![Trump sworn in](https://www.socialistworld.net/wp-content/uploads/2025/01/Trump-sworn-in--600x381.png)
Trump is back in the White House. Much of the world is gripped by fear about what his second term will mean, as are millions in America – particularly migrants, LGBTQ+ people, and others likely to be on the sharp end of his attacks. In Britain one opinion poll reported that 54% of British people think Trump will be bad for their country, compared to only 15% who think he will be good. An even greater majority of Britons think he will be bad for world peace.
Meanwhile Britain’s prime minister, Keir Starmer, has publicly emphasised his “constructive” relationship with Trump, expressing how grateful he was to Trump for having dinner with him in New York last year, and pleading for a US/UK trade deal. Such warm words for new US presidents are the norm for capitalist governments, as they try to get close to the leader of what is still the world’s strongest power. No amount of sickening sucking up, however, will make Trump prioritise a trade deal with Britain.
More fundamentally, nothing can prevent British capitalism being particularly vulnerable to the negative consequences of ‘maganomics’; as a result of being a weaker power, extremely reliant on foreign capital, and outside any of the major trading blocs. The January bond market jitters, and the fall in sterling are a foretaste of what is ahead. Nor will the consequences of Trump for Britain be simply economic. Starmer’s Labour is currently sticking closely to the traditional script of British capitalism: backing US imperialism to the hilt in all its crimes. Trump will demand the same in future conflicts, but mass domestic opposition and a multi-polar fragmented world could make that much more difficult. And of course, Trump draws little or no distinction between political and economic conflicts – and has already shown how he likes to use the threat of tariffs, for example, to try and bludgeon governments into line on all kinds of issues.
Clearly Trump is an idiosyncratic character. As US president he will add a large dollop of chaos and uncertainty into world relations. That in itself will tend to increase global political but also economic turbulence. Even before taking office his election has added to the frenzy on the US stock markets, and led to the further inflation of huge speculative bubbles. In particular, he is actively fuelling crypto-mania. His actions will increase the size of the inevitable financial crash when it comes. At the same time his attempts to abolish the US debt ceiling is an indication of his reckless approach to US government finance, even from a completely capitalist viewpoint, at a time when markets are extremely nervous about the huge scale of government debt in the US and globally. And on his threat to ratchet up tariffs the IMF has weighed in to warn that Trump “could make trade tensions worse, lower investment, and disrupt supply chains across the world”.
Trump reflects and accelerates
Nonetheless, it would be a mistake to see the era we have entered as being the consequence of one reckless individual. On the contrary, Trump’s election both reflects and accelerates the increasingly unstable multi-polar character of global capitalism today. The world we are now living in has more in common with the first half of the twentieth century than anything that has been experienced since.
From the dawn of capitalism there has been tension between the nation state and the world market. It is one of the fundamental contradictions of capitalism that Marx described. In the twenty first century the productive forces have massively outgrown the barriers of nation states, but capitalism has shown itself unable to fully surmount those barriers. It did not do so even in the nineties and noughties age of globalisation. Today, the nation state has come roaring back.
This is a very different era to the two which preceded it. In the decades that followed the second world war, the cold war era, US imperialism dominated the capitalist world. It was able to establish an international framework and institutions and to a considerable extent compel the other capitalist powers to do its bidding. However, that – clearly – was not the whole story. World relations in that period were underpinned by the clash of systems between the countries of the West and the non-capitalist Stalinist states of the East, which acted as a counterweight to the capitalist powers led by the US, while also increasing the tendency in the West to toe the US line, as a result of the pressure to unite against a common enemy.
Then, when Stalinism collapsed in Russia and Eastern Europe in the early 1990s, the US became a true hyper-power, able to set the framework for the world economy, with China now willing to act as a cheap labour assembly plant for the Western capitalist powers. That was the era of US-dominated globalisation, and of US hubris. World trade increased massively. In the decades up until the 2008 Great Recession world trade increased from 39% as a percentage of GDP in 1990 to 61% by 2008, with two-thirds of the profits growth (to 2013) being captured by Western companies. At the same time Western capitalists restored profits by driving down the share taken by the working class.
That period of history – brief in historical terms – has been gone for some time. The disastrous invasions and occupations of Iraq and Afghanistan badly dented US imperialism’s prestige and inner confidence. Then the Great Recession revealed all of capitalism’s underlying economic fault-lines, none of which have since been overcome. The propaganda that US-led ‘liberal’ capitalism was going to provide peace, prosperity and democracy for all was severely undermined before 2008, but the Great Recession finished it off. Nonetheless, the response to the Great Recession was still a demonstration of the power and global role of US imperialism, which acted as the world’s banker, effectively underwriting China’s 2008 stimulus packages, and partially limiting the still devastating effect of the economic downturn.
Trump’s election makes it absolutely clear that that era is dead and buried. As a result, the next world economic crisis could be far more severe. From 1929 to 1932, in the Great Depression, global production fell by an estimated 15%; in the US, gross domestic product fell by 30% in that period. Yet the depth of that crisis was determined less by the 1929 Wall Street crash itself than by the response to it. In contrast to 2008, the US, which had by then thrust Britain aside as the strongest imperialist power, turned in a sharply protectionist direction, deepening the slump. The 1930 Smoot Hawley Tariffs Act raised US tariffs on over 20,000 items, and triggered major global retaliation. Trump, who has declared tariff to be his favourite word, could respond in the same way to future crises.
Trump without the tweets
In reality, however, with or without Trump, there was no prospect of US imperialism in this era behaving as it did back in 2008. The protectionist turn that Trump initiated in his first term was maintained and developed under Biden and will now be stepped up again under Trump 2.0. The Economist magazine’s Lexington column was accurate on 16 January when it said that, “on trade, industrial policy, energy, foreign affairs and even the rule of law, Mr Biden’s term can be viewed less as a radical departure from Mr Trump’s than as MAGA-lite”. It goes on that Biden “signed no new free-trade deals and made no effort to revive the Trans-Pacific Partnership, signed by Barack Obama, from which Mr Trump withdrew. Mr Biden kept Mr Trump’s sanctions on China and piled on more. Though Mr Biden emphasised multilateralism, he blindsided allies in what he saw as America’s interest”. The article quotes an anonymous French minister saying Biden was “Trump without the tweets”.
Obviously, there are more differences than that between Trump and his predecessor, but they are less than the hype proclaims. Trump will cut back on Biden’s clean energy policies, but, of course, in reality Biden pumped out record levels of fossil fuels. Biden ruthlessly pursued the interests of US imperialism but was more inclined than Trump will be to do so via the weakened existing ‘rules-based order’. Nonetheless there were considerable limits to this. For example, throughout Biden’s presidency the US blocked the appointment of any new members of the World Trade Organisation’s judges panel, leaving it inquorate and unable to settle disputes. China’s complaint that the US Inflation Reduction Act (IRA) breaks global trade rules has therefore never been heard.
In fact, the $890 billion IRA, along with the Chips Act and other measures introduced under Biden to provide state subsidies to companies based in the US, are more significant protectionist measures than anything introduced under Trump’s first term. Trump has railed against them, but the Economist is probably right to predict that he will now be “cashing cheques and cutting ribbons” with his name emblazoned on “signs for public works paid for by Mr Biden’s law”. And he could introduce more. One of Biden’s parting shots was the publication of a new US trade verdict which concludes that China is using “non-market practices” to dominate the global maritime industry and that therefore state subsidies are needed for the US maritime, logistics, and shipbuilding sectors. Ironically, the verdict was probably delayed until four days before Trump took office because Biden and the pro-state subsidy Democrats doubted if they could get action agreed, but are challenging Trump to pick up the ball and run with it.
The rise of China compels
Increasing tariffs and other protectionist measures will only exacerbate the problems of global capitalism, but continuing along the path of globalisation which US imperialism championed at the start of this century is no longer in its interests. The US is now compelled to try and protect its national markets against its rivals, above all China. Back in 2001, when China joined the World Trade Organisation, its economy at market exchange rates was barely one-tenth the size of the US. Even at the start of the 2008 crisis it was only one-fifth of the size. Now it has grown to almost half. Rather than just an assembly plant for US imperialism it is an increasingly powerful rival.
The unique character of China, with the state playing a large directing role in the allocation of capital, enabled it to provide the infrastructure and workforce for a qualitatively larger, more advanced, ‘assembly plant’ than any other country could have provided. However, it has also enabled the regime to develop the Chinese economy beyond that. Xi’s 2015 ‘Made in China 2025’ policy is a determined effort by the Chinese state to haul itself up the value chain and develop ten strategic sectors from next generation IT to agricultural machinery. Progress has been made. China is a manufacturing behemoth, responsible for almost a third of global manufacturing output, more than the next nine countries combined, and that is no longer solely in low-tech goods. China is now the world’s biggest car exporter, overtaking Japan, and leads the world in electric vehicle manufacturing. At the same time China’s unique character, where the state continues to play a central role in directing the economy and foreign capital is only allowed to operate within huge restrictions, mean it is a rival that US capitalism cannot exploit as it pleases. China has fundamental internal contradictions – which will result in huge revolutionary upheavals at a certain stage – but for US imperialism it is a growing threat. Trumpism is the result.
None of this is to suggest that the interdependence between the US and China is no longer central to the world economy or that Trump will move smoothly in one direction. On the contrary, he is likely to be dramatically buffeted by events. World trade has not regained its pre-2008 peak but has remained at a higher level than the early 2000s, or any previous period of history. The US/China axis remains central to that, and in 2023 the US trade deficit with China was around $280 billion. That was a decrease – of around 11% – from the near record high the year before, but was still enormous. At the same time China’s ability to hold down the value of its currency, especially as the dollar is at this stage very strong, has to some extent limited the effects of tariffs.
Trump will face conflicting pressures from different sections of the US capitalist class as they try and direct him in the way that best reflects their material interests, including within the minority who backed him for the White House. For example, most of the ‘tech bros’ who are currently cuddling up to Trump have production facilities in China and will want to limit tariffs, not least Elon Musk. The giant Tesla plant in Shanghai is responsible for half of the company’s global production. Nonetheless, the general direction of travel is clear. And where the US leads, the rest of the West has ended up following. The IMF estimates that in 2023 2,500 new ‘industrial policies’ were introduced worldwide, 71% of which it considered to be “trade distorting”. This compares to virtually none a decade before. It also claims that, in 74% of cases, a subsidy for a given product in one major economy will be followed by a subsidy for the same product in another major economy within twelve months. In 2023, the world’s governments imposed trade sanctions more than four times as often as they did in the 1990s, according to the Global Sanctions Database.
It can’t be predicted how far Trump will go in implementing his various tariff threats. However, it is clear that – while China is his primary target – he will be more prepared than Biden to threaten tariffs against US ‘allies’ for all kinds of reasons. This, combined with his downplaying, or even dismissing, of the importance of the existing ‘rules based order’, can only accelerate the multi-polar character of world relations. As part of attempting to negotiate the end of the Ukraine war, for example, he is more than capable of attempting to bring Putin into the US orbit, pulling Russia away from China. At the same time, different Western powers will not be part of a solid economic bloc behind the US and against China, especially if they are themselves on the receiving end of US tariffs. We are not in a world of two clear blocs, but rather of two major powers, and all the other capitalist nations trying to best defend their own interests in an ever-shifting swirl of allegiances.
Puny Britain
The Starmer government is no different to others, attempting to defend the interests of British capitalism in this multi-polar world. Hence the diplomatic charm offensive as it tries to increase trade with both the EU and China. It has, however, huge disadvantages. The recent turmoil in the bond markets gave a hint of the potential future consequences of Britain’s weakness. The rise in the cost of government debt (yields) took place across several major economies, but Britain suffered the biggest hike in the G7. The source of the global turbulence was not Britain, but the markets’ reaction to events in the US. The old saying that ‘when the US sneezes the world catches a cold’ is particularly applicable to the UK. Like the US, Britain is highly reliant on foreign lenders, but as a far weaker economy, without the global reserve currency, it is more susceptible to the consequences. Fundamentally, the market jitters reflected their lack of confidence in the prospects for British capitalism.
No wonder. Britain’s economy, as the oldest capitalist power on the planet, is extremely sclerotic. Since the Great Recession its relative decline has accelerated. In 2023 Britain’s economy was 22% smaller than it would have been if the pre-Great Recession trend had continued. In the twelve years following 2007, labour productivity grew by only 0.4% a year in the UK, less than half the average among the 25 richest OECD countries. Since the financial crisis, Britain’s already low business investment fell further, leaving Britain second bottom in the 38 countries of the OECD, ahead only of Greece.
The Starmer government’s fever dreams of transforming government finances by economic growth bear no resemblance to reality. Starmer’s latest wheeze is to big up Britain’s AI industry. In reality, however, Britain does not have one single computer amongst the top 500 most powerful computers in the world. Tech startups in Britain are, in the main, quickly bought out by the US tech giants. In general, the promise of higher levels of investment and bigger profits is acting as a magnet for UK companies to up sticks to the US. Last year was the worst for the London Stock Exchange since 2009. More than 88 companies delisted from London’s main market in 2024, overwhelmingly relisting in New York. The AI dream is likely to go the same way as Labour’s pre-election hope that they could corner part of the market in green technology, only to find that China already had it sewn up.
Many of the features of British capitalism today reflect its particular role in the era of globalisation. Britain, already a weaker power clinging to the US’s coattails, went further than many other major economies in de-industrialisation, privatisation, deregulation, and complete dominance of – often foreign – finance capital. Rachel Reeves reflected this last November when she told the City of London that “financial services” are “the crown jewel in our economy”. It is therefore particularly ill-prepared for this era when the nation state is roaring back. No amount of diplomacy will allow British capitalism to – for example – gain closer trading relations with the EU by abiding by its food standards, while also getting a trade deal with Trump which includes accepting chlorine-washed chicken. British capitalism will face all kinds of dilemmas, with generally only different bad possibilities on offer. Starmer’s current parliamentary majority could be destroyed by splits on the way forward when it comes to choosing between Chinese electric vehicles or avoiding threatened US tariffs, or a thousand other similar quandaries.
Prospects for class struggle
Britain and the US are both parts of a global trend. In economically developed countries that had general elections in 2024, the incumbents held on in only one in seven of the contests. Capitalism is an increasingly ailing system, and capitalist governments of all stripes have overseen falling living standards, for which they have been punished at the ballot box. This was the most important factor in the victories of both Starmer in Britain and Trump in the US. Neither will be able to overcome the crises in the system they defend, and both will face massive opposition.
Inauguration day protests were smaller in the US this year than when Trump first won in 2017, but significant struggles against his policies will develop, potentially very quickly, particularly if he attempts to proceed with large scale deportations. There are numerous issues on which mass movements could develop, not least Trump’s refusal to recognise the continuing horrifying consequences of climate change.
However, the greatest rage against Trump will develop over his failure to improve the living standards of the working class. More than 80% of those who voted for him did so on the issue of the economy and his promise of ‘good jobs, good wages’. Right now US economic statistics look far healthier than those of Germany, France or Britain – but the experiences of ‘Wall Street’ and ‘Main Street’ are very different. For substantial sections of working-class Americans the official growth figures are meaningless. There is no prospect whatsoever of that changing under Trump. The elite may get more tax cuts, but higher tariffs will lead to further price hikes for already squeezed US workers, while the coming economic crisis could put 2008 into the shade. Far from making ‘America Great Again’ Trump will preside over increased crisis and turmoil. Some of those workers who voted for Trump in 2024 will be leading the struggle against him in the coming years.
Even in his first term Trump had a whiff of the power of the working class when, for example, in January 2019 Sara Nelson, president of the Association of Flight Attendants, called for a general strike to end the federal government shutdown which was leaving around half a million federal workers unpaid. This time, however, Trump has come to power in a period which has already seen – albeit from a low base – the largest number of strikes in both the US and Britain since the 1980s. Trade unions are more popular than at any time in the last sixty years, despite their often weak and pro-capitalist leaderships.
Faced with inevitable new attacks on wages, jobs and living conditions under Trump, we will see a further development of strikes, alongside other battles against war, over the consequences of climate change, and in defence of migrant, women, and LGBTQ+ rights. In the coming period both countries could be shaken by class struggle on a scale even greater than that experienced in the post-war eras. That will urgently pose the need for the working class – in the US, Britain and elsewhere – to build its own parties, based on a programme of international socialism, as the only way to establish the genuine global cooperation which is needed to create a world able to meet humanity’s needs, free from war and climate catastrophe.
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