US president Donald Trump caved in on Wednesday, after the financial world reacted in fear and dread over the rapidly unfolding collapse of the American economy and the immediate prospect of a world economic crash, brought on by his global tariff war.
On social media, Trump announced a 90-day pause in reciprocal tariffs to all countries, except China.
China, which refused to kowtow to Trump’s initial tariff increase of 64% and responded with increases on US imports of 84%, was now to be hit with a new 125% increase.
China has indicated it will not back down, meaning that any hope by capitalist governments of any peaceful negotiated resolution of the world crisis is grasping at straws.
Last week, Trump sprang his tariff war on the world with a blanket 10% on goods imported to the US from every country, alongside a 25% increase on cars and steel accompanied by reciprocal tariffs.
All week, Trump boasted that his ‘beautiful’ tariffs would make Americans rich, that jobs would flow into the US as industries across the globe closed down their factories to re-locate to America’s rust belt.
This vision of making America great by carrying out a world trade war to bankrupt US’s rivals, including previous staunch allies, came immediately unstuck.
Global stock markets saw a staggering $10 trillion wiped off the value of shares.
These massive losses didn’t, on the face of it, disturb Trump despite the splits it caused amongst his main financial multi-billionaire backers like Elon Musk, who reportedly spent last weekend begging the president not to impose the tariffs.
Trump shrugged off the panic from Musk and other billionaires, whose profits and personal wealth were vanishing overnight, and all the dire warnings that the US was diving into recession.
Trump dismissed the growing mass opposition amongst US workers and youth over his drive to carry through a trade war that would crush businesses, drive up inflation and cost millions of jobs.
But he couldn’t shrug off the threat from the bond markets and a looming global financial meltdown that his trade war had accelerated.
The bond markets trade in buying up US government bonds (or Treasuries) with money borrowed from the banks.
The US economy has always in the past been held to be a safe haven for investment, with the price of bonds always slightly increasing, opening the way for the speculators to make vast fortunes using borrowed money.
With Trump zig-zagging around, with policies that change from one day to the next, it became clear that far from being a safe bet US capitalism was being ripped apart, and in a state of chaos, presided over by an increasingly unhinged Trump. Instead of investors selling shares and investing in US treasuries, they dumped both, along with the US dollar.
Yesterday, The Daily Telegraph newspaper summed up the mood saying: ‘Investors have been shunning all things American,’ as it becomes clear that US capitalism was on the brink of bankruptcy.
Trump and the entire US capitalist system was exposed to the world and to the working class as truly having ‘feet of clay’ with all the posturing and boasts of supremacy laid waste by the disastrous attempts to resolve the economic crisis of capitalism through a world trade war.
What is clear to the working class and people of the world is that capitalism, in its final imperialist stage, is collapsing into chaos and imbecility, completely unable to deal with the global economic crisis using the old world order of peaceful trade negotiations, replacing this with trade wars and a class war to force workers to pay for capitalism’s historic crisis.
The only force on the planet with the strength and ability to resolve the crisis is the working class.
With capitalism in its death agony, and prepared to take the working class down with it, as it collapses into another great depression, the working class must take the road to socialist revolution and put capitalism out of its misery by taking power through socialist revolution.
The burning issue today is to build sections of the International Committee of the Fourth International in every country to organise the victory of the World Socialist Revolution. There is not a moment to lose!
