Behind Trump Tariffs Is Capital’s Warfare Against the Working Class

What is behind the tariff war that Donald Trump has launched against Mexico, Canada and China, with a promise to extend the war to the world as a whole? Moving beyond the smoke and mirrors, we must step back and focus on three things. First, the tariff war is a response to the rapidly deepening crisis of global capitalism. Second, it is one component of a radical escalation of class warfare from above against the U.S. and the global working class. And third, the tariff policy is riddled with so many contradictions that it will end up aggravating the crisis and contributing to the unraveling of the Trump coalition.

The crisis of global capitalism is both economic and political. Economically, the system faces a structural crisis of overaccumulation and chronic stagnation that generates turbulence in global financial markets as it heightens international and geopolitical conflict. Over the past half-century, every country has become integrated into a global system of production, finance and services. Nationalist and populist movements of both the left and the right may wish to extricate their countries from this global economy, but withdrawal is impossible — or at least not possible without massive disruption that would generate chaos and collapse. The 2020 COVID-19 shutdown that interrupted global supply chains, for instance, triggered an economic meltdown and social catastrophe unmatched since the Great Depression of the 1930s.

Trump’s tariff war will aggravate the economic turbulence, but the system also faces a spiraling political crisis of state legitimacy, capitalist hegemony and mass social discontent. These political dimensions of the crisis reflect a fundamental contradiction in the organization of global capitalism: the disjuncture between a globally integrated economy and a nation-state-based system of political authority. Despite our economic interdependence, political authority is divided up among over 200 individual nation-states. These capitalist states have a contradictory mandate. On the one hand, each individual state needs to achieve political legitimacy among its respective population and stabilize its own national social order. On the other hand, it must promote transnational capital accumulation in its territory in competition with other states and secure the inflow of resources and raw materials that this capital needs.

The transnational capitalist class (TCC) is not tethered to particular nation-states. Its members will welcome any incentive offered by a state if it enhances profit-making opportunities and will invest wherever they find the best conditions to accumulate. As the crisis has deepened, each state seeks to reduce risks to its internal economy in the face of global financial turmoil and political instability by doubling down on policies that incentivize or oblige transnational corporations to invest in its domestic economy.

These two functions of the capitalist state — the accumulation function and the legitimation function — are incompatible with one another and are played out in protectionist wars and other forms of interstate competition. Attracting transnational investment requires providing capital with incentives such as low wages and labor discipline, a lax regulatory environment, tax concessions, investment subsidies, privatization, deregulation, and so on — precisely the neoliberal policies that have been pursued worldwide since the onset of globalization. The result is rising inequality, impoverishment and insecurity for working and popular classes — precisely the conditions that throw states into crises of legitimacy, destabilize national political systems, jeopardize elite control and give impetus to the rise of a neofascist right.

Enter Trump

This is the larger context for the rise of Trumpism, which must be seen as a far right, neofascist response to the social and economic crisis of the U.S. working class and to the crisis of state legitimacy that it has produced. The working class has experienced an ongoing destabilization of its living conditions over this past half-century, with a particularly sharp deterioration since the financial collapse of 2008 and in the wake of the COVID-19 pandemic. It faces increasing precarity, job instability, widespread and rising un- and underemployment, poverty wages, marginalization and social decomposition, food insecurity, and crises of health care, substandard housing and homelessness.

Trump managed to get elected for a second term through a populist, nationalist, racist and neofascist discourse that spoke to this rising socioeconomic insecurity and mass social anxiety. He manipulated mass discontent with the Democratic Party and with the status quo, above all with a false promise to solve the socioeconomic problems of the masses. Hypernationalism has always been a key ideological weapon of the ruling classes to channel mass disaffection away from its source in the system, especially during times of crisis and rising class struggle, and toward scapegoated groups such as immigrants and “foreign enemies.”

Far from stabilizing global capitalism, the Trump project will aggravate the contradictions that are tearing it apart.

Trump has now escalated his “America first” rhetoric by slapping 25 percent tariffs — temporarily suspended — on Mexico and Canada, 10 percent tariffs on China, and promising to impose tariffs on the European Union (EU) and on all U.S. imports. In fact, well before Trump took office, successive U.S. administrations in the 21st century have pursued subsidies, tax credits and tariffs to entice transnational investors, triggering ongoing subsidy and protectionist conflicts among the United States, the EU and China. State protectionist measures offer the TCC incentives to invest inside rather than outside the borders of a particular country. Beyond the United States, state subsidies, tariffs, and other nationalist economic policies have been on the rise around the world with the aim of attracting transnational capital in search of investment opportunities in the face of chronic stagnation. Governments worldwide adopted over 1,500 policies in the early 2020s to promote specific industries in their territories compared to almost none in the 2010s.

Unlike the protectionism that countries imposed in the early part of the 20th century, which was intended to keep out foreign capitalists and cultivate domestic industry, this new protectionism has not been directed at keeping out “foreign capital” but at attracting transnational corporate and financial investors. “America is open for business,” Trump declared to these investors during his first term, at the 2018 meeting of the global elite for the World Economic Forum (WEF) in Davos, Switzerland, shortly before imposing tariffs on China, the EU, and other countries. “Now is the perfect time to bring your business, your jobs and your investments to the United States.”

Fast forward to 2025. Just two days after his inauguration, Trump told this year’s WEF gathering: “If you don’t make your product in America, which is your prerogative, then very simply you will have to pay a tariff.”

Trumpism 2.0, hence, represents not a break from but a radical escalation of recent trends. If one part of the equation involves tariffs and other protectionist measures to attract TCC investment, the other part is an all-out escalation of class warfare against the U.S. and global working class as the dictatorship of the TCC consolidates and ruling groups around the world turn to more openly authoritarian and fascist political dispensations.

The Trump program is following the script laid out in the notorious Project 2025 drafted by the Heritage Foundation, which was founded in 1973, at the start of capitalist globalization and the neoliberal counterrevolution. That script calls for smashing what remains of the regulatory state; privatizing the final remnants of the public sphere; massively cutting social spending, including the threat to cut and to privatize Social Security; reducing taxes on capital and the rich; expanding the state apparatus of repression and surveillance; and forcing all this through by overriding the few remaining mechanisms of democratic accountability.

Trumpism’s goal is to radically degrade U.S.-based labor, already facing a severe crisis. Transnational corporate investors are to be punished with tariffs if they are located outside of the United States, but enticed to relocate inside U.S. borders by the incentive of a mass of labor thrown onto the defensive and available for exploitation. Trumpism proposes to offer the TCC a desperate and readily exploitable working class, making this class’s exploitability competitive with the exploitability of the working classes in other countries. As many have noted, tariffs will hurt not capital but workers. Corporations will pass off the cost of tariffs through higher prices. This rise in prices will contract working-class consumption. It is a calculated strategy to weaken labor by dividing and immiserating workers at a time of mass discontent and rising class struggle.

Beyond the deceptive rhetoric, the war on immigrants and the threat of mass deportation is an attack on the entire multiethnic, multinational working class, intended to generate fear and chaos in labor markets and social institutions at a time when strike activity, protests and organizing drives have spread among workers in both old and new sectors of the economy. Historically, hypernationalism such as that now wielded by Trumpism serves to undermine working-class unity and to pit workers of different countries against each other. Racism must also be inflamed, whether by scapegoating immigrants or doing away with diversity, equity and inclusion, in order to divide and disorganize the working class.

The Dictatorship of Transnational Capital

Trumpism seeks to profoundly restructure state power into a more direct instrument of capitalist domination under fascist leadership, involving a vast expansion and concentration of presidential power. The goal is to expunge the remaining elements of the “great class compromise” that emerged during the Great Depression of the 1930s and resulted in the New Deal, or the social democratic welfare state. Under Trump, U.S. members of the TCC have seized even more direct control of the state. Trump has tapped an unprecedented 13 billionaires for his administration and appointed the richest man in the world, Elon Musk, as unelected co-president. Corporations and billionaires — especially from the tech, financial and energy sectors — funneled unprecedented millions into the Trump Inaugural Committee in order to ensure that their interests would be represented.

The stock market soared after Trump was elected, and then spiked even further in the days leading up to his inauguration, reflecting the giddy confidence that transnational capital has placed in his government’s ability to represent its interests and to further discipline and control the working class. Just days before Trump took office, banks reported near-record profits. JPMorgan Chase posted a stunning record annual profit of $54 billion for 2024. Fossil fuel billionaires increased their wealth by $3 billion following Trump’s inauguration. The stock value of GEO Group, one of two corporations that run private, for-profit immigrant prisons, soared by 32 percent immediately after Trump was elected in November, while that of the other, CoreCivic, rose by over 30 percent.

Nonetheless, Trumpism 2.0 is a fundamentally contradictory program. Trump is a Frankenstein, a monster conjured up by transnational capital’s reliance on the state to keep mass discontent under control and to resolve the problem of chronic stagnation. The TCC wants to have its cake and eat it too. It may embrace Trumpism for its plans to compress wages and control workers, to deregulate and cut taxes on capital and the rich. But it is doubtful that Trump’s trade wars will actually succeed in convincing transnational capitalists to relocate production to U.S. territory. The TCC has consistently opposed protectionism and state interference in accumulation strategies. Capital’s rationale for going global was to escape any national constraints on its worldwide freedoms and it has no intention of returning to the confines of the nation-state.

The U.S. Chamber of Commerce, the National Association of Manufacturers, the National Retail Federation, and other corporate bodies have opposed U.S. tariffs and other measures against China. Almost immediately after Trump announced his tariffs on Mexico and Canada, major business groups came out in opposition. The case of Elon Musk’s Tesla corporation is instructive. Musk may serve as a shadow co-president, but he has been quietly fighting against any state interference in his global business empire. In January, for instance, Tesla sued the European Union over tariffs it had placed on Chinese-made electric vehicles. Tesla was joined in the suit by the Germany-based BMW and several China-based firms. Tesla, BMW and the Chinese firms may have a home base in a particular country, but they operate through vast intertwined global production and distribution chains that are impeded by tariffs or any other obstacles imposed by nation-states.

Trump’s hardcore base lies in the far right, organized into racist and neofascist organizations and militias, such as those that stormed the capital on January 6, 2021. But he has also managed to construct a mass base in a significant sector of the working class, especially but not exclusively white workers. These workers are expecting that Trump will improve their economic situation, but this will not happen. His government cannot represent the interests of workers and of capital, and he has no intention whatsoever of abandoning capital. To the contrary, if Trump’s agenda is successful, the lot of workers will deteriorate further. Moreover, even if some corporations were to reshore manufacturing to the United States, this would not result in any significant increase in manufacturing jobs or higher wages, as artificial intelligence and other digital technologies are already leading to the rapid automation of manufacturing sequences and to the deskilling of many tech and professional jobs.

The Trump coalition will unravel as disillusion sets in, and eventually his mass base will break up. There will be escalating social and political conflict. Trump will take advantage of the chaos generated by his program to unleash the full fury of the police state against popular resistance. These are the conditions for a popular left alternative to develop, but they are also conditions under which the fascist tendency could consolidate into more open 21st-century fascism.

Far from stabilizing global capitalism, the Trump project will aggravate the contradictions that are tearing it apart. Global elites are divided and increasingly fragmented as the post-WWII international order cracks up and geopolitical confrontation escalates. The WEF released its annual Global Risks Report on the eve of Trump’s inauguration. “As we enter 2025, the global outlook is increasingly fractured across geopolitical, environmental, societal, economic and technological domains,” it warned. The world faces “a bleak outlook across all three time horizons — current, short-term and long-term.”

Trump’s tariff war, his threat to annex Canada and Greenland to seize their resources, his attacks on U.S. allies and his withdrawal from multilateral organizations will rapidly undermine longstanding international alliances and fragment the global economy, driving the world closer to World War III. The breakdown of global order and the threat of world war spring from the underlying contradictions of a global capitalism in intractable crisis, just as fascism and the world wars of the 20th century were outcomes of world capitalist crises. We cannot turn to the ruling classes to avoid catastrophe; our salvation lies in the mass resistance of the working and popular classes.