San José, CA – On Thursday, July 31, President Trump tweeted that he would be imposing new tariffs, or taxes, on the $300 billion of Chinese goods not covered by his 25% tariffs. U.S. stocks took an immediate dive, giving up all of their 300-point gain to drop 280 points for the day. They continued to fall on Friday, leading to the worst week for U.S. stocks all year.

Despite what Trump says, tariffs are taxes that are paid by U.S. importers. Up to now, most of the Chinese goods placed under heavy tariffs have not been consumer goods. But the new tariffs mainly hit consumer goods such as cell phones, consumer electronics, toys, and baby supplies. U.S. workers could see higher prices going into the upcoming holiday season.

Trump also claims that his goal is to bring down the U.S. trade deficit, where the U.S. imports more goods and services than it exports to other countries. But despite his tariffs, the U.S. trade deficit grew to a record dollar amount last year, as other countries fought back and retaliated against U.S. exports.

The U.S. and China had just met to discuss the trade war and had agreed to meet again in mid-September. By placing tariffs on even more Chinese goods, Trump is trying to bully China into changing its socialist economy. While his bullying tactics can work with smaller economies like Mexico and Guatemala, China is the world’s second largest economy and has had an independent leadership since the Chinese revolution in 1949.

The new Chinese ambassador to the United Nations, Zhang Jun, said, “China’s position is very clear that if the U.S. wishes to talk, then we will talk, if they want to fight, then we will fight.” With the Chinese leadership beginning a two-week annual policy conference, their specific response may take a few weeks. But the trade war is likely to get worse in the coming weeks.

Trump’s trade war is just one of the factors weighing on the world capitalist economy. The European economy is already in the doldrums, and worries are growing about the impact of a no-deal Brexit in October. The Japanese economy is also slow, and Japan has copied Trump by restricting exports of chemicals used in making semiconductors under the guise of “national security”. Here in the United States, business investment and construction are slowing, one of the most sure-fire warnings that a recession is on the way. While the U.S. economy is relatively strong, with low unemployment, it is harder and harder to see how it can continue to grow with one problem after another cropping up.

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San José, CA – On Sept. 17, President Trump announced that tariffs of 10% will be slapped on $200 billion of Chinese goods starting Sept. 24. These tariffs will rise to 25% at the beginning of 2019. Trump also said that he would put tariffs on another $267 billion dollars of imports from China if China responds to his tariffs. Along with the tariffs on $50 billion of Chinese imports already in place, this would mean steep tariffs on virtually all of the $500 billion in goods that the United States buys from China.

China has all along replied to Trump’s tariffs with tit-for-tat tariffs, while calling for negotiations. While it cannot match the United States, as it imports much less than the United States in terms of tariffs, U.S. businesses do have much more extensive business in China that could be restricted. China’s currency has also been falling in value, offsetting part of the price increases that Trump’s tariffs would bring.

The main goal of the Trump administration is to slow or stop China’s modernization drive, which seeks to put China on an equal footing with Western nations and Japan in terms of high technology. This goal of blocking China has wide backing among the big capitalists and both their political parties (the Republicans and the Democrats), even though many disagree with his tactic of a unilateral trade war. This goal, along with Trump’s desire to restore basic manufacturing in the United States at the expense of China, would leave China in the position like many former colonial countries of having an economy based on low-wage labor such as textiles and exporting raw materials.

China’s socialist modernization, along with opening up to world trade, has led to one of the greatest reductions in poverty in world history. China is currently trying to make sure that it is not caught in what is called the “middle-income trap,” where poorer countries make some economic progress but are not able to close the gap with high incomes in the United States, Western Europe and Japan. The Trump administration’s desire to roll back China’s economic progress will never be accepted by China’s government or people.

Many of Trump’s advisors and Wall Street pundits argue that China’s economy is hurting because its stock market is in bear market territory, down over 20% this year, while the U.S. stock market is near record highs. But they don’t understand the basic difference between the two economies. In the United States, with its capitalist economy, the stock market is seen as a key barometer of corporate profits, which drive the U.S. economy. The Chinese stock market plays a secondary role in what is still a largely socialist economy dominated by state-owned banks and businesses.

Ultimately, the impact of price increases for imported consumer goods will fall most heavily on poor and low-income working-class Americans. At the same time the trade war could push Chinese businesses to put even more effort in developing their own higher-technology goods, the very thing that Trump is claiming to oppose.

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