The key to a capitalist economy is the state of its capital accumulation. That goes for understanding tariffs in particular.
— U.S. tariffs were successful in the late 19th century. Capital accumulation was vigorous, and tariff protection helped develop domestic industries.
— The 1930 Smoot-Hawley tariffs certainly did not help when the boom of the 1920s had already collapsed into a deep depression. Capitalism cannot evade the law of the falling rate of profit; boom turns into bust.
— Now, Trump’s tariffs make things worse for workers. The immediate consequence is higher prices. In theory, there could also be a positive impact if tariffs on cheap-labor products from China, Mexico, Vietnam, India, etc., spurred capital investment in domestic production. It is a mirage. Capital in decay chases ever-lower wages or races for a technology niche it can monopolize. Capital does not see more profit from investment in good jobs and a rising standard of living for U.S. workers.
Robert Kuttner, a non-Marxist but pro-worker economist, sees the facts:
“[Tariffs on Canada, Mexico, and China] will raise consumer and producer prices somewhat.”
“Exacerbating the impact of tariffs on Canada and Mexico is the integrated nature of North American production since NAFTA…a humble car part, a piston, makes six different border crossings as it goes through several stages of production in the U.S., Canada, and Mexico…how on Earth do you levy tariffs on each border crossing without slowing down the production chain?”
“The Conference Board’s Consumer Confidence Index for February…fell for the third straight month, marking the largest monthly decline since August 2021…Consumer spending in the U.S. dropped 0.2 percent in January—the first monthly decline since March 2023.” (Excerpts)
Opposite to a Marxist analysis is the child’s reasoning of the United Auto Workers—cheering Trump’s tariffs. The union leadership, headed by Shawn Fain, recently stated, “Tariffs are a powerful tool in the toolbox for undoing the injustice of anti-worker trade deals. We are glad to see an American president take aggressive action on ending the free trade disaster that has dropped like a bomb on the working class.”
Free trade and outsourcing production to low-wage countries have indeed been a disaster. So the UAW statement continued, “But if corporate America chooses to price-gouge the American consumer or attack the American worker because they don’t want to pay their fair share, corporate America bears the blame for that decision…We want to see corporate America, from the auto industry and beyond, recommit to the working class.”
Fain threatens the auto bosses with unease in their souls. They will “bear the blame” if they do not “pay their fair share.” The auto bosses must be laughing in their executive suites while the UAW feeds illusions to its members and workers in general.
Did Trump pay attention to the UAW’s praise? Only hours after the union statement’s release, Trump exempted cars and trucks for one month from the 25% tariff hikes on Canada and Mexico.
Trade After Capitalism
What will a working-class regime be able to do immediately after the revolutionary overthrow of U.S. capitalism? We will continue trading with foreign capitalists as needed, but state control will ensure the balance between imports and exports. The imports will be necessary raw materials and foodstuffs. We will not become dependent on goods made by exploited cheap labor. We will have to develop alternative products and find new methods of meeting our needs, too, because the capitalist powers will try to strangle us.
We will not have to worry about whether investment is vigorous or slack. A planned socialist economy allocates overall investment so that our economy expands in a balanced way, with full employment of all of us, to produce what we need, not what brings capitalists a good profit.
One reason Trump won the 2024 election was because workers suffered prices rising faster than wages during the Biden years. Now, Trump makes things worse with his stupid tariffs, and Musk swings a sledgehammer at every program that provides some relief to working people.
There is no going back to a better capitalist U.S. The only way is forward to the overthrow of capitalism and onto the socialist-communist road. Commit, study, organize, act!
* Charles Andrews is the author of The Hollow Colossus and other books.
