THIS WEEK at the World Economic Forum in Davos, US president Donald Trump reignited his trade war with Britain and Europe.
On Wednesday Trump vowed to impose sky-high tariffs on European cars if the EU didn’t climb down and agree a trade deal with Washington on terms he will dictate.
Trump threatened an increase of 25% on all car imports, a move that would immediately destroy the motor industry across Europe hitting Germany the hardest.
Trump told reporters that Europe is ‘more difficult to do business with than China’, but he added that: ‘Ultimately it will be very easy because if we can’t make a deal, we’ll have to put 25% tariffs on their cars.’
Trump said: ‘I wanted to wait till I finished with China, to be honest with you. I always like to be very transparent. I wanted to wait till I finished with China. I didn’t want to go with China and Europe at the same time.’
Trump is clearly scared of a trade war on two fronts.
Britain is also in his sights for a trade war, with the US Treasury Secretary Steven Mnuchin warning both the EU and UK that they must immediately stop their plans to levy a tax on the multi-billion profits made by giant US digital companies, the ‘big six’ high tech firms – Amazon, Facebook, Google, Netflix, Apple and Microsoft.
A report, ‘The Silicon Six and their $100 billion global tax gap’ published last November, said these companies had been guilty of ‘aggressively avoiding’ $100bn of global tax over the past 10 years by moving sales and profits through low-tax countries and tax havens.
The move by France and the UK governments to impose a modest 2% tax on tech companies with sales of more than £670 million in the country brought down the wrath of Trump who promised to not only increase tariffs on cars by 25% but to put a 100% increase on French goods.
France immediately capitulated on Wednesday, while in the UK, Tory Chancellor Sajid Javid tried to save face by insisting Britain will still carry on with implementing the tax in a few months in line with the Tory election pledge to exact ‘fair taxes’ on these companies.
This will soon be junked as Boris Johnson crawls to Trump for a deal that will turn the UK into a vassal state of American capitalism.
Trump’s trade war against Britain and the EU is a sign not of any strength in US capitalism but on the contrary to its enormous weakness. The trade war with China, which Trump claims to have been settled, was no victory.
He was forced to back off when the damaging effect began to reverberate through the US – with thousands of US companies based in China and reliant on Chinese workers to produce their products – the threat by China to go all-out in retaliation forced Trump’s hand while the ban on US agricultural imports collapsed US agriculture, with Trump forced to pump $28 billion in subsidies to prevent the farming industry from complete closure.
Trump has suspended his trade war with China to concentrate on accelerating the trade war with the UK and Europe, using the threat of tariffs and sanctions against supposed ‘allies’ to force through a trade deal that would enable US capitalism to dump its products on them without any restrictions or face bankruptcy.
World capitalism has broken up into warring camps, each one fighting for survival at the expense of its rivals. This escalating trade war will lead inevitably to financial and industrial collapse on a scale never seen before.
With world capitalism plunging rapidly into a historic crash the capitalist class is determined that it will be the working class in every country that will pay the price.
With workers and youth across the world rising up against a capitalist system that is crashing into bankruptcy and war, the only solution to this crisis is for the working class internationally to unite and put an end to bankrupt capitalism through the victory of the world socialist revolution.
