Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page: https://www.socialistparty.org.uk/issue/1011/28011

From The Socialist newspaper, 26 September 2018

US-China trade war

Trump's tariffs raise international tensions and threaten to derail global economy

  (Click to enlarge)

On 24 September, a further tranche of US tariffs on $200 billion of imported Chinese goods - nearly 6,000 products - was imposed by the Trump administration. The Chinese regime of President Xi Jinping retaliated by levying tariffs on $60 billion worth of US exports to China, but at lower rates (5-10%) than had been anticipated.
Starting at 10%, the new US duties will rise to 25% in January 2019. Further tariffs on $267 billion worth of Chinese imports, threatened in the New Year, would mean virtually all of China's exports to the US would be affected.
Trump was pressured into deferring the 25% rise on the September tariffs and the additional $267 billion of tariffs, after US retailers warned that they would cause a consumer sales slump at Christmas.
Both sides are engaging in brinkmanship to secure a trade deal, but it's uncertain when and what would be agreed. A lasting trade war, with all its domestic and international implications, could ensue.
Vincent Kolo in the following article on chinaworker.info analyses the geo-political tensions being ratcheted up between the US and Chinese leaders.

The trade war between Washington and Beijing looks set to escalate. Trump's claim that trade wars are "easy to win" was mocked by Financial Times columnist Gideon Rachman, who compared this to the wildly inaccurate claims of the British ruling class in August 1914 that World War One would 'all be over by Christmas'.

There is enormous uncertainty even about what strategy the Trump administration is following, if any. Different factions in the government send out contradictory signals.

Sections of the US capitalist class, their Chinese and global counterparts, are holding their breath to see if the conflict can be contained or escalates with potentially grave implications for the world economy, which is already experiencing turbulence especially in 'emerging markets'.

Washington's mixed signals are illustrated by the recent proposal from Trump's treasury secretary Steven Mnuchin for a new round of trade talks with China. This glimmer of hope briefly lifted the gloom on Asian and other stock markets in early September. But Trump quickly disassociated himself from Mnuchin's move, tweeting he was under "no pressure to make a deal".

Previous talks have proved abortive, despite the Chinese side initially offering significant concessions. The result is increased wariness on the part of Xi's regime fearing that the US side will just keep moving the goalposts if Beijing offers bigger concessions.

The instability and siege mentality of the Trump administration further complicates matters - as it faces 'Russiagate' investigations and numerous other domestic crises, and with opinion polls predicting a Democratic 'blue wave' that could wipe out Republican control of Congress in the November elections. But the roots of today's trade and economic disputes go much deeper than this, to the fundamental inability of global capitalism to take society and the economy forward.

Imperialist conflict

The more Trump's trade agenda rolls out, the clearer it has become that China is the main target. His administration reached deals with the EU in July and Mexico in August, both of which increase the pressure on Beijing.

It's also clear that this conflict is only partly about trade and is in fact driven by bigger geopolitical and strategic issues. US imperialism is seeking to defend its position as the preeminent world power against its strongest international rival.

As one Chinese fund manager told The Economist magazine: "The Americans don't want a deal. They want to screw us."

Having initially gone into battle over the huge trade imbalance between the US and China, Trump's spokesmen have shifted the focus to technology and Beijing's 'Made in China 2025' industrial modernisation plan.

Furthermore, US politicians now speak about the 'structural issues' with China's economy. They are increasingly taking aim at China's state capitalist economic model: its large state sector and more extensive government intervention compared to 'normal' free market capitalism.

The US and its hungry multinationals, which want to prize open China's protected state sector, complain that the Chinese approach amounts to "cheating". Xi, while prepared to offer concessions, will never compromise over this issue which is central to the regime maintaining its dictatorial rule.

Alarm

Trump has claimed his tariffs are working "big time" against China. But this is a mixture of bravado, showing toughness in order to shore up his domestic position, and the president's poor understanding of the subject.

In fact, the US trade deficit with China and worldwide has actually risen since his first batch of tariffs were introduced in July. The rise in the dollar, a byproduct of Trump's policies, is the main reason for this because it has made foreign goods cheaper.

Capitalist commentators are increasingly alarmed about the potential impact of a full-blown trade war between the world's two most important economies, which together account for 40% of global GDP (total output) and 53% of global growth. This could ultimately tip the world economy into recession.

It would also enormously frustrate any coordinated inter-national response to a new financial crisis, an eventuality that is not at all excluded.

None of the fundamental causes of the previous crisis in 2008 have been addressed. Actually, they have reached even more extreme levels of indebtedness, financial speculation and bubbles.

At the same time, as a South China Morning Post editorial recently stated, the policies implemented globally to 'solve' the last crisis have resulted in "the greatest wealth transfer in history from the have-nots and have-littles".

Trump's policies, despite his populist rhetoric, only reinforce this process while injecting much greater instability into US and world politics.

A recent survey by the American Chamber of Commerce in China showed that three-quarters of US companies based there are predicting reduced profits and sales as a result of the tariffs.

Rather than target these companies for retaliation, Beijing is trying to woo them with concessions. It is not accidental that no anti-US protests or boycott calls have broken out in China, on similar lines to past protests - largely stage managed by the authorities - against Japan, South Korea and the Philippines.

None of Beijing's options for retaliation are pain free. That, of course, is implicit in any tit-for-tat conflict. Xi's regime does not want to widen the conflict, in so far as it can decide this, and has therefore taken only minimal countermeasures while at the same time muzzling its own media to prevent overly nationalistic and belligerent outbursts.

China's economic problems

This reflects deep concerns within China's ruling elite over the vulnerable state of the economy. These problems predate Trump and his 'America First' policies, but the trade war could now make things a lot worse.

China's stock market slump - shares have fallen 25% since January - is one symptom of mounting economic problems.

China's debt-driven growth model is losing speed. Discontent is rising as social inequality reaches alarming levels. The government is caught on the horns of a dilemma - to continue its crackdown on debt (to avoid a financial crisis) or revert to debt-financed stimulus (to avoid a sharp slowdown or recession).

Its response to the trade war is therefore to try to keep a lid on things and tread a precarious balance in the hope of not 'provoking' Trump further while also not appearing weak.

The longer a trade war drags on the higher the risk that companies - foreign and Chinese - will relocate to other countries outside the trade war. This is a process that was already underway. South Korea's Samsung, for example, has already announced a cut in smartphone output in China, shifting some production lines to India and Vietnam.

If Trump makes good on his threat to levy tariffs on all Chinese imports this would have a serious impact, causing the loss of 5.5 million jobs according to Haibin Zhu, chief China economist at JPMorgan Chase in Hong Kong.

Warnings

However an even bigger threat could come indirectly, in the form of a chain reaction of collapsing confidence among the capitalists. The capitalists and financial speculators are dumping emerging market assets such as stocks and currencies and fleeing for higher returns in the US.

Most commentators seem to have concluded the trade war is going Trump's way, but this is short-sighted in the extreme. Both the US and China will lose from this standoff, and unfortunately the working class in both countries will pay the biggest price through business closures, lost jobs and inflation.

Socialists don't support capitalist 'free trade' which is a false label, hiding the exploitation of poorer economies by the most powerful ones. Neither do we support capitalist protectionism, which aims to defend the profits of one set of capitalists against another.

The current trade war is yet another wake-up call showing the need to build a socialist alternative internationally to put an end to the toxic system of capitalism.


Money talks - Trump listens

One exemption to the president's latest round of tariffs on Chinese imports to the USA is smart watches. After the mega, tax-dodging corporations Apple and Dell complained to the White House administration, Trump responded by tweeting that Apple, instead of complaining, should relocate its production to the USA. But it seems the author of 'Art of the Deal' settled for a poor second. A case of big money talking even bigger than big mouth.

Donate to the Socialist Party

Coronavirus crisis - Finance appeal

The coronavirus crisis has laid bare the class character of society in numerous ways. It is making clear to many that it is the working class that keeps society running, not the CEOs of major corporations.

The results of austerity have been graphically demonstrated as public services strain to cope with the crisis.

The government has now ripped up its 'austerity' mantra and turned to policies that not long ago were denounced as socialist. But after the corona crisis, it will try to make the working class pay for it, by trying to claw back what has been given.

  • The Socialist Party's material is more vital than ever, so we can continue to report from workers who are fighting for better health and safety measures, against layoffs, for adequate staffing levels, etc.
  • Our 'fighting coronavirus workers' charter', outlines a programme to combat the virus and protect workers' living conditions.
  • When the health crisis subsides, we must be ready for the stormy events ahead and the need to arm workers' movements with a socialist programme - one which puts the health and needs of humanity before the profits of a few.
Inevitably, during the crisis we have not been able to sell the Socialist and raise funds in the ways we normally would.
We therefore urgently appeal to all our viewers to donate to our special coronavirus appeal.

Please donate here.

All payments are made through a secure server.

My donation

 

Your message: 

 


In The Socialist 26 September 2018:


What we think

Militant was right - councils can fight cuts

Fight for a democratic, socialist Labour Party

Fighting for socialism amid capitalist chaos


Socialist Students

Students and workers unite and fight

Freshers fairs: socialist ideas chime with students


News

Private firms and toothless regulator to blame for trains chaos - nationalise rail now!

Fight plans for A&E appointment system - fight to save our NHS

Labour civil war rages in Enfield

Them & Us


Workplace

Who wants driver-only operation?

Hospitality workers coordinate historic strike

Strike vote: college staff want a pay rise

Compulsory redundancies stopped at Leicester University

Safety-critical airport workers continue strike

Glasgow workers striking for equal pay


Socialist Party reports and campaigns

Victory for Sheffield Save Our NHS

Residents push back Barking estate landlords

Brilliant sales at Labour Party conference

Directors' contempt for repressed workers

Huddersfield campaigners keep their powder dry


International socialist news and analysis

Trump's tariffs raise international tensions


Opinion

Powerful defence of the welfare state

The Socialist inbox


 

Home   |   The Socialist 26 September 2018   |   Join the Socialist Party

Subscribe   |   Donate   |   Audio  |   PDF  |   ebook






Related links:

China:

triangleRapacious capitalism and the spread of coronavirus

triangleHackney & Islington Socialist Party: China today and the coronavirus

triangleCoronavirus: international cooperation needed, not capitalist competition

triangleCoronavirus crisis shakes Chinese regime

triangleCoronavirus exposes capitalism's weaknesses in healthcare and economy

Trump:

triangleTrump, coronavirus, capitalism, and the presidential race

triangleTrump puts profit before safety (again)

triangleUS: Trump's public health cuts have condemned thousands worldwide

triangleCoronavirus news in brief

Global:

triangleA new world order - global reconstruction after World War Two

triangleA CWI May Day 2020 statement

triangleGlobal covid-19 pandemic, capitalist crisis and bitter class polarisation in the United States

Economy:

triangleSouth East London Socialist Party: Covid-19's impact on the economy

triangleNo return to the 1930s: World War Two and 'a land fit for heroes'

War:

triangleThe Spanish Flu of 1918 and how it "fanned the flames of revolt"

US:

triangleCardiff West Socialist Party: Class struggle in the US in the crisis

Capitalism:

triangleThe Jungle: capitalism's remorseless attack on workers' safety and conditions

Korea:

triangleSouth Korea shows capitalism has money to respond to coronavirus

USA:

triangleUS private healthcare system in meltdown

South Korea:

triangleKorean peninsula: is nuclear war likely?

World economy:

triangleEast London Socialist Party: How will coronavirus effect the capitalist world economy?

International

International

20/5/20

US

Trump, coronavirus, capitalism, and the presidential race

6/5/20

India

India: Fighting the curse of capitalism and coronavirus

6/5/20

Trump

Trump puts profit before safety (again)

6/5/20

US

US: Trump's public health cuts have condemned thousands worldwide

29/4/20

May Day

A CWI May Day 2020 statement

29/4/20

Ireland

Irish police use Covid-19 emergency powers to disperse Dublin shop workers' protest

22/4/20

USA

US private healthcare system in meltdown

14/4/20

Coronavirus

Rapacious capitalism and the spread of coronavirus

8/4/20

CWI

Coronavirus, capitalism and fighting for socialism worldwide

8/4/20

Amazon

Amazon workers threaten revolution!

18/3/20

France

French local elections: CWI candidate elected

18/3/20

Coronavirus

United States: private healthcare exposed as Trump throws money at markets

18/3/20

Coronavirus

'Health not profit' strike wave sweeps Italy

11/3/20

US

How can Trump be ousted from the White House?

11/3/20

Italy

Italy on lockdown: lack of resources and democracy causes panic

triangleMore International articles...


Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party
Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube

LATEST POSTS

CONTACT US

Phone our national office on 020 8988 8777

Email: info@socialistparty.org.uk

Locate your nearest Socialist Party branch Text your name and postcode to 07761 818 206

Regional Socialist Party organisers:

Eastern: 079 8202 1969

East Mids: 077 3797 8057

London: 07748 534 891

North East: 078 4114 4890

North West 079 5437 6096

South West: 077 5979 6478

Southern: 078 3368 1910

Wales: 079 3539 1947

West Mids: 024 7655 5620

Yorkshire: 077 0671 0041

ABOUT US

ARCHIVE

Alphabetical listing


May 2020

April 2020

March 2020

February 2020

January 2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999