Communists analyse the trade war: The bosses will force the workers to pay AGAIN

Against The Stream · 2025-04-10

Core Argument

The central thesis is that Trump's tariff offensive represents not a personal aberration but a necessary and inevitable phase in capitalism's long-term decline. The post-war boom peaked in the mid-1970s, and the system has been in secular decline ever since. The 2008 crisis was temporarily suppressed by a massive injection of cheap credit — global debt now stands at $350 trillion, over three times world GDP — but this only postponed and deepened the underlying contradictions. The trade war is the expression of those contradictions breaking through: the productive forces have outgrown the nation-state framework, yet capitalism cannot transcend it. The result is not a return to national prosperity but a destructive spiral of protectionism, falling productivity, and intensified class war. The bill, as the title states, will be paid by the working class.

Theoretical Grounding

The analysis is rooted in the Marxist understanding of capitalism's laws of motion, particularly the contradiction between the development of the productive forces and the limitations of the nation-state and private property. It draws on Trotsky's analysis of protectionism in the 1930s — the attempt to "put the genie back in the bottle" — and Engels' critique of tariffs as a "salt water" solution that only intensifies the thirst. The episode deploys the concept of overproduction/overcapacity concretely: China's industrial output now exceeds that of the US, Germany, Japan, South Korea and Britain combined, and its excess steel capacity alone is larger than the entire European steel industry. The argument sits firmly in the Marxist tradition that sees capitalism as a world system whose internal contradictions periodically erupt in crises that cannot be resolved within the system itself. It explicitly rejects both free trade liberalism and protectionist nationalism as false solutions, arguing that both are expressions of the same underlying impasse.

Conjunctural Relevance

The episode was recorded in the immediate aftermath of Trump's "Liberation Day" tariff announcement (April 2025). It provides specific data points that ground the analysis in the current moment:

• US tariffs on China escalated to 125%, with Chinese retaliation reaching similar levels
• Container trade bookings fell 50% globally; US-bound bookings down 64%
• JP Morgan raised global recession probability from 40% to 60%
• US stock markets lost $5 trillion; oil prices collapsed
• US average tariff levels rose from 2% to 24% in under three months
• China now uses 470 industrial robots per 10,000 employees (exceeding Germany at 429 and Japan at 419)
• China's factory output is larger than the combined manufacturing of the US, Germany, Japan, South Korea and Britain

The episode connects this to the broader debt crisis: OECD government debt-to-GDP has nearly doubled since 2007; the UK spends more on debt interest (£105bn) than on defence, education or universal credit; 45% of OECD sovereign debt must be refinanced within three years at higher interest rates. The conjuncture is defined by the simultaneous pressures of trade war, debt overhang, declining productivity growth, and rising social tension — a combination that the episode argues will produce class struggle on an unprecedented scale.

Where the Argument Continues

The episode explicitly flags several threads for future development:

• The debilitating effect of cheap debt on innovation and productivity — "we can look into this in future episodes"
• The military dimension: America's withdrawal from Europe as guarantor, and the impossible equation of raising defence spending while servicing debt
• The zombie company problem: 20% of Western firms cannot cover interest payments from profits, employing 140 million workers
• The specific situation of European states (Italy, France, Spain) with debt-to-GDP above 100% facing demands for military spending they cannot finance

These threads connect to broader RCI analyses of the Ukraine war, the crisis of European social democracy, and the decline of US hegemony, which are developed in other Against the Stream and Spectre of Communism episodes. The Trotsky quote on tariffs from the 1930s points to a deeper theoretical engagement with the Marxist analysis of protectionism that could be pursued in The Communist or other RCI publications.

Connections

• Trotsky, "The Death Agony of Capitalism and the Tasks of the Fourth International" (1938) — the Transitional Programme, from which the closing quote is drawn
• Engels, "The Protective Tariff and Free Trade" (1888) — the salt water analogy
• Marx, Capital Volume 3 — on the tendency of the rate of profit to fall and the development of the world market
• Larry Elliott, "I've seen many phony trade wars come and go. This is the real thing" (The Guardian, April 2025) — the article that frames the liberal establishment's recognition of the shift
• The New York Times, "The Tsunami is Coming: China's Global Exports are Just Getting Started" — cited for data on Chinese industrial expansion
• OECD Debt Report 2024 — cited for the debt statistics
• Previous Against the Stream episodes on the 2008 crisis, the decline of US hegemony, and the crisis of European social democracy

Key Quotes

1. "This trade war was bound to happen one way or another. Whether it be trade war like this or other protectionist tit-for-tat measures, sooner or later it was going to take off and was going to accelerate."

2. "The development of free trade has produced this crisis. And like Sean Fain says, free trade has created misery. But it's also created these advanced productive forces which now can no longer be contained within the capitalist system. And they're revolting against the capitalist system in a sense."

3. "You cannot contain the industry, the need for parts and resources, this specialization, the division of labour which has been developed over the past period. You cannot solve it that way. But you can see it comes straight from the same thing: the more they developed free trade, the more they created opportunities for development of industry, the more they then create the conditions for the backlash."

4. "What we're seeing is a qualitative shift in the development of capitalism. It's entered its long-term decline. The post-war boom peaked in the mid-70s, and since then it's been a decline. But this decline has several phases, and the one we're entering now is massively accelerated from the previous one."

5. "To save society it is not necessary either to check the development of technique, to shut down factories, to award premiums to farmers for sabotaging agriculture, to turn a third of the workers into paupers, or to call upon maniacs to be dictators. What is indispensable and urgent is to separate the means of production from their present parasitic owners and to organize society in accordance with a rational plan." — Trotsky, quoted in the episode's conclusion