The Economic Crisis, Trump’s Sanctions, and the Cost to Poor and Working People

Editorial Board

Global stocks face upheaval in response to Trump’s so-called tariffs. Trump rejects calls even from sections of the imperialist ruling class to scale back the sanctions; then, when pressured, postpones or reorganizes them. On Wall Street alone, $6.6 trillion was wiped out in two days during the start of this round of tariffs, announced April 2 on what he dubbed “Liberation Day”. Forced by the weight of events, even those stalwart deniers of the economic crisis among the imperialist and reactionary camp have begun to acknowledge reality by discussing “recession.”

Trump has not backed down on his efforts to exacerbate the inter-imperialist contradiction between the US and China and the tariffs reflect this.

Trump threatens to increase the sanctions of 145% leveled at China to an unprecedented 245% on some commodities—electric vehicles, for instance. The tariffs on these were already at 100% under the former Biden administration. The White House insists that Trump will not reconsider, and that his next move is targeting Chinese semiconductor trade, though the main semiconductor producer in the world remains US-dominated Taiwan. Global trade and investments suffer paralysis and dangerous vacillation. The Asian stock market has plummeted. The European Union has stated that they are willing to negotiate, but are prepared for retaliatory tariffs. Chairman of the Federal Reserve Jerome Powell has warned that the uncertainty of the tariffs poses a real threat to US economic growth and trends toward higher unemployment and faster inflation, a trend The Worker has already observed. In response, Donald Trump has threatened to fire Powell: “If I want him out, he’ll be out of there real fast,” Trump announced in a press release.

Many bourgeois economists and imperialist billionaires are speaking in more alarming terms than they were before Trump took office. Problems and contradictions are arising within Trump’s own camp, while he stubbornly continues to liken the sanctions to medicine to “fix something.”

Those who suffer the most from Trump’s sanctions are the workers and peasants of the Third World.

These are the nations oppressed by imperialism and under bureaucratic capitalism, the capitalism that imperialism generates in the backward countries, which is linked to a decrepit feudalism and in submission to imperialism which is the last phase of capitalism. This system does not serve the majority of the people but rather the imperialists, the big bourgeoisie, and the landowners.

The Trump administration calculated the rate of sanctions based on the surplus trade with the US divided by the country’s total exports, and then divided by 2. Oppressed nations are hit the hardest. Some of the poorest countries in the world—such as Cambodia and Laos, where the average worker earns a few dollars a day—were each hit with nearly 50% in tariffs, drastically deepening their ongoing economic and political crises. If the sanctions persist, the comprador bourgeoisie and economists predict that many factories will be shutdown and mass layoffs at an enormous, countrywide scale will take place, as imperialists relocate their manufacturing to countries with lower tariffs.

At the same time, the boogeyman of “trade deficit” not only hides the fact that the imported commodities are produced under the domination of foreign—often US—capital, but that the US exports its cheapest and most defective commodities to those countries. For example, one of Cambodia’s top imports from the US is food waste to be turned into animal feed.

This serves a dual function of deepening US domination of the oppressed countries as well as weakening the position of other imperialist powers that utilize oppressed nations as export platforms. The comprador bourgeoisie in Cambodia is considering granting the imperialists tax credits to keep their factories in place, increasing their profits by transferring more wealth produced by peasants and workers. At the same time, the sanctions themselves serve to skim more profit off the backs of the oppressed nations—for example, last year, even before the added sanctions, the US government collected nearly $1.3 billion in duties on commodities imported from Bangladesh.

The second most affected people is the working class of the imperialist countries whose economic and military strength do not rival that of the US. This will be felt particularly across Europe. Trump wants to destabilize Europe in the interests of preserving US imperialist global hegemony. The German, French, English and other imperialists will not be taking the loss themselves, but will raise prices, passing the problem off to their own working classes while colluding and contending with US imperialism. The workers of these countries have suffered the economic crisis more than it has been felt in the US, which still maintains the strongest economy in the world.

Finally, there will be a dramatic impact on the US working class, who will have less money with less purchasing power and will be subjected to price increases. The sanctions are not likely to increase the number of US jobs—for example, the president of the American Chamber of Commerce in Cambodia, representing US monopolies in the country such as Under Armour, Lululemon, Black & Decker, Hugo Boss, Eddie Bauer, Dollar General and Bass Pro Shops, stated of the monopolies: “They’re absolutely not going to go back to the United States,” adding, “I can’t imagine that Americans want to sit down and sew a pair of sweatpants for long hours of the day.” In other words, the superprofits and extreme exploitation and oppression enforced in the Third World are not comparable to the US, and the monopolists have indicated that they will simply move to Third World countries with lower tariffs if need be.

The tariffs are not designed to increase things like sweatshops in the US, but to produce the critical elements of tech production which the US needs to stay hegemonic. The imperialists loot the natural resources such as bauxite, lithium, and coltan required for this production while bolstering their ability to bypass the supply-chain by having a backup supply from increased home manufacturing.

On the other hand, there will certainly be an increase in competition for the existing jobs in the US due to the drop in wages, and in a vicious cycle this competition will increase and feed into the process of layoffs and automation. This assault is combined with increased state terror directed against mainly Latin American workers and rollbacks of child labor laws, forcing workers to accept more precarious conditions for lower pay. The companies that do return to domestic manufacturing will lead all out assaults on labor rights, and focus on producing in areas of the US South with the least developed labor laws.

The Process of Protectionist Tariffs

Imperialism is capitalism in decay, and US imperialism particularly stumbles from crisis to crisis. Such crises happen often and tend to get worse with each successive cycle of crisis-recovery. Though they try to hide it, the US imperialists are well aware of this, and their chief representative Trump has planned since before November of last year to use sanctions disguised as tariffs politically to force capitulation from other governments, and also to use actual tariffs economically to crush them. Trump’s behavior is explained perfectly by his job to defend the hegemony of US imperialism, preventing the other imperialists from assailing the position of the US, while increasing the domination and oppression of the semi-colonies and colonies of the Third World.

The rhetoric that comes from Trump is always that he represents a fight to return to industrial production—which has declined from representing only around 30% of the US GDP in 1970 to 10% in 2023. The trend of increased economic weight in the service sector (over 76% of the GDP), paired with a decreasing industrial productive sector and the supply chain problems exacerbated in 2021 makes it increasingly important for US imperialism to regain a home base for its production chains. The protectionist policies began during Trump’s first term in office and continued under Biden, and have reached a state of frantic desperation this year.

US domination of the global tech sector requires imports and so the reactionaries dream of enhancing their global dominance in order to protect it. Tariffs are designed to fulfill this. They begin as protectionism from importers but (especially under monopoly capitalism) quickly transform into protectionism against consumers. The absurd system of protectionism does not benefit workers but is a bail out for monopoly manufacturers, strengthening their direct control over the market and allowing them to raise consumer prices. Most importantly for the US worker, this comes along with massive attacks on hard-won labor rights of some sections of workers, as workers are forced to work more jobs and for longer hours in order to make ends meet and increasingly compete among themselves for jobs while the capitalists simultaneously automate and carry out mass layoffs. This seeps down, increasing the attacks on labor rights generally, affecting the deepest sections of the class with worsening safety conditions and lower pay.

Once protectionism is implemented against importers it is nearly impossible to reverse—not only due to the influence of the monopolist manufacturers but also because of the political and economic turmoil created by the panic that tariffs provoke, and the problems from there cascade into deepening the problem of rising prices. It is uncertain that even the basic increases to domestic manufacturing will be meaningfully accomplished on a countrywide scale but it is certain that the workers will suffer worse conditions and afford less.

Protectionism in no way benefits small businesses, as it allows the monopoly capitalist greater control by rigging the markets even further in their favor and strengthening their domestic supply of the material necessary for the productive sectors—like tech, which they already dominate—driving more small-scale capitalists into the ranks of the working people. Likewise it offers no step forward in regard to the conditions of working people, who not only must fight the worsening of conditions, but in that fight be educated on the question of political power.

Attacks on the People of Mexico

Trump has pressured the capitulationist and land-selling government in Mexico politically and economically to grovel and accept his terms of further military and economic domination of the country.

The US imperialists intend fully to increase the oppression of Mexico while using Latin America as a scapegoat to divide the working class. US imperialism seeks to reorganize Mexico into a colony from which it extracts raw materials. Destroying its natural resources, it has imposed mega-projects and displaced poor peasants to facilitate them. In a violent and coercive manner, the US imperialists seek to preserve their decadent wealth by further dominating and draining the oppressed nation closest to it.

It does not harm the overall plans of the US imperialist ruling class to spare Mexico of tariffs, provided their country-selling government predictably capitulates. They have amassed their troops around Mexico and waged a relentless assault on Mexican immigrants and Mexicans working in the US. It all becomes far more insidious when one considers the flow of illegal weapons from the US to Mexico which prop up imperialism with extrajudicial gang brutality. US imperialism has always propped up drug cartels in this manner, all over Latin America. After taking advantage of the crumbling and corrupt Mexican state and arming the cartels, Trump threatens to encroach on Mexican sovereignty by troop and drone deployment in the name of stopping the very forces set up by US imperialism. The goal is to carry out suppression of the revolutionary activity in Latin America in preparation for imperialist war and to prevent rival imperialists from encroaching upon US plunder in Latin America. The US imperialists fear nothing more than the liberation of any Latin American country, which would set off a conflagration in its “backyard” that threatens to bring down its own crumbling edifice.

Photo: Trump displays a chart of tariffs to be levied on “Liberation Day”.

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