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A Global Steel War

Marxist Analysis · 2026-05-13

Core Argument

The article argues that the 2002 US steel tariffs were not an aberration from capitalist norms but a predictable expression of inter-imperialist rivalry during an economic downturn. The central thesis is that "free trade" is a policy pursued only when it serves the dominant capitalist power; when domestic profitability falters, protectionism becomes the default mechanism for managing overcapacity and declining profits. The steel tariff is presented as a harbinger of a broader breakdown of the neoliberal globalisation consensus, driven by the underlying crisis of capitalist profitability.

Theoretical Grounding

The analysis is grounded in the Marxist theory of capitalist crisis and the political economy of imperialism. It draws on the classical Marxist understanding that free trade is the ideology of the strongest capitalist power, not a permanent or neutral framework — a position developed by Marx and Engels in their writings on the Corn Laws and later systematised by Lenin in Imperialism, the Highest Stage of Capitalism. The article implicitly deploys the concept of overaccumulation: the steel industry's excess capacity and falling profits are symptoms of a broader crisis in which capital cannot be profitably reinvested. The argument also invokes the tendency of the rate of profit to fall, noting that "global profitability has fallen sharply" since 1997, and that this decline is the underlying driver of trade conflict. The piece sits firmly within the Marxist tradition that sees inter-imperialist rivalry as an inevitable feature of capitalism in crisis, and rejects the liberal notion that trade wars are irrational departures from a natural equilibrium.

Conjunctural Relevance

The article is written in the immediate aftermath of Bush's 2002 steel tariffs, but its relevance extends well beyond that moment. It identifies three pillars of the 1990s boom — high profitability, low interest rates, and expanding world trade — and argues that all three were already weakening. The data cited is specific: US manufacturing fell for 19 consecutive months; corporate profits experienced their sharpest drop on record; General Motors had one million units of excess capacity. The article correctly anticipates that the WTO dispute mechanism would be too slow to prevent retaliation, and that the EU would use a separate ruling on US corporate tax law to impose sanctions, risking a wider trade war. The parallel drawn with the Smoot-Hawley tariff of 1930 is not merely historical colour — it is a structural comparison: both episodes occurred after a period of globalisation and financial expansion, and both reflected the inability of the leading capitalist power to reconcile domestic accumulation pressures with its international commitments. The article's pessimism about the durability of the 1990s globalisation model has been vindicated by subsequent events, including the 2008 financial crisis and the trade wars of the Trump era.

Where the Argument Continues

The article leaves several threads underdeveloped, which are taken up elsewhere in the Marxist.com corpus. The relationship between declining profitability and the rise of fictitious capital — particularly the role of low interest rates in sustaining asset bubbles — is hinted at but not explored in depth. Later articles by Michael Roberts, including his regular analyses of the rate of profit and the long downturn, develop this connection more systematically. The question of whether protectionism can actually resolve the underlying crisis of overaccumulation is not addressed here; it is taken up in subsequent IDOM pieces on trade wars and the limits of national capitalist strategies. The article also does not examine the specific class dynamics within the US — the role of organised labour in demanding tariffs, or the divisions between industrial and financial capital — which are explored in later analyses of the Trump-era tariffs and the Biden administration's industrial policy.

Connections

This article should be read alongside Lenin's Imperialism, the Highest Stage of Capitalism, which provides the theoretical framework for understanding inter-imperialist rivalry as a structural feature of monopoly capitalism. Marx's and Engels's writings on free trade, particularly the speech "On the Question of Free Trade" by Marx, are directly relevant. Within the IDOM corpus, Michael Roberts's later articles on the rate of profit and the long downturn — especially "The Great Recession: A Marxist View" and his regular profitability updates — provide the empirical and theoretical continuation of the argument. The article also connects to the broader Marxist literature on capitalist crisis, including the work of Ernest Mandel on late capitalism and the theory of long waves.

Key Quotes

  1. "In periods of capitalist economic downturn, national interests predominate over international."

  2. "International rules only apply when the world's greatest capitalist power does not think they threaten its interests. When they do, rules are thrown out of the window."

  3. "What this shows is that when the US economy is doing well, free trade rules. When it is not, protectionism rears its ugly head."

  4. "There are three factors that have driven global capitalist growth over the last decade: high company profitability, low interest rates and strong world trade growth/globalisation of capital flows. Since 1997, global profitability has fallen sharply and even the mass of profits has fallen in the US."

  5. "The steel war could be the start of the slippery slope down towards a full-scale trade war and the end of 'globalisation'."