The capitalists and their political representatives internationally try to understand precisely what is happening in the United States under the presidency of Donald Trump, how far he is determined to go and what will be the impact of his policies. Something similar is true for the working class and the organisations of the Left.
Trump is turning the might of the US economy against every other economy on the planet and not just against China, as was the case in 2017 when Trump began to raise tariffs against China’s exports to be followed by Biden. This time he’s raising tariffs not only on Chinese exports (an additional 20% at this stage, with threats to take it to 60%) but also against his closest allies and trade partners, like the European Union, Britain, Mexico and Canada, with tariffs to the level of 25%. China, the EU and Canada have already announced retaliation, raising tariffs on US imports. This is undermining the global economy and is pushing it in the direction of lower growth and/or recession.
As if the tariff issue was not crucial enough in itself, Trump, Elon Musk, JD Vance and other close associates of his, make blunt interventions into the internal affairs of US’s allies and speak in complete disregard and insulting terms of governments and their leaders that until very recently were considered as close allies.
Trump stunned the whole world by demanding the ownership of Greenland, the American domination over the Panama Straits, the expulsion of the Palestinian people from big sections of Gaza to turn Gaza into a tourist destination under the ownership of the United States, etc.
Even worse, from the point of view of European capitalism, he gave up the fight against Russia over Ukraine, completely humiliating Zelensky and largely accepting Russia’s claims. He is refusing to supply the funds necessary for the running of NATO while his close “advisor” Elon Musk went as far as saying that the US should leave NATO. Trump says the European powers should not only increase military expenditure to the level of 2% of GDP, which is what is formally demanded by NATO membership, but to 5% of GDP.
Ukraine – and the new arms race
The European powers were essentially thrown into the war in Ukraine, back in 2022, under the pressure of the US and Britain, convincing Zelensky to fight and not to negotiate with Putin (in March 2022, in Turkey, Russia and Ukraine came close to a peace agreement).
Now the European powers are left with a war in their hands which raises demands that in reality they cannot fulfill. The war against Russia cannot be won, so they find themselves in a position in which they have to hugely increase their military expenditures and at the same time feel the impact of a defeat in Ukraine while Trump is posing as the “peace maker”.
They are forced to raise massively their expenditure on arms, at a time when the EU countries and Britain are facing large budget deficits and high sovereign debts, and were planning to apply the “Growth and Stability Pact” (GSP) terms of no more than 3% of GDP for budget deficits and no more than 60% of GDP for public debt (the Maastricht criteria on which the EU is based). Applying the conditions of the GSP in practice means austerity. Instead, now they have to go into an expansionist fiscal policy, spending hundreds of billions of euros to finance the war in Ukraine and to expand and develop military capabilities on a European basis. Budget deficits and public debts will rise as a result of this. So, in order to avoid formally clashing with the Maastricht Criteria, they decided to not consider the “expenditure on defense” (or at least parts of it) as part of the budget expenditure. Thus, they try to kid the European working class that budget deficits and public debts are decreasing, when in fact they will be going up, causing even greater indebtedness and therefore future instability. The working class will of course be called to pay for all this, at the expense of its own standard of living.
Europe in despair
It is true that Trump was considered unreliable and unpredictable before his election. But the fact is, he has gone far beyond anything anybody could imagine.
The impact is particularly strong on the EU. It is not just the issue of the tariffs. The European powers have been shocked by the level and character of the attacks against them by Trump and his closest associates. The speech delivered by Trump’s vice president JD Vance to his European colleagues in the Conference on Security held in Munich (Germany) last month (12 February 2024) is quite characteristic:
“We have a new sheriff in town [meaning Trump]… …In Britain and across Europe, free speech, I fear, is in retreat… …It was wrong for Russia to buy social media to influence European elections [referring to Romania] but if your democracy can be destroyed [referring to the fact that the Romanian elections were cancelled by the High Court, with the tacit support of the EU] by a few thousand dollars of digital media from a foreign country it was not very strong to begin with… …If you are afraid of the voices, the opinions and the conscience that guide your very own people… …If you’re running in fear of your own voters, there is nothing America can do for you, nor for that matter is there anything you can do for the American people.”
As if his comments were not enough, Vance left the meeting in a haste, in order to… meet the leader of the far-right party AfD, refusing, at the same time, to meet the German chancellor Olaf Scholz!
The response of Robert Habeck, Germany’s vice-chancellor, summed up, probably in the most accurate way, the feelings of the European elites:
“Over the course of the weekend in Munich, the Western community of values was terminated here”.
The question of whether what we see is “the end of the transatlantic alliance” has been raised by many capitalist journals and commentators. The answer is that NATO has received huge blows but it would be wrong to predict its dissolution. On the other hand, relations cannot go back to what they were before. Most probably the major European powers (France, Britain, Germany) will take the main responsibility for maintaining NATO, making sure that they keep the US on board, because the challenges from China and Russia, on the economic and military levels, will continue. But the close relations that existed in the past have come to an end and they cannot be the same again, at least for the foreseeable future.
Trump has replaced diplomacy, which has been a cornerstone of the ability of the West to maintain functional relations between its various powers –and to have a common approach to major global events, including military interventions– with blunt blackmails, threats, bullying, attacks, and insults. This is creating a vast rift between the US and Europe that is going to have a lasting effect.
Friends with Putin to isolate China?
Trump, his vice president Vance, Elon Musk and other key figures in the US administration have treated Zelensky in such a humiliating way that sent shockwaves across the planet, particularly the European powers. At the same time, he refuses to attack Putin; on the contrary he is making friendly gestures – at least until now; this may change if they clash over Trump’s proposals for a ceasefire. This has started a discussion about whether Trump’s aim is to develop closer relations with Russia in an attempt to isolate China.
It’s impossible to know what the deeper motives of Trump may be. But what we need to say is that any attempt to break away Russia from China, if there is such an intention, will not succeed.
Russia and China have built over the past decades a very close, strategic relationship which is necessary for them in order to overcome the pressure they faced from the Western alliance. We cannot expect Putin to be ready to undermine Russia’s relation with China just because there has been a change in the US administration. Nobody can be certain that the policies applied by Trump now will be the same as the ones applied by Trump in one or two years from today. Also, there is no certainty that the next US administration, after Trump’s term ends, will follow the same policies or even similar policies to today.
It’s not possible to predict how exactly US relations with Russia will develop and this is also true for China. But what is certain is that for the foreseeable future the present relations between Russia and China will remain strong.
Economy
The economic policies followed by Trump are pushing the US and the global economy in the direction of lower growth and recession.
The tariffs against Europe, Canada, Mexico, China etc., will be followed inevitably by retaliation from these countries–this is already taking place. This will mean lower rates of global trade and slower rates of growth. Growth rates in the US are already falling and the discussion about the economy entering recession has been sparked again. Higher tariffs will mean higher inflation in the US undermining the standard of living of the working class. This is accentuated by the policies of cutting down state expenditure particularly through mass layoffs from the public sector which have not yet had their full impact on the economy.
All this, is reflected on the Wall Street Stock Exchange. The S&P 500 lost more than $5 trillion in a matter of a few weeks.
According to the Petterson Institute for International Economics if all of Trump’s declarations on tariffs are implemented, this will mean that tariffs will rise from 2.4% average on all imports to 10.5%. This will take protective measures of the US economy back to the 1950s.
This will mean an additional cost of $1,200 US on average for every American household according to the Institute. Similar estimates have been made by other US think tanks.
Class struggle
Class polarization and class struggle as a byproduct of Trump’s victory are inevitable not only in the US but also internationally.
The US workers are bound to fight back. It may not be immediate, because many workers will wait to see if Trump’s policies will work in the end, but sooner or later they will begin to move. This has to be seen in conjunction with the attack on rights by Trump, especially against women and lgbt+ people and with the rise of racism against blacks and people of color. And of course, the issue of the climate crisis which Trump completely discards, will mobilize particularly younger people.
Similar processes can be expected to take place internationally. Trump’s administration is providing a boost to the Far Right (FR) and even fascist organizations globally. The conservative and reactionary agenda of the FR and right-wing populists will cause a backlash in big sections of the populations in Europe and internationally. Coupled with economic stagnation and probable recession together with rising inflation, class polarization and struggle are bound to increase.
Fascism?
Having said this, we should stress once again that any attempt to fight against Trump by calling him and his associates fascists, is wrong and will backfire.
Of course, Elon Musk’s Nazi salute cannot be considered as something accidental or of no significance. But the point is not what Elon Musk is or may become in the future and the same is true for Trump.
Fascism is not an issue related to the aspirations or characteristics of this or that individual. It’s a regime which crashes every democratic right not only of the working class but even of the ruling class (i.e. parliamentary democracy). Nothing of the sort exists in the US today and nothing of the sort can develop in the next period, because the conditions for this do not exist and the balance of forces does not allow this to happen.
Of course, there are elements of authoritarianism in Trump’s administration but this is very different from fascism or an authoritarian state/regime. We have developed this extensively in other material so there is no need to expand on it here. There are many regimes that can be described as FR or right-wing populist, internationally, there are significant Nazi groups inside FR parties internationally, but the conditions for the establishment of fascism in the US or the rest of the industrially developed countries do not exist.
On the other hand, the rise of the FR with their reactionary and conservative ideas, is bound to cause a reaction, especially in younger layers, and a feeling that we need to fight back.
Will Trump win his battle against China?
The trade war against China was initiated by Trump in 2017. One of the declared aims was to cut down the trade surplus of China with the US and the rest of the world. Seven years of trade wars by Trump and by Biden have not solved this problem and China continues to challenge the US on every level not only as regards the quantity of goods that are exported to the rest of the world but also as regards the quality of these goods
The last few years have seen the dynamic entry of China into the mobile telephone and computer markets of similar quality to the Western products. Then, in the last couple of years, we had the onslaught of China’s electric vehicles and new energy vehicles that have thrown the West’s auto industry into crisis. More recently we have seen China challenging the West’s artificial intelligence, with Deep Seek which has been described as equal or better than ChatGPT and at a much lower cost. It seems also that China is challenging the West on the level of quantum mechanics and space exploration.
Years ago, we took the position that the trade war of the West against China would have as a result to slow down the growth of China and probably delay its overtaking of the US economy but it would not be able to stop/prevent it. If we look at the facts and figures of today, we can say that the policies applied by the US, followed by Europe, have not succeeded in their aims.
Thus, for example, China’s trade surplus, despite 7 years of trade war, soared to a record last year reaching an unprecedented 992 billion US dollars in 2024. This was 21% higher compared to the previous year, and the highest ever since statistics began to be kept in 1998.
The new tariffs imposed by Trump against China will of course have a certain impact on China’s GDP, but this cannot be of a decisive character. The total amount of Chinese exports to the US is only around 3% of the Chinese GDP. So however high tariffs Trump’s administration imposes, this will have a limited impact on the Chinese economy.
Especially so, as over the past years China has been diverting its exports precisely because of the trade war by the US, through bilateral and regional trade agreements. Seeing that relations with the US and the EU are getting more and more sour, China turned to the rest of the planet – Asia, Latin America, Africa and the Middle East. The same is the case with Chinese capital invested abroad.
This is linked to the development of BRICS, the economic alliance of China, India, Russia, South Africa, Brazil, United Arab Emirates etc., which Trump has threatened with tariffs of up to 100% if they try to undermine the dominance of the dollar in the global economy. This kind of threats are actually pushing countries towards China and away from the United States.
What is more probable is that Trumps policies will not isolate China from the rest of the global economy and increase the United States share in it, but produce the exact opposite effect, i.e., lead to an increase in trade between the rest of the world at the expense of the United States.
This is relevant to the European powers as well, despite the deep and long-standing relations between Europe and the US. Since the beginning of the trade war between the US and China, the EU also joined under the pressure of the US, but at its own big expense. Since then, it has been losing ground in the Chinese market and also its supply chains to a large extent based in China have been adversely affected. That’s one of the reasons why some of its major industries like the auto industry are in crisis.
Given the present Trump Administration’s policies a discussion has already started in the European bourgeois media that Trump may be a bigger enemy than China. A gradual turn towards more “balanced” relations with China on the part of the EU cannot be excluded in the next period.
No accurate predictions possible
It is impossible to predict exactly how things will develop. Trump changes his mind all too frequently. Even if he goes through everything he has declared, it’s still impossible to predict accurately the impact of the economy either of the US or globally. But it’s clear that the initial impact will be to push the US and the global economy in the direction of lower growth rates and recession. At the same time, they will be intensifying class struggle and class polarization, in the US and internationally.
It’s also correct to say that most probably Trump’s policies will backfire. The rift between the US and the EU is of fundamental importance and is actually weakening the West in its attempt to contain China and Russia.
The crisis of the EU, already deep, will intensify, because it will be faced with even more challenges that it’s not able to respond to.
This is despite the fact that additional efforts will be made in the direction of greater convergence especially on the level of military expenditure. The EU will move in the direction of “social militarization” (i.e., propaganda about the threat of war from Russia and the need to prepare) at faster rates than in the previous years, in an attempt to justify the huge amounts of expenditure on arms at the expense of social services and the living standards of the working class. This will be an additional factor for radicalization in Europe.
In conclusion
The rise of Trump is a reflection of the impasse of capitalism in general and of US capitalism in particular. Trump has no way of solving this problem.
He represents a serious danger on many levels for the US but also the international working class because of the boost it gives to the FR internationally and the reactionary-conservative ideas that are implanted into society. But at the same time, it creates opportunities for Marxist forces, precisely because it intensifies class struggle and class polarization.
Marxists need to orient themselves in order to take advantage of these opportunities and build sizeable Marxist organizations internationally, which are the absolutely necessary tool in order to ditch capitalism and all its reactionary aspects and lay the basis for an alternative socialist society.
