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Editorial: Trade War

Donald Trump fought the Presidential campaign pledging to put ‘America First’. Soon after taking office, he pulled the US out of the Trans-Pacific Partnership (TTP) trade deal and plans to cancel the Transatlantic Trade and Investment Partnership (TTIP), a trade deal between Europe and the US.

On 8 March, Donald Trump appeared to fulfil an election promise to steel workers by slapping a 25 percent tariff on steel and 10 percent on aluminium. Canada and Mexico are, for the time being, exempt. However, if during the renegotiation of the North Atlantic Free Trade Agreement (NAFTA), they fail to make the concessions that Trump wants, then they will also be hit with these tariffs. Trump justified these measures on the grounds of national security and so-called ‘unfair’trading by America's competitors. Other countries have threatened to retaliate.

These measures also face opposition within the US Republican Party and some US capitalist interests, such as the aviation sector and car manufacturers, which risk having their profits squeezed by the increased cost of steel. Trump's economic adviser, Gary Cohn, an opponent of these measures, has quit.

The general view seems to be that a maverick president has defied the natural order of free trade that has taken place between nations for decades. However, trade protectionism is nothing new in the history of capitalism. In the late eighteenth and nineteenth centuries, the new American nation state used tariffs to protect its nascent industries from foreign competition. In 1930 the US government introduced the Smoot-Hawley bill, which raised tariffs over a wide range of imports. After the Second World War, when the US emerged as the dominant global power, it supported a liberal trading regime which opened up global markets to US capitalists. However, since the 1980s, its enthusiasm for free trade waned as its economic supremacy was challenged by emerging powers like Japan. Both Ronald Reagan and George W Bush attempted to raise tariffs.

Britainand the European Union have also employed trade protectionist measures, such as subsidising their export industries. Britain, like the US, was in favour of free trade when it was the top economic power in the nineteenth century. However, in the early twentieth century, when facing increasing competition from rivals such as Germany and the US, it sought a more protectionist trade policy.

Donald Trump's move has to be seen against the backdrop of a global overproduction of steel and the more difficult world trading conditions since the 2008 financial crisis. He is attempting to reassert US capitalism's dominance over world markets and check the rise of Chinese capitalism and keep the European Union in its place. It has little to do with the wellbeing of the American working class. Trade wars are usually cloaked in the language of protecting workers' jobs. Workers should not be fooled by this.

Despite the attempts by global organisations like the World Trading Organisation to regulate world trade, capitalist nations will invariably use their economic clout to gain advantage over their rivals, and on many occasions, back this up with the threat and even use of military force. In this light, to talk of ‘fair’or ‘unfair’trading practices is a nonsense.