
He has also singled out 60 countries as the ‘worst offenders’ when it comes to erecting tariff or non-tariff barriers to trade with the US. The EU will be hit with a 20% tariff, China will face a 54% tariff, Japan will face a 24% tariff, and countries from South Africa, to Cambodia, to Vietnam will face similar barriers. Naturally, many of these states will retaliate, potentially driving the world economy into a trade war of the kind not seen since the 1930s.
A trade war will push prices up everywhere, as well as disrupting global supply chains, and reducing business investment. Together, all this means much lower global economic growth and potentially multiple, simultaneous recessions across a number of large economies.
Wall Street hates recession talk as it impacts corporate profits, which is a big part of why share prices have dropped so precipitously over the last few weeks.
Given that Trump spent his last term desperately trying to inflate share prices by cutting corporate taxes (a strategy which worked very effectively), you could be forgiven for thinking that he’s lost his mind. Why on earth would Trump be pursuing a trade policy that undermines the interests of US capital?
The answer doesn’t lie in the realm of economics, but that of politics. Trump’s policy agenda isn’t about growing the US economy. It’s about defending America’s declining position in the world system. In other words, Trump’s tariffs are about preserving hegemony – even if it means sacrificing prosperity at home.
REVENGE OF THE WORKER
Trump has justified his trade war by claiming that the current system of global trade harms the interests of US workers. He points to the devastation of industrial communities across the Midwest, which have been hollowed out by decades of offshoring. He claims that tariffs will force companies to ‘reshore’ production and create good jobs for American workers.
It’s a compelling narrative that contains a grain of truth. Neoliberal globalisation has been a disaster for much of the US working class, driving deindustrialisation and decline across many communities. Both major parties completely ignored the uneven impact of globalisation, claiming that the aggregate benefits of greater global integration outweighed the costs. A rising tide would, they argued, lift all boats. They could not have been more wrong. And those who lost out from globalisation took their revenge on mainstream Republicans and Democrats by electing Donald Trump.
But tariffs alone will not bring back the jobs lost to globalisation over the last forty years, which was driven by capital’s desperate hunt for cheap labour. Corporations that had been held hostage by organised workers in the rich world sought out disorganised workers in poor states with friendly governments. The plan was both to take advantage of lower wages in these countries, and also to discipline workers in the rich world into submission. It worked.
Trump’s tariffs aren’t going to prompt a wave of reshoring. Existing patterns of production and trade are too embedded to disappear overnight. Over the long term, the rest of the world is going to look for new ways to circumvent a hostile US economy rather than cow to Trump’s demands. Even if some production returns to the US, it won’t be unionised, well-paid, or secure. It will be automated, precarious, and ununionized.
Trump was not, of course, ever really concerned about the interests of American workers. His administration spent four years crushing unions, slashing taxes for the wealthy, and rolling back labour protections. His rhetorical appeal to the interests of working-class communities disguises his true plan: weaponising the US economy to arrest imperial decline.
'FREE' TRADE
The US has ruled the capitalist world system since the end of the Second World War. It has dominated the world through its control over finance, trade, and tech – all backed up by the world’s most formidable military. This dominance allowed it to set the rules of world trade, to the benefit of US capital.
But US hegemony is now in decline. America’s share of global GDP has fallen. The dollar’s dominance is slowly being eroded, and countries like Russia and China have started to trade outside the dollar system. Competitors, including China, have long-since taken over the US’ role as the world’s manufacturing powerhouse. The EU, despite its internal divisions, is pushing for ‘strategic autonomy’ in tech and defence.
Trump’s tariffs are a response to the US’ apparent decline. They’re an attempt to weaponize the size of the US economy and its importance to global trade to discipline both allies and rivals; to force other nations to accept his terms or risk being locked out. In this way, the tariffs are less about economics and much more about politics. They are a form of economic war – a war against the very system the US built after 1945.
In some ways, Trump is finally saying the quiet part out loud. For decades, US leaders claimed to support ‘free markets’ and ‘free trade’. In reality, they used the language of freedom to hide a system of imperial dominance. Institutions like the IMF and World Bank forced open the markets of the Global South. Trade agreements like NAFTA protected US corporations while crushing workers. Thanks to the rules of the dollar-based financial system, global crises were met with bailouts for Wall Street and austerity for everyone else.
The 47th President has dropped the nice-sounding rhetoric. Trump states outright that he’s not interested in free trade and doesn’t care about the impact his tariffs have on markets. What he wants is control: control over supply chains, control over capital flows, control over the behaviour of rival states. He’s willing to crash the economy to preserve US supremacy.
There’s a broader lesson here about how capitalism works. The goal of the capitalist state is not to deliver prosperity for all. It’s to maintain order, protect property, and preserve the dominance of capital, both at home and abroad. The power of capital is what makes the system go around – no company can make profits if workers do not submit to their own exploitation, no government can rule if citizens do not obey.
That’s why governments often make decisions that seem irrational from the perspective of the academic economist. They aren’t serving ‘the economy’. They’re protecting and expanding their own power.
Trump’s tariff plan is a case in point. It may raise prices, lower growth, and tank business investment. But if it allows the US to discipline rivals, secure control over strategic supply chains, and signal to allies that it still calls the shots, then it will all be worth it.
We should not mourn the collapse of the ‘rules based international order’. It was built to serve US capital, not working people, whether in the US or anywhere else. But it is interesting to note that the collapse of this deeply unfair system will not be driven by poor countries coming together to subvert a system that keeps them down, but by rich countries lashing out as their dominance fades.
Trump’s tariffs are a warning: when hegemony begins to slip, the gloves come off. If the American ruling class can’t rule through consent, they will rule through coercion. If they can’t secure their power through economic growth, they will secure it through fear.
Grace Blakeley is an English economics and politics commentator. She is the author of several books including Stolen: How to Save the World from Financialisation, The Corona Crash and Futures of Socialism. Her most recent book is Vulture Capitalism: Corporate Crimes, Backdoor Bailouts and the Death of Freedom.
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