Skip to content

Trade wars are good Trump threatens fragile world economy

Marxist Analysis · 2026-05-13

Core Argument

The article argues that Trump's 2018 steel and aluminium tariffs are not an idiosyncratic policy blunder but a symptom of the terminal crisis of capitalism. The central thesis is that the world economy, ten years after the 2008 slump, is on a knife-edge, and that protectionist measures — far from being an aberration — represent the logical outcome of overaccumulation and declining profitability. Trump's "trade wars are good" rhetoric is treated as a declaration of inter-imperialist rivalry that risks replicating the 1930s dynamic, where the slump itself was deepened and generalised by beggar-thy-neighbour policies. The article insists that no reformist patch can resolve the underlying contradiction: the limited purchasing power of the masses colliding with the expanded productive forces.

Theoretical Grounding

The analysis is grounded in Marx's theory of crisis as developed in Volume 3 of Capital, specifically the proposition that "the last cause of all real crises always remains the poverty and restrictive consumption of the masses." This is deployed not as a mechanical formula but as the organising logic: overproduction is the primary contradiction, and the tariff war is a surface expression of it. The article also draws on the Marxist theory of fictitious capital — the stock market bubble, inflated asset prices, and the proliferation of financial instruments that do not correspond to real wealth creation. The concept of monopoly capitalism as a blind alley, where productive investment dries up and capital becomes parasitic, situates the argument within the tradition of Lenin and Bukharin on imperialism and the decay of capitalism. The ten-year trade cycle is referenced as a heuristic, but the deeper claim is that the system has "reached its limits" and exhausted its capacity for recovery.

Conjunctural Relevance

The article is written in March 2018, at the moment Trump announced 25% tariffs on steel and 10% on aluminium, invoking national security grounds. It identifies the key retaliatory actors — the EU, China, Canada — and names specific figures: Cecilia Malmström, Jean-Claude Juncker, Roberto Azevêdo. The conjuncture is defined by the aftermath of the 2008 slump, the weakest recovery in history, and the build-up of debt: OECD sovereign debt rising from $25tn in 2008 to over $45tn by 2018. The article notes that US stock market valuations (Shiller's CAPE ratio) are as high as 1929, that corporations are sitting on cash piles rather than investing productively, and that the "recovery" has lasted nine years with little further room. The political conjuncture includes the rise of Corbynism in Britain, which the article treats as a symptom of class polarisation and the crumbling of the old order.

Where the Argument Continues

The article is an early warning shot in what becomes a sustained IDOM analysis of trade war and inter-imperialist rivalry. It leaves underdeveloped the specific dynamics of US-China competition, which later articles take up in greater detail — particularly the technological dimension (Huawei, semiconductors) and the geopolitical reconfiguration of supply chains. The argument about the "terminal decline" of capitalism is asserted rather than fully demonstrated; later texts in the corpus, including Against the Stream episodes on the rate of profit and the long downturn, provide the empirical backing. The article also gestures toward the political conclusion — socialist transformation — without developing the strategic implications for the workers' movement in the context of trade war. That argument is continued in IDOM pieces on the need for a revolutionary party and the critique of left nationalism.

Connections

The article sits alongside Lenin's Imperialism, the Highest Stage of Capitalism and Bukharin's Imperialism and World Economy for the theoretical framework on inter-imperialist rivalry. It echoes the analysis of the 1930s trade wars found in Trotsky's writings on the Great Depression and the rise of fascism. Within the IDOM corpus, it connects to later articles on the US-China trade war, the COVID-19 economic crisis, and the inflation surge of 2021-2023. The use of Marx's Capital Volume 3 on crisis theory is central. The article also implicitly engages with — and rejects — the Keynesian and liberal-institutionalist frameworks that treat the WTO and multilateral trade rules as capable of containing the contradiction.

Key Quotes

  1. "When a country (USA) is losing many billions of dollars on trade with virtually every country it does business with, trade wars are good, and easy to win."

  2. "As Marx explained in Capital (volume 3): 'The last cause of all real crises always remains the poverty and restrictive consumption of the masses as compared to the tendency of capitalist production to develop the productive forces in such a way that only the absolute power of consumption of society would be their limit.'"

  3. "The stock market is based largely on fictitious capital, which are values not backed up by real wealth. It is driven purely by speculation, as in the past."

  4. "Global monetary policy has been 'ultra-easy' for many years. Yet it is becoming clear it is now caught in a debt trap of its own making."

  5. "The capitalists have become a parasitic class of rentiers. They want to make money not through productive means but purely through speculation."

  6. "Only a socialist planned economy, under the democratic control of the working class, can offer a way forward. Only if we abolish the profit motive and the tyranny of the 'market economy' can we use the talent and resources of society for the wellbeing of all."