AT midnight (US time) on Monday, US president Trump made good his threat to impose his long-threatened 25% trade tariffs on Mexico and Canada – America’s two biggest trading partners.
The capitalist financial investors had been banking on Trump using the threat of a tariff war on America’s neighbours just to scare them, and the rest of the world, into caving in to any ‘deal’ the Trump administration offered.
This hope by investors was shattered when Trump told reporters on Monday there was ‘no room left for Mexico or for Canada’ adding: ‘The tariffs, they’re all set. They go into effect tomorrow.’
In addition, Trump announced he would put an extra 10% tariff on China on top of the previous 10% imposed last month.
Meanwhile, along with China, the EU is firmly in Trump’s sights for a tariff war.
The reaction of the world stock markets was to immediately crash with global investors now rightly fearing that Trump’s trade war inevitably leads to the US economy diving headlong into recession.
The reasoning behind Trump’s global trade war is that the US desperately needs to raise trillions of dollars to cover federal spending and to try to bring down America’s huge national debt of well over $36.5 trillion – and increasing by the hour.
On top of all this, Trump has pledged to extend billions of dollars in tax cuts for US corporations and the extremely wealthy that he first introduced during his first term as president.
The tax cuts Trump introduced in 2017 have already driven up America’s debt pile and it is now ballooning even higher.
Tariffs are seen by Trump, along with slashing the federal workforce, as the way to raise money to pay for all this.
According to Trump, increased tariffs mean that other countries will pay for all his tax cuts while, in reality, the cost of any tariff increases will be passed on to American workers and middle class in the form of higher prices under conditions where the cost of living is already spiralling upwards.
US workers will pay for the filthy rich corporations and bosses reaping billions from tax cuts and federal handouts while Trump and his ally Elon Musk lay waste to jobs, social spending and benefits.
Yesterday, the Telegraph newspaper published an article highlighting a warning from a US billionaire hedge fund boss that Trump’s low tax, high spending policies will trigger a fiscal ‘heart attack’ in the US.
Ray Dalio, founder of giant hedge fund Bridgewater Associates, also expressed an underlying fear now prevailing amongst the global financial investors that the working class will not stand to see their lives destroyed in order to resuscitate capitalism from a ‘fiscal heart attack’.
Dalio said: ‘When the economy, and this heart attack of sorts, comes along, then you’re going to find yourself that the voters are not going to be very happy … It would be very much like the 1970s, which was very much like the 1930s.’
The 1970s was a period of severe economic crisis in the US following huge debts run up financing the Vietnam war which forced America to abandon the gold standard, but, tellingly, what Dalio is worried about is that what is emerging rapidly is a financial and economic meltdown like that of the 1930s.
Following the crash of Wall Street in 1929 the US dived into the Great Depression of the 1930s, a catastrophic collapse that reverberated around the world sending tens of millions of workers across the globe into abject poverty.
US workers will be more than ‘not very happy’ at being driven into absolute poverty and nor will the working class of the world accept being driven into the ground by a bankrupt capitalist system that deserves to have a ‘do not resuscitate’ label fixed to it.
The working class has the power to put world capitalism out of its death agony by taking power and expropriating the bosses, bankers and financial speculators, and going forward to a world socialist planned economy.
This requires the rapid building of sections of the International Committee of the Fourth International in every country to organise the victory of the World Socialist Revolution.
