Trump’s dangerous game. Graphic: Flickr/Marco Verch Trump’s dangerous game. Graphic: Flickr/Marco Verch

Both free trade and protectionist strategies will ultimately impoverish workers, writes Susan Newman

Trump blames globalisation and, in particular, the rise of Chinese manufacturing for the decline in manufacturing employment and worsening conditions for working people employed in particular in ‘blue collar’ jobs in the US. His response has been the promotion of nationalist trade policies. But Trump’s analysis is wrong for a number of reasons.

First, he neglects the political economy of neoliberal globalisation that is rooted in a class analysis and one that pays particular attention to capitalist interests and restructuring in the global economy, namely the rise of transnational supply chains and international capital flows that have been driven by US corporations, the interests of Wall Street, and facilitated through its government policies. Second, Trump neglects the ‘home-grown’ nature of US industrial decline that has its roots in the specific way in which capitalist development accelerated after WWI, propelling it to its position as the major economic power.

One of the most distinct characteristics of globalisation of the last three decades has been the replacement of trade in finished goods by trade in components, parts and semi-processed products through transnational supply chains. This process has been propelled by the liberalisation of capital flows previously constrained by the Bretton Woods system, technological advancement in transport and communications, and the rise of low-cost manufacturing in so-called emerging economies, as well as trade liberalisation.


Off-shoring of production by US multinationals has been driven both by the imperatives of cost minimisation – US firms benefit both from low-wage manufacturing and the relative low-cost of imports because of the over-valued dollar – and the reorientation of corporate strategy towards short-term goals associated with share-price performance as distinct from production that has driven firm downsizing and outsourcing of production activities as well as corporate mergers and acquisitions in the 1990s and 2000s.

The collapse of the Gold Standard and its replacement by the Bretton Woods system of fixed exchange rates and capital controls saw the replacement of gold by the US dollar in international reserves. For this reason, the US dollar, and by implication the US monetary authority, holds a unique position of influence in global economic activities. It was also the authority of the dollar that informed the push by the US for the breakdown of the B-W system as US finance could profit greatly from liberalised capital flows. If Trump truly wanted to support US manufacturing, he might be more inclined to depreciate the overvalued US dollar that would make US manufacturing more competitive on global markets but this would go against the interests of Wall Street and the financial sector. 


The US economic might was born out of the most technically advanced and unprecedented scale of mass production for mass consumption that reached its heights in the 1950s. Steel production and manufacturing boomed in the regions stretching from the New York across the Midwest. Cities like Detroit were the pinnacle of modernity and hard work was rewarded with new items of private consumption and suburban living. By the 1960s the dynamism of Fordist production was reaching its limits. Industrial decline accelerated throughout the 1970s and 1980s transforming the once-booming Midwest into the depopulated and abandoned Rust Belt that had been the focus of Trump’s presidential election campaign. In order to maintain profits, US capital has fiercely affected the wage bargain in order to get an increasing slice of a pie that is growing more slowly.

Hourly and weekly real wages have been stagnant at their 1972 level and capital’s share of income has risen from 18.8% in 1979 to 26.2% in 2010.  Work has been intensified with racial and gendered features. At the same time capital has consolidated and reoriented its strategy away from domestic productive investment towards short-term profit generation on capital markets, fuelling further deindustrialisation and inflating the financial sector. The vast majority of the US working class has experienced a decline in living standards over the last three decades. However, per capita consumption has been able to increase with the expansion of consumer debt and epic levels of household debt on which US financial investors could profit. This feature of contemporary capitalism in the US was brought to stark relief at the onset of the crisis of 2007/8 and persists today.

Trump’s steel and aluminium tariffs address none of the sources of declining standards of living for the US working class. It will have no little effect on production and almost no impact on employment in these industries. Pro free trade doomsayers warn on the possible retaliatory actions by US trade partners and the onset of a trade war while US capitalists have threatened the relocation of remaining production. Neither free-traders nor protectionists seem to have an appetite for what is really needed by workers, namely strategies for industrial revitalisation or regional development in areas adversely affected by offshoring, or international economic cooperation and coordination that would be of benefit for workers everywhere.

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