Sam Gindin is a former research director for the Canadian Auto Workers union and co-author of The Making of Global Capitalism: The Political Economy Of American Empire (with Leo Panitch), among other works.
Green Left’s Federico Fuentes spoke to Gindin about the impacts of United States president Donald Trump’s tariff war on global capitalism.
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Could you set out the context for Trump’s tariffs?
For a good many US people, the past four or five decades have brought deepening frustrations.
Trump’s populist response has been to ask why, if the US is the leader in the globalisation of the world economy, have US people borne such a disproportionate share of the burdens but received such an unfair share of the benefits.
Tariffs are, for Trump, the critical instrument to correct this.
This poses three underlying questions: is it true that US people have been getting the short end of the stick within global capitalism?
Does the root of popular frustrations, especially of US workers, lie in trade relations or is it homegrown — in the gross inequalities, permanent insecurities, cutbacks in social services and general failures of governments and political parties to improve working-class lives?
And, if the issue is current and future jobs, can tariffs alone solve this concern?
There is a further factor to consider. The US empire has, over the past eight decades, been defined by its drive to universalise free trade capitalism.
How then does Trump’s dramatic focus on tariffs affect the future of the US empire?
Is Trump right that the US has been getting an unfair deal and tariffs are needed to fix its trade deficit?
Far from the US getting the short end of the stick, the US trade deficit reflects unique US privilege as the imperial centre of global capitalism.
Any other country with sustained trade deficits would be disciplined by “natural” economic dynamics.
It would experience markets losing confidence in its currency, their currency falling in value, and higher import costs (as it would cost more in their currency to buy imports). Imports would consequently fall until they were more or less offset by equivalent exports.
Not so, however, for the US. The US has run trade deficits every year since 1976 without being disciplined due to the US dollar’s universal status. The value of the US dollar was universally trusted and accepted.
Consequently, the US kept getting more of the fruits of labour abroad without having to offer the products of US labour in exchange.
This continues so long as the US remains economically strong and can stand behind the dollar, with the US Federal Reserve essentially acting as the world’s central bank, allowing the US to effectively “print” money.
What of the claim that Trump wants to weaken the dollar to make US manufacturing more competitive?
First, Trump cannot go in two directions at once. His bravado nationalism includes pride in the strength of the dollar, so he would have a tough time going the other way.
Second, weakening the dollar is possible, but not easy. If the US acted to lower the dollar, this may lead to other countries following its lead to protect their own competitiveness.
Negotiating this with the rest of the world would be extremely difficult — part of the point of the US empire’s long-standing commitment to the rule of law and judgement of markets was to avoid the near impossibility of coping with the complexities and disruptions involved in this
Moreover, the method for carrying this out can prove very problematic.
For example, one possible mechanism is for the US to introduce controls that limit the inflow of capital. This might work but comes with other possible consequences: a rise in US inflation as the lower dollar makes imports more expensive, and a shortage of capital (or capital only available at higher interest rates) for consumer and business borrowing.
If this becomes more than an exceptional, temporary intervention, it threatens the workings of global financial markets, a key pillar of global capitalism.
What about the claim these tariffs are a response to a decline in US power or a more general crisis in capitalism?
I think this misses what is going on. There is a social crisis, not an economic crisis.
If we measure US capital’s success in terms of profit growth, the wealth of corporate owners and, especially, the capacity to dominate the “commanding heights” of the global economy, the US’ record is impressive.
It stands at the pinnacle of global high tech sectors (aerospace, pharmacare, biotechnology, health services, computers, software programs, AI) and crucial business services (engineering, legal, accounting, advertising and, of course, finance).
And though the US state has not been able to prevent crises at home and within global capitalism — some quite serious — it has been able to contain them.
The problem is not the weakness of US capital but that its successes have come at the expense of working people.
The international economic crisis of the ’70s was turned from possible conflicts among capitalist states to internal wars on their working classes. Capital succeeded in solving that crisis, in good part on the backs of workers.
The economic crisis for capital was converted into a social crisis for workers.
Could this tariff war lead to China opting to economically decouple from the US?
Yes, but that depends primarily on the US.
What is at stake here is not inter-imperial rivalry in the sense of contesting who will lead global capitalism. China does not want to replace the US and take on its responsibilities or burdens.
It does not want to decouple, but is determined not to give in to bullying and thereby encourage more US aggressiveness.
China’s goal is clear: its GDP per capita is only a fifth to a quarter of that of the US, so its primary concern is obtaining some recognition for its constructive role within global capitalism and continuing to develop under the aegis of the US empire.
That is why it often sounds like the main advocate for a “responsible” US empire.
The US too does not want to decouple, and risking it is also making its allies nervous.
But the US, unsatisfied with its preeminent role in global capitalism and insisting on establishing and consolidating absolute power, risks a greater but unwinnable economic Cold War — or worse.
Could all this create space for Global South countries to pursue more autonomous development strategies?
I do not know. I would not put great weight on the US acting in its self-interest making it acceptable for others to do the same.
We should not assume that the modal form of the US empire is over, with its insistence on the sovereignty of states being contingent on the sanctity of private sovereignty, the free flow of capital and the more general rule of markets.
A return to “normal” — with or without Trump — is still possible.
But the new “normal” will reflect the history of what we are living through and it is not clear to me how investors and states will modify the new order.
Importantly, we must not treat states in the Global South as if each of them has a national consensus on what they want. Class struggles will affect their paths.
Elites will perhaps prefer global economic ties to reinforce their power.
Workers and peasants might, on the other hand, fight for a substantive sovereignty — one ready to challenge capitalist priorities and rules — and see their own elites as much, or more, of a problem than the US.