By Jamie Merchant¹

As part of his flailing trade wars, Donny Deals has proposed 100% tariffs on movies made overseas. "The Movie Industry in America is DYING a very fast death," the president exclaimed, pointing to the tax breaks offered to shoot overseas as "a National Security Threat." Placing foreign movie makers in the same camp as the government's official military enemies might seem like classic Trumpian hyperbole. But as is often the case, the president's social media noises are a window to a darker reality.

Since Trump's first term and continuing into the Biden years, the U.S. government has gradually redefined trade as a matter of national security. This is a far cry from yesteryear's tale of globalization. In that happy fable, trade was the outworking of a competitive world market bound to link the globe in commercial harmony. Reducing trade barriers and opening up national markets to the free flow of capital would attract foreign investment, creating jobs and rising incomes in the developing world. In turn, the multinational firms of the rich nations would profit from these investments, expand themselves, and continue to explore the technological frontier. Everyone wins in a beneficent order led by its virtuous steward, the United States, avatar of capitalist freedom.

So much for all that. In Trump's gothic rhetoric, trade is a scene of death and dying, a Darwinian struggle for survival. In this story, national growth happens not in cooperation with other nations, but only at their expense. This is not a sharp break with precedent. His predecessor, Joe Biden, shared the same worldview. So-called "Bidenomics" doubled down on precedents from Trump's first term, not only keeping Trump's tariff regime against China but escalating it. The centerpiece of Biden's economic agenda was historic legislation designed to capture manufacturing investment from its supposed allies in Europe and East Asia. Biden's government threatened to penalize foreign producers if they traded with its official enemies in industries deemed critical for America's national security. Like the Republicans, the Democrats pursue trade by extortion. Trump II is a more rhetorically colorful version of the same berserker nationalism that has overtaken economic statecraft in the U.S. and dominates world politics today.

Properly contextualized, the tariffs' bumbling rollout is another embarrassing episode in the disintegration of the U.S.-led global economy. But their role in this saga goes mostly unremarked in current debates around trade. Instead, mainstream commentary talks about tariff policy on the terms established by the Trump administration. They are evaluated as a more or less effective method for achieving its official, public goals. These typically include some mix of reindustrialization and debt reduction to be achieved by shifting demand for foreign products to home producers.

The story goes something like this: a reinvigorated manufacturing base will put U.S. industry on newly competitive footing, reducing the trade deficit in the balance of payments. The U.S. will no longer need to borrow so much, allowing a drawdown in government debt. Tariff revenue will replace taxes, unshackling American business to unleash a new wave of prosperity. Perhaps they will support U.S. military preparedness by relocating critical industries inside the country, appeasing a paranoiac defense establishment.

Can the administration pull it off? Is it economically feasible? Perhaps a comprehensive Mar-a-Lago accord is waiting to be unveiled, revealing Trump's master plan to the world.

To some, it all seems so chaotic, so unplanned and incompetent that the idea of a rational basis for it beggars the imagination. Others have warned against the risk of "sane-washing" Trump's agenda by imposing some grand strategy on what might be nothing more than a historic grift. Of course Trump's entourage is taking every chance they can to plunder wherever and whatever they can, even fleecing their own, contemptuous supporters. But to see nothing but kleptocracy would be an overcorrection, missing the political effects of Trumponomics beneath the official policy debates.

Tariffs are in part Trump's unique lizard-brained obsession, an idée fixe of the reality TV real estate tycoon since the 1980s. But their broader historical meaning lies in the context of a gradual collapse in capital investment and profitability that pushes national governments to adopt ever more extreme measures in order to continue appropriating their aliquot parts of a stagnating global pool. This shows up in virtually every major empirical indicator. GDP growth rates across the capitalist world have drifted downward for decades, including in its supposedly most dynamic new centers, like China. Labor productivity and productivity gains from technology — measured by what economists call "total factor productivity"² — have both steadily decayed as productive investment has dried up. Such investments are decreasingly profitable for the world's capitalists, so nation states must bribe them to invest by throwing trillions in state money at them in the form of tax breaks, subsidies, grants, and federal contracts. This was the point of yesterday's enthusiasm for the celebrated return to industrial policy in the Biden years, now but a distant memory.

Corporations, in turn, increasingly depend on cheap credit to finance their activities or even just to continue existing. This is the case with the symptomatic zombie firms, unprofitable concerns that survive on easy credit and make up somewhere around 20% of U.S. public companies. Consequently, the declining profitability of capital shows up most dramatically in a permanent explosion of government and private debt. These trends afflict not only the rich countries, but also the middle- and low-income nations of the Global South in which development has all but stalled out, most strikingly seen in the phenomenon of premature deindustrialization.

What is causing this breakdown? Consider the question of profits. Trump thinks profits come from deals. Economists think profits would be competed away in a fair market. Neither understands their source and function in the broader capitalist economy as a class-based order, in which a dominant class extracts their wealth from a coerced, toiling majority. In this society, profits come from the protean fire of human drives and creativity: labor-power.

If labor-power is the ultimate source of profits, then the drive to ever higher productivity that defines the capitalist mode of production is also its undoing. As that source is progressively displaced by more advanced, capital-intensive production, the total amount of profits available system-wide to reinvest and expand diminishes. The planetary ossification of industry overwhelms the capacity of world markets to absorb its output, intensifying the pressure of competition. Eventually the process of accumulation reaches a limit in which the profit it is able to produce isn't enough to further expand accumulation on a greater scale. This, a general crisis of overaccumulation, underlies the shattering of world capitalism today.

Global breakdown in capitalist growth is immensely destructive to societies because it condemns them to a distributional struggle over shrinking resources. Capitalism is based on the class opposition between capitalists and the workers they exploit. If productivity is growing, profits can be shared with the working population in the form of higher real wages and salaries. But if it slows or stops, the economic surplus goes to that class with the power to decide who gets what. Oligarchs get richer as inequality grows more savage by the year. Institutions break as the frail bonds that hold society together come apart. The fuse is lit.

The elites are well aware of this. Popular rage at permanently failing government institutions constantly threatens to boil over. The climate crisis threatens the basis of human civilization itself. Planetary upheaval looms. For a capitalist class whose most repulsive members now simply run the U.S. state directly, the most prudent course is the empowerment of domestic security and surveillance forces through an equally empowered, unconstrained executive. Erratic tariff policies that are unpopular even with many capitalists themselves are just part of the deal, as Trump would probably say. In the short-term they may be inconvenient; in the longer term, they are part of a fortification of class power through a newly emboldened crackdown state. They may even coerce some favorable concessions from rivals, allowing uncompetitive industries to limp along a bit longer. In this sense they are indeed a policy of national security.

If interstate economic conflict was notably absent in the days of globalization, it was because the elites of all nations were getting rich plundering their national working classes. Now, the fact that they turn on each other like ravenous dogs is a harbinger of capitalism's autumn, a sure sign that growth — like the mental faculties of our rulers — is expiring.

Seen in this light, the tariffs are neither a more or less rational policy choice, nor solely an elaborate grift. They are part of a two-front, worldwide class war unfolding between national bourgeoisies, on the one hand, and between them and the proletarians of their respective countries on the other. That is, the tariffs are a recipe for a renewed ruling class offensive on the workers of the world against a backdrop of accelerating global decline. They express the economic breakdown of capitalist society in political form.

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