The headlines have been ablaze recently with the escalating trade war between the United States and China. The opening shot was the imposition by the Trump Administration of $50 billion in tariffs against 130 different types of Chinese imports, artificially increasing their prices to make them more expensive, and less attractive, to U.S. consumers. Shortly thereafter China imposed its own regimen of $50 billion in tariffs against a wide variety of U.S. imports. All of a sudden, the trade war was on!
Since then the Trump administration has threatened an additional $100 billion in tariffs and has recently imposed sanctions against ZTE, one of China’s largest global providers of technology, effectively locking it out of U.S. markets. If we really want to understand the significance of these actions, it is essential for us to understand the history of the United States and trade.
After WWII the U.S. emerged as the last superpower in the West still standing after a devastating conflict which drew in nearly every country throughout Europe and beyond. This war left many of the capitalist countries-which would have competed with the U.S. for market share and profit-barely hanging on; their many industries devastated by bombs and bloodshed. At that time, the United States decided on a strategic vision: a truly global capitalist empire with the U.S. at the center of it. A world where capital could move easily and freely, no longer bound by states, communities, or human needs, able to seek profit wherever it chose. Until very recently, this vision and goal has been the hallmark of the ruling class elites in the U.S..
To achieve this global vision the U.S. would engage in warfare, sabotage and bribery, all with the aim of overcoming the barriers other countries sought to impose to protect themselves and their economies. However, the U.S. was willing to be strategic about removing these barriers. It funneled billions of dollars into Europe in order for it to rebuild from the Great War with the aim of creating willing markets to purchase U.S. goods. The U.S. would allow certain countries to impose trade barriers temporarily to build their markets to be strong enough to attract capital from U.S. investors.
The United States’ relationship with China is a good example of this. In the 1970s world socialism was on the rise with nearly a third of all human beings living under a socialist economy. One such massive economy was China’s. In spite of his virulent anti-Communism, Richard Nixon brokered a deal with Deng Xiaoping, who took power shortly after Mao’s death. In exchange for opening its cheap labor supply to U.S. capital, the U.S. would allow China to maintain a degree of state control over U.S. investments and to tax them heavily. The end result is that companies like Apple have reaped super profits from this labor while China has developed its productive capabilities and has been able to finance strong social programs to benefit its people. A strong middle class has developed in China and per capita income has gone up dramatically.
New trade war signals change
The trade war with China, however, signals a dramatic change in the United States’ relationship with China and the overall vision of U.S. capitalism. Trump, inspired by ideologues like Steve Bannon, is promoting a hyper nationalist “America First” platform rooted in a racist nationalism. This ideology believes that China is a mortal enemy of the United States and that the Chinese economy will soon eclipse U.S. markets. This racist ideology blames the people of other countries for the United States’ own economic problems. The super profits gained by U.S. capital being invested in foreign markets–markets like China–have aggravated income inequality in the United States to the breaking point. CEOs like Jeff Bezos and Tim Cook own wealth the likes of which most people can only dream and envy. Poor workers in the U.S. have far more in common with workers in China than they do with lifelong millionaires like Donald Trump.
The policy of aggressive tariffs shows that the United States is becoming less interested in an integrated global capitalism and more interested in its own narrow economic interests. This narrow focus is the first step in escalating conflict between different ruling class elements tied to their respective countries. We saw the same thing happen prior to WWII when the ruling class in Germany believed it had to eliminate its ruling class competitors in the surrounding European nations in order to be successful. The other capitalist European powers came to believe the same and the end result was a brutal war which cost many millions of lives. Trump’s line of thinking is similar in that he believes that for U.S. capitalists to succeed, China’s must fail.
Tariffs, used like sanctions, have the illusion of being the alternative to open war. Tell that to the nearly one million Iraqis who died under U.S.-UN sanctions following the Gulf War. When applied aggressively, tariffs can cripple economies resulting in food shortages, shortages in fuel, and shortages in clean drinking water. Aggressive tariffs are an act of war, pure and simple. By imposing tariffs on China the United States is upending nearly 70 years of international and economic policy and aggravating a powerful, nuclear armed nation. War with China may seem like madness, but most people in Europe in 1938 had no idea a war was coming that would destroy most of the Western world.
It is for these reasons that people must reject the racist narrative which blames “foreigners” for the economic problems of the United States and instead lay the blame at the feet of the capitalists in the United States who own nearly half of our wealth. We must reject the narrative that tariffs and sanctions are beneficial or even necessary when they drive nations closer to war. A war that will not end the lives of the billionaires who profit from the war but the lives of the millions of working people who are forced onto the meat grinder of the front line in the name of a nationalism which does not care if they live or die. It is not China that is our enemy but the billionaires who declare war and then hide in their gated communities while young people go off to die.