YESTERDAY saw a massive escalation in the world trade war when the US was given the green light by the World Trade Organisation (WTO) to impose tariffs on £6.1 billion ($7.5bn) of goods it imports from the EU.
Immediately, the Trump administration announced that it would increase tariffs on a wide range of EU goods from France, Germany, Spain and Britain including a 10% increase on aircraft and parts imports and 25% on other goods including cheese, Scotch whisky, olive oil and industrial products.
This ruling follows a case put to the WTO in 2004 by the US claiming illegal subsidies by EU governments to the Airbus company, the main competitor of the US aircraft manufacturer Boeing.
It followed a case brought by the EU against the US for their own ‘illegal’ subsidy of Boeing.
Both these tit-for-tat claims have slowly progressed through the WTO with them finding for the US this week while a judgement that would authorise EU sanctions against US goods is due next year.
Although the foundation of this latest increase in tariffs had its origins long before Trump started his global trade war against US rivals it has been quickly seized upon by him. Trump hailed the decision as a ‘big win’ for the US claiming: ‘All of those countries were ripping off the United States for many years and they know I’m wise to it.’
The EU, in response, immediately threatened to respond with tariffs of its own on US imports which led to a US trade official warning that any retaliation by the EU would be met with further increases and that the US had the authority to increase tariffs ‘at any time’.
This latest escalation of trade war between the US and the EU follows Trump’s imposing tariffs of 25% on steel and 10% on aluminium imports into the US and his threat to raise duties on European cars and drive Mercedes cars ‘off the streets’ of New York.
Such a move would signal the end of the already collapsing German car industry.
This latest ramping up of the brutal global trade war is throwing petrol on an already explosive world economic crisis of capitalism.
£63 billion was immediately wiped off the FTSE 100 – the shares of Britain’s biggest companies – as the stock market was panicked by the news of the new tariff war.
They were already reeling from the news that US manufacturing had officially entered into a recession and that European manufacturing is in its worst decline since the banking crash in 2009.
Data produced last Tuesday showed that manufacturers are shedding jobs at the fastest rates across the globe as the world crisis intensifies.
As one US trader put it: ‘Traders had gotten used to the idea that manufacturing in Europe is weak, but the disappointing US ISM manufacturing report sent the message home it is a worldwide problem.’
That’s putting it mildly.
The fact is that the global trade war being waged by the US is a sign of the desperation by the American capitalist class to survive the emerging world economic crash at the expense of its rivals prompting retaliation and an ever-increasing descent into complete global collapse.
There can be no escape from this economic crisis by capitalism. In 2008 it attempted to survive the financial meltdown by printing trillions of worthless paper money to prop up the banks and by making the working class pay through savage austerity cuts – none of this worked.
Capitalism can no longer develop the productive means to satisfy even the most basic requirement of humanity. Instead, it can only offer trade war, shooting wars and even greater austerity attacks on workers and young people throughout the world.
This world crisis of capitalism can today only be resolved by the working class taking power and overthrowing this bankrupt system, replacing it with socialism.
Workers throughout the world are rising up against having capitalism’s crisis dumped on their backs and the decisive issue today is building revolutionary parties of the Fourth International in every country to lead this fast developing mass movement to the victory of the world socialist revolution.