By Francis Williams
In recent weeks there has been a significant turn by the Trump administration towards a new international offensive, primarily focused on China, but with stepped up polemics also against Russia and Iran, and threats of escalated action in Syria and elsewhere in the Middle East.
Trump has recently changed his team so that hardline foreign policy hawks that have advocated tough measures against China, Russia, Iran and North Korea now hold almost all the top foreign policy posts. These recent staff changes in the White House include John Bolton replacing HR McMaster as National Security Adviser, Mike Pompeo replacing Rex Tillerson as Secretary of State and Gina Haspel’s appointment as Director of the Central Intelligence Agency. The new Director of the National Economic Council Larry Kudlow, unlike his predecessor Gary Cohn, backs the proposed new tariffs on Chinese exports.
Bolton in particular is seen as the hawk’s hawk, a long-term advocate of regime change in North Korea and Iran, who favours pre-emptive military strikes, with the US asserting itself with greater aggression, including against Cuba.
However, so far the key steps taken have been on trade. A sharp escalation of trade tensions was signalled by Trump’s unilateral announcement in early March of penalties on steel and aluminium imports, which followed his January announcement of tariffs on Chinese solar panels and washing machines. He has now also announced a proposed 25 per cent levy on up to $60bn of annual imports from China. These tariffs proposals have been accompanied by more aggressive rhetoric about China, threats to send US navy ships to Taiwan, and suggestions of further actions by the US against Russia and the Middle East.
Overall Trump has, in the last few weeks, put both the team and the measures in place that can rapidly lead to a serious ‘hotting-up’ of global conflict, particularly aimed at containing and constraining China, with new regional wars as likely collateral.
Trade tariffs on China
The fact that the penalties on steel and aluminium imports are geopolitical rather than economic in intent is underlined by the US offering exemptions to virtually all other exporters apart from China, even though China ranks in ninth place as an exporter of steel to the US. As Trump cajoles allies into joining a US-led anti-China alliance he has to take account of the fact that countries like Australia and South Korea are not going to sign up to a limit on their own exports to the US.
According to the Financial Times the real US target is not narrowing the bilateral trade US-China deficit but China’s industrial policy. In effect, the FT argues that, the concentration of tariffs on sectors such as IT, robotics, aerospace and electric vehicles shows the US is determined to disrupt China’s drive to become an advanced industrialised country.
Trump’s protectionism will not save American jobs. Detailed analysis has shown that when Obama imposed tariffs to boost the uncompetitive US tyre sector, the effect was indeed to cut Chinese tyre imports to the US – by 67% – and an estimated 1200 jobs were created in the US tyre industry. But the increased cost to American consumers was a staggering $1.1bn – in other words it cost $900,000 per job saved or created. This was money inevitably taken out of spending in other sectors of the US economy, which led to a loss of an estimated 3731 jobs elsewhere in the economy. In other words the overall effect was a possible net loss of 2531 jobs as well as a major price hike for consumers.
For Trump this doesn’t matter as his aim is not saving US jobs but putting brakes on China’s growth. In the US the proposed tariffs will simply benefit less competitive sectors of US industry, where his electoral support is concentrated, while actually cutting US jobs overall. It fits comfortably with his imperial-revival project ‘Make America Great Again’.
For all advanced economies, trade protectionism and tariffs are overwhelmingly a negative development preventing the development of production and adding costs, which are in turn shouldered by workers and the poor. Trump’s steel tariffs also threatens jobs in the UK, as the US is the third largest export market for British steel, after the EU and Turkey.
Protectionism does not lead to prosperity. When it was widely adopted in the capitalist countries in the 1930s it ended in disaster. These anti-Chinese trade measures from Trump will cost US and other jobs. They fit entirely with the rest of his politics.
Hawks taking over foreign policy
China, for its part, has reacted cautiously to Trump’s threats. It has said that it would consider responding with tariffs on $3billion of US exports to China if the US measures are imposed. It remains to be seen what steps China takes if the tariffs are actually implemented. China clearly has means to fight back as it is a vital export market for many US producers. But China does not want to escalate the protectionist measures, and has therefore struck a defensive posture.
Trump’s recent hawkish appointments and trade measures open the very real possibility of increasing conflict with China and Russia and further US military action in the Middle East, with the US dragging the other imperialist states behind it.
Already the British government has stepped in to help the US increase tensions with Russia. Britain in particular will increasingly become the tail to the American dog on foreign policy as its separation from Europe forces it to stick more closely to the US. But the EU and other Western states are also being encouraged and cajoled to coordinate more closely with the US’s new orientation.