The World After American Decline

Michael Roberts

First, Donald Trump is a seriously dysfunctional individual whose self-aggrandizement, intense hubris, and lack of human empathy is obvious to all reasonable people. His public statements and his zigzags on policy (tariffs, international conflicts, and all sorts of cultural and social issues) demonstrate that. But there is method in this madness. Trump’s strategy aims at restoring the United States’s manufacturing base, reducing the trade deficit in goods, and reasserting US global hegemony, particularly against China.

Trump and his MAGA acolytes are convinced that the United States has been robbed of its economic power and hegemonic status by other major economies stealing their manufacturing base and then imposing all sorts of blockages on the ability of American corporations (particularly manufacturing companies) to rule the roost. For Trump, this is expressed in the overall trade deficit that the United States runs with the rest of the world.

Donald Trump often refers to US president William McKinley when announcing his tariffs. In 1890, McKinley, then a member of the House of Representatives, proposed a range of tariffs to protect American industry that were subsequently adopted by Congress. But the tariff measures did not work out well. They did not avoid the severe depression that began in 1893 and lasted until 1897. In 1896, McKinley became president and presided over a new set of tariffs, the Dingley Tariff Act of 1897. As this was a boom period, McKinley claimed that the tariffs would help to boost the economy. Called the “Napoleon of Protection”, he linked his tariffs policy to the military takeover of Puerto Rico, Cuba, and the Philippines to extend America’s “sphere of influence,” something Trump echoes today with his comments about Canada, Greenland, or Gaza. Early into this second term as president, McKinley was assassinated by an anarchist who had been enraged by the suffering of farm workers during the recession of 1893–97, which he blamed on McKinley.

Now we have another “Napoleon of Protection” in Trump, who claims his tariffs will help American manufacturers. Trump’s aim is clear: he wants to restore America’s manufacturing base. Much of the imports coming into the United States from countries like China, Vietnam, Europe, Canada, Mexico, etc., are from US companies selling products back to the United States at lower cost than if they were produced within the country. Over the last forty years of “globalization,” multinational companies in the United States, Europe, and Japan moved their manufacturing operations into the Global South to take advantage of cheap labor costs, the absence of trade unions or regulations, and access to the latest technology. But these countries in Asia dramatically industrialized their economies as a result and thus gained market share in manufacturing and exports, leaving the United States to fall back on marketing, finance, and services.

Does that matter? Trump and his crew think so. Their eventual strategic aim is to weaken, strangle, and pull off “regime change” in China, while also taking full hegemonic control over Latin America and the Pacific. So, US manufacturing must be restored at home. Joe Biden was keen to do that through an “industrial policy” that subsidized tech companies and manufacturing infrastructure, but that meant a huge rise in government spending that in turn drove up the fiscal deficit to record levels. Trump reckons that imposing tariffs to force American manufacturing companies to return home and foreign companies to invest in America is a better way. He reckons that he can boost manufacturing, spend more on arms and reduce taxes for corporations while cutting back on social spending and so keep the government budget and the dollar stable — all through tariff hikes.