Opinion
Whatever purpose Trump's tariffs have they won't help US workers
Trump imposing massive tariffs on countries around the world is an attempt to make them pay for the US' deficit, but it’s American workers who will suffer.
Unfiltered
Daniel Lindley
10 Apr, 2025
THE NEW ARAB
Trump's tariffs are a radical but clumsy attempt to make the US economically self-sufficient by unleashing disaster capitalism on their own population, writes Daniel Lindley. [GETTY]
The world media has been set ablaze this week by the Trump Administration’s announcement that they are going to be imposing massive tariffs, or rather sanctions in disguise, on almost the entire world. Even uninhabited islands near Antarctica were included.
It’s hard to glean the purpose of these tariffs, when popular discourse is almost entirely either Trump opponents screaming how awful this is in one ear, or the president’s supporters spouting delusions about this being retaliation for America being ‘looted, pillaged, raped and plundered’ by other nations, in another.
Ultimately, however, they are a radical but clumsy attempt to make the US economically self-sufficient by unleashing disaster capitalism on their own population, while also serving as an extortion racket to make the world pay for the country’s deficit.
Whilst Trump has since announced a pause on the tariffs for most countries after Wall Street stocks surged in response, this will only be for 90 days. However, China is an exception and faces a raised tariff of 125% due to a "lack of respect", in the president’s words.
How did we get here?
Whatever deficit the United States finds itself in, it is of its own making, and not the fault of others as Trump claims.
Take the dollar's global dominance and the US national debt for example. Until 1971, the US dollar operated on a gold standard system. This means that rather than fluctuating on the market, its value was fixed at a specific weight of gold (from 1945-71 this rate was around $35 per troy ounce of gold). The advantage of this system is that, because gold will always be valuable, this guarantees the value of the US dollar as anyone anywhere in the world could convert their dollars into a specific amount of gold at any time. The disadvantage is that it limits how much currency the US Treasury can create.
By the 1970s however, the US decided that there’s really no need for the dollar to convertible into anything tangible, because international demand for dollars will always be high due to it being the world’s reserve currency and almost all international trade being done in dollars (oil being denominated in dollars is especially important).
This put the US in an extremely powerful position (arguably unprecedented in world history), in that it could create virtually unlimited amounts of its own currency out of thin air, and then use that currency to buy actual real goods from other countries. One might even call this the Magic Money Tree™.
That dynamic has led to the situation that exists today; where the US is by far the wealthiest country in the world despite having relatively little domestic production or industry, as it just net-imports almost $1 trillion in goods a year paid for by issuing IOUs, running up gigantic debts and assuming that this can be sustained indefinitely.
Another issue is this massive trade deficit has caused the destruction of swathes of American industry in favour of importing from abroad. However, it is the United States under a Republican President, Ronald Reagan, that launched the policy of de-industrialisation and offshoring, including to China after Nixon's 'reset'. Their purpose was to drive down wages and break labour unions.
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Now, Trump’s tariffs are abruptly telling the people of the US, it’s over. You’re not importing your stuff from the rest of the world anymore. You’re going to have to build your own domestic industries, or do without. However, it is unlikely Trump realises that re-industrialisation is unrealistic in such a short time frame, or that he is aware it would mean higher wages, unionisation, and not that much employment anyway given the advances in automation.
Setting back the global order or resetting it?
The media reaction is correct in that it’s difficult to overstate how massive a change this is. The entire US economic model of the last 50 years has been made unworkable overnight.
Whilst there is a logic that tariffs make imports more expensive and therefore in theory this increases consumption of domestic goods, it certainly doesn’t mean it will work. Especially in a country which currently doesn’t even have a domestic alternative for many of these goods.
Tariffs have a bad reputation in US history. This is largely due to the legacy of the Smoot-Hawley Tariff Act of 1930, which increased the average tariff rate on imports from around 13% to 20%. This is widely regarded to have been disastrous, as other countries retaliated by imposing their own tariff rates on the country, hurting US export industries and worsening the Great Depression.
This isn’t necessarily a good model though. In 1929, the US had the largest trade surplus in the world, leaving it especially susceptible to its trading partners imposing retaliatory tariffs on its exports. Today’s situation is the exact opposite. The US now has the largest trade deficit in world history; that is, no country has ever consumed more than it produces than Americans do today.
US Secretary of State Marco Rubio made clear that changing this is the real aim of the tariffs in his recent press conference, commenting “we’re the largest consumer market in the world, and yet the only thing we export is services, and we need to stop that. We need to get back to a time when we’re a country that can make things, and to do that we have to reset the global order of trade.”
One thing that hasn’t changed, however, is that imposing massive sanctions like this is going to do immense diplomatic harm. International relations is heavily dependent on trust, nobody wants to do business with a country which is seems politically unstable and unpredictable.
In fact, these tariffs are even more inflammatory than in 1930, because it entails the USA tearing up the very international order which they set up and enforced for decades.
Millions of lives have been lost in the various wars, coups etc that the US has waged to keep weaker countries obedient to their system, where the fruits of the world’s labour are shipped to them with only dollars going the other way. For the US to then turn around and claim this system constitutes the rest of the world ripping America off has gone down like a plate of rotten Big Macs.
The people will pay
On the domestic front, this is going to hit the living standards of American workers very hard.
Tariffs are almost always inflationary. Whilst the tariffs imposed during Trump’s first term did not result in the inflation many predicted, those were on such a smaller scale it’d be foolish to extrapolate a similar outcome now because most businesses will have to pass their cost to the consumers. Already, reports suggest an Apple iPhone made in China could cost $2300 in the US.
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So why is Trump doing it? This is what I think is not well understood. Theories differ between reports that it is an outdated obsession of Trump's since the 1980s, while others claim they’re just a threat Trump is using to bully concessions out of other countries. It may well be both, but either way, tariffs seem like the only ideological lynchpin of Trump's economic policy, and so far, he has doubled down on them and boasted that world leaders are kissing his a$$ to make a deal.
It would be a bit less extreme if these measures were accompanied by some kind of industrial policy to bring production back the US, but that’s not happening. Another crucial question for US industry is, since there’s a good chance these tariffs will simply be reversed by Trump’s successor in four years, is it really prudent of us to invest billions of dollars into creating this new industrial capacity when it might not even be used after Trump’s gone? What’s in it for them?
Whilst we’re in uncharted waters, this is all unlikely to work for the administration. Maybe if the US had a more competent ruling elite which was following a long-term plan, something like this could have been done if they’d spent the last decade building economic crash pads to mitigate the damage this will inevitably cause.
It’s like he’s sailed the American people to an isolated island, burned the ships, and told them they now have no choice but to figure out how to live here.
Daniel Lindley is a writer and trade union activist in the UK.
Opinions expressed in this article remain those of the author and do not necessarily represent those of The New Arab, its editorial board or staff.
