One Year After Trump’s “Liberation Day” Tariffs

Read our editorial on Trump’s sanctions here.

When arch-reactionary Donald Trump declared April 2 of last year as “Liberation Day,” he presented sweeping tariffs as a historic rupture. According to Trump, these measures would “liberate” American industry, restore jobs, and generate vast new revenues—“trillions of dollars”—to resolve the deepening US debt crisis. The policy targeted more than 180 countries. Despite legal challenges, including a Supreme Court ruling striking down portions of the tariffs, the measures that hit workers hardest remain in place, and trade wars with rival imperialist powers continue.

Trump’s fixation on tariffs involves the idol worship of President McKinley, who presided over the transformation of the US from free-market capitalism to monopoly capitalism. During this period, bank capital merged with industrial capital, leading to monopolization with finance capital at the helm. The US military was deployed to seize and colonize Cuba, Puerto Rico, Hawaii, the Philippines, and Guam on behalf of those monopolies. Trump casts himself in this mold, invoking tariffs as a tool of national revival. But under the imperialism of today, tariffs function in fundamentally different ways.

Tariffs have not resolved the general crisis of US imperialism. They are an expression of it. Far from generating jobs, they have coincided with rising joblessness, particularly in manufacturing. Public debt continues to climb, and the war on Iran threatens to accelerate this trajectory. Rather than restoring industrial strength, tariffs function as instruments of finance capital, used to enforce economic domination on behalf of the ruling class.

The Role of Tariffs

When the US was a rising capitalist state, tariffs served to protect the budding industrial capitalists. The economy remained largely agrarian, with slavery entrenched in the South. Industrialists in the North required protection to develop domestic industry. As Karl Marx observed, the protective system functioned as a means of building large-scale industry, which later became fully subordinated to the world market and free trade.

With the consolidation of monopoly capitalism and the maturation of US imperialism, tariffs no longer function as instruments of national industrial development. They have become instruments of imperialist domination.

Tariffs serve three important functions for US monopolists today: to force concessions from rival imperialist powers, particularly Britain, the EU, and social-imperialist China; to extract greater wealth from oppressed nations in the Third World by forcing unequal treaties that lower barriers to US investment and commodities; and to depress wages in the US by raising the cost of imported goods.

Trump is using tariffs to exert pressure on allies and rivals alike, forcing concessions and capitulation. Companies in the EU and UK have responded by partially relocating production into the US to bypass tariff barriers, while simultaneously maintaining economic ties with China to secure access across competing markets.

US imperialism escalated measures against social-imperialist China, with rates at one point reaching 145% on some imports. Both sides later settled on a 10% reciprocal tariff. In practice, US tariffs on Chinese goods average around 51%.

These developments reflect an intensifying inter-imperialist rivalry. China has moved to consolidate control over rare earth minerals essential to advanced technology and military production, directly challenging US imperialist efforts to maintain global dominance.

Trump’s protectionism is far from an anomaly. It extends existing policy, only in a more naked form. The Democrat mafia relies more heavily on state subsidies and selective tariffs, while the Republican mafia favors broad tariff regimes and tax cuts. Despite tactical differences, both aim to preserve US imperialism’s status as the sole hegemonic imperialist superpower.

Unemployment and Inflation

Trump’s claims are pure demagoguery. He attributes job losses to “unfair” trade deals, but in reality US monopolists have relocated production to exploit cheap labor and weaker regulations in the Third World. Tariffs were presented as a way to reverse this trend and restore domestic employment. Instead, they have been used as a weapon to extract further concessions from oppressed countries, deepening domination of US capital while intensifying exploitation. Domestically, workers face higher prices and continued job losses, with no meaningful return of industry.

Manufacturing had already been in contraction for two years prior to “Liberation Day,” meaning factory output was declining, new orders were falling, and firms were cutting production and investment across the sector. Tariffs produced only limited gains in narrow sectors such as primary goods (metals and nonmetallic minerals), while losses spread everywhere else. The US now faces its worst slump since the start of the pandemic-era crisis of overproduction. Unemployment has risen from 4.3% to as high as 4.5%, with roughly 116,000 manufacturing jobs lost. The sharpest declines are in transportation equipment and electronics.

Tariffs have also fueled inflation. Federal Reserve Chairman Jerome Powell admitted that increased costs are passed directly to consumers. While workers are forced to pay more, monopolists got a $166 billion refund from the federal government after the Supreme Court struck down some tariffs in February.

The US-Zionist war of aggression on Iran has intensified these pressures. The closure of the Strait of Hormuz by the Iranian national resistance has disrupted a critical artery of global energy supply, driving up oil prices, which monopolists pass onto workers.

The price of crude oil and other products derived from it will remain elevated for a while. Oil and gas shipments have not returned to previous levels and finance capital anticipates further shocks. Goldman Sachs projects that prolonged war could drive oil prices to $140 or even $160 per barrel. Such increases would deepen the existing inflationary burden, which has already driven prices up roughly 20% since the 2020 economic crisis.

Public Debt, Militarization, and Austerity

The promise that tariffs would reduce public debt has proven hollow. The US continues to run a massive deficit while expanding military spending amid its losing war on Iran and its regional allies. Trump has proposed $1.5 trillion in military expenditures for 2027 alongside $73 billion in cuts to health, housing, and education.

Trump stated, “We can’t take care of day care… It’s not possible… Medicaid, Medicare… We have to take care of one thing: military protection.” The cuts target LIHEAP, which helps poor households afford heating and cooling, WIC, which provides food for mothers and young children, as well as Medicaid, food stamps, and other federal programs relied on by millions.

The proposed 2027 military budget represents a 40% increase, the largest increase since the Korean War. Combined with tax cuts for the wealthy, it will drive public debt even higher, pushing it beyond $44 trillion in the coming decade.

The expansion of public debt reflects the parasitic and increasingly unstable character of US imperialism. Domestic production and exports cannot generate sufficient surplus, and the system becomes increasingly dependent on debt issuance to sustain itself. This growing dependence puts pressure on the US dollar as the world’s reserve currency and encourages rival imperialist powers to move away from both Treasury bonds and dollar-based trade. Rising debt also constrains the state’s ability to respond to crises, as more resources are diverted to servicing debt, driving cuts to social spending.

A year after “Liberation Day,” the same old imperialist trends have continued: windfall profits for the monopolists, paid for by workers through increased inflation and their increased exploitation.

Image: Donald Trump in February 2025. Credit: Gage Skidmore.

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