The negotiations that have taken place since April, and earlier, have been characterized by mafia diplomacy.
The Trump administration is becoming increasingly authoritarian and threatening—both at home and on the world stage. At the same time, support for Trump is falling and his new budget is unpopular. A majority believe that it will make things worse. The budget represents a historic redistribution of wealth from the poor to the already rich.
The bottom 20 percent of households would see their annual incomes fall about $800 in 2027 on average. Meanwhile the top 20 percent would see theirs grow by $9,700 on average. The top 1 percent would gain $63,000.
The budget includes $1.2 trillion in cuts to Medicaid and other social safety net programs. The proposed cuts represent the largest slashing of federal healthcare spending ever, and could leave as many as 12 million Americans without insurance by 2034. This rises to 17 million people if other cuts and changes are included. The cuts means that over 300 hospitals may be in danger of closing.
The budget is also extremely hostile to the climate. The oil and coal industries will receive new tax cuts and subsidies, while the opposite is true for wind and solar power.
Overall, the budget’s tax gifts to the rich and large corporations will mean increased deficits, growing government debt, and interest costs (on government loans) that will almost double by 2034. This, in turn, will be followed by even harsher attacks on the living conditions of ordinary people in the US. But it is also likely that the Trump administration will increasingly try to starve the rest of the world with the help of, among other things, an escalated trade war.
This week, the deadline for the tariff pause that Trump was forced to take after his tariff package on April 2, the so-called “Liberation Day” sent the world’s stock exchanges and financial markets into turmoil, was extended to August 1.
According to Trump, April 2 was forever to “be remembered as the day American industry was reborn, the day America’s destiny was reclaimed”. But it was a day that nearly plunged the US and the global economy into a new crisis. In just two days, the US market lost more than $6 trillion in value and the US dollar begin to sink, and is still sinking. This in turn forced Trump to retreat and begin ‘negotiations’ with all the countries that were going to be punished by the so-called ‘reciprocal’ tariffs.
Despite the pause, tariffs have both increased and risen since April. US tariffs are now the highest since 1934. On July 7, the Trump administration sent letters to 14 countries threatened to reimpose tariffs on South Korea, Japan, Thailand, Malaysia, and others by August 1 if they didn’t strike a trade deal that is favourable to US capitalism. The anticipated tariff rates varied from 25 percent on Japan and South Korea to 40 percent on Myanmar.
The negotiations that have taken place since April, and earlier, have been characterized by mafia diplomacy. With US imperialism’s gun to their heads, the other side has been given “an offer they can’t refuse.” However, US imperialism has so far only signed agreements with two countries: the UK and Vietnam. Both of these agreements have in common that exports to the US will be subject to higher tariffs and that they are also aimed at China, the US’s main rival on the world stage. Other agreements, if signed, will be in line with these two.
The news site Bloomberg estimates that after the so-called tariff pause in the spring, average tariffs on all US imports could rise to around 20 percent or more, compared to just under 3 percent before Trump took office in January.
Socialists are neither for so-called free trade nor tariffs, both of which are means of exploitation and plunder.
The capitalists were in favour of so-called “free trade” and “global cooperation” as long as they believed it best served them and the system, but now it is completely different. In a time of intensifying competition in a world market that is no longer growing — world trade in goods is declining again this year — and increasing imperialist power struggles, it is every nation for itself. Nationalism and militarism are in the driver’s seat, as expressed in the trade war.
The imminent escalation of the trade war will hit both the rivals and allies of US imperialism and US capitalism, which is no longer growing. At the same time, the value of the dollar is plummeting, which, together with tariffs, is pushing inflation upward. The tariffs could cost American families around $2,300 this year.
The escalating trade war is reinforcing the contradictions and accelerating the development toward a new crisis for global capitalism, which could be as devastating as the economic depression of the 1930s.
Trump 2.0 is symptomatic of a capitalist system in decline. Only a mass movement led by the working class — a socialist revolution — can halt the catastrophes toward which sick capitalism is leading the world.
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