Tag: economy

Trump turns up heat on ‘allies’

17th April 2025

US President Donald Trump pointing in which direction the US economy is heading

In the midst of the apparently chaotic approach to the international economy taken by United States President Donald Trump, there is an underlying objective which was made clear by the Wall Street Journal this week.  The newspaper cited internal sources in the Trump administration confirming that the plan is for the US to use “ongoing tariff negotiations to pressure US trading partners to limit their dealings with China.”

The Wall Street Journal states that,

“U.S. officials plan to use negotiations with more than 70 nations to ask them to disallow China to ship goods through their countries, prevent Chinese firms from locating in their territories to avoid U.S. tariffs, and not absorb China’s cheap industrial goods into their economies.”

The so called Liberation Day ‘reciprocal’ tariffs, announced on 2nd April, saw the US propose a wide range of tariffs upon trading partners based upon the trade deficit they had with the US, a methodology which famously included the Heard and McDonald Islands, only inhabited by penguins.

The British government, far from being outspoken in opposition to the tariffs, expressed relief at only being in the 10% tariff band, a category which is now occupied by everyone but China, faced with an outrageous 145% tariff on goods exported to the US.  The 90 day hiatus on implementation of the tariff bands subsequently announced by Trump is supposedly to give countries the opportunity to negotiate.

What this means in reality is that those countries who rely significantly on trade with the US are expected to bend the knee to US imperialism or be hit with more punitive action once the 90 days is up.  In particular, the negotiations will be a means by which the US tries to compel nations to limit their dealings with China.

The US is used to getting its own way, either through economic manipulation of international bodies such as the International Monetary Fund (IMF) and World Bank, or through the use of military force.  

The clearest example of economic pressure is the illegal blockade of Cuba, which has stood up to US imperialism for over 60 years and continues to survive in spite of the attempts of the US to strangle its economic development.   

More recently the US has adopted similar tactics in relation to Venezuela in an effort to enforce regime change.  Threats to annexe the Panama Canal and take over Greenland are current indicators of US intentions, while the people of Libya, Iraq, Afghanistan and Syria can attest to the fallout of direct US military intervention in the Middle East.  The people of Gaza and the West Bank are the ongoing victims of the genocide perpetrated by the US’s proxy in the Middle East, Israel.

The unipolarity which US imperialism enforced following the defeat of the Soviet Union in the early 1990’s  is now threatened by the rapid economic development of the Chinese economy.

The latest World Economic Outlook data, published by the IMF in January 2025, indicates growth of 2.7% for the US in 2024, the EU at 0.8%, Britain at 0.9% and China at 4.8%.  While this only provides a snapshot it is indicative of the trend globally, that capitalism as a model is failing and that economies structured with more centralised state control are on the ascendant.

In recognising this the US trade war, launched by Trump, is a clear attempt by the US to bully so called ‘allies’ back into the US camp.  The pressure upon members of the NATO Alliance to increase their military spending to 5% of GDP is also part of this strategy.  Not only will public services across much of Europe be impoverished but the main beneficiaries will be the US arms dealers who have access to the most up to date weapons technology.

China’s response to US tariffs has been to impose tariffs of its own, at 125%, on US goods imported into China.  Chinese President, Xi Jinping, has undertaken a tour of Southeast Asia this week, as part of an anti-tariff campaign and offering a more stable alternative trading partner to US uncertainty.

As part of the BRICS (Brazil, Russia, India, China, South Africa) Alliance, China is already engaged in a process of exploring alternatives to the US dollar as the default international currency measure.  The Global South generally is suspicious of US actions and intentions in relation to both economic issues and military threats.

While tariffs will undoubtedly hit the Chinese economy the capacity of China to withstand the impact is arguably greater, as it can more easily replace what it imports from the US from other sources.  US exports to China are heavily agriculture focused such as soya beans, cotton, beef and poultry.  Conversely the US relies on China for imports of electronics, machinery and processed minerals, far more difficult to source from elsewhere.

Also, as a result of tariffs imposed upon China in Trump’s first term, China has consciously reduced its share of imports from the US, down from 21% in 2016 to 13.4% in 2024, all of which underlines why the US is also putting pressure upon so-called allies to reduce trade with China.

China controls more than two thirds of global rare earth production and more than 90% of processing capacity.  The US relies on China for many rare earth metals, essential for electric vehicle batteries for example, which means Trump’s trade war could well backfire even more spectacularly than it already has.

The real danger for the world is that if the economic arm twisting tactics of US imperialism do not work the usual recourse is to military force.  Anti-Chinese propaganda is now widespread across Western media and the possibility of action over Taiwan could well be the occasion for a military flashpoint.  The peace, trade union and labour movement need to be alert to this possibility and be ready to expose the machinations of US imperialism rather than be fooled by the illusion of a US/Britain ‘special relationship’, which will certainly not be special for the working class if world war is the outcome.

Cracked Actors

10th March 2024

Smug Chancellor, Jeremy Hunt, prepares to reveal a pointless budget

A Tory budget could never be expected to deliver anything of significance for the working class or families living in areas of the highest deprivation across Britain.   In that respect alone Tory Chancellor, Jeremy Hunt, deserves top marks for consistency, as the heavily trailed pre-election budget revealed on Wednesday (6th March) gave no hope of any alleviation of pain from 14 years of Tory rule for those most in need.

The Institute for Fiscal Studies (IFS) has calculated that while Hunt’s budget contained an estimated £9 billion in tax reductions, previous budgets have increased the tax burden by £27 billion, scheduled to kick in from next year.

Not that there is anything inherently wrong with raising taxes, if the revenue collected is spent correctly.  A commitment to investment in research, development and production of green technologies to reduce the amount of carbon pouring into the atmosphere would be a start.  Greater investment in the training, retention and pay of NHS staff with a boost in emphasis upon Creative Health to reduce the burden at the acute end of the medical spectrum would be welcomed by most.  

Abolishing the ‘right to buy’ for council housing, which sees any investment made by local authorities to increase the stock of affordable housing effectively privatised after a short period, would be welcome.  The Chancellor could have considered the proper funding of local government as an area worthy of investment, given the growing number of local Councils posting section 114 notices, effectively declaring bankruptcy and having to limp along with under resourced statutory services only.  

While Councils like Birmingham are cutting £300 million and Nottingham £53 million from their budgets the government are heralding Mayoral Combined Authority deals, creating a new tier of regional government with economic development, transport and housing powers but little to directly offer local communities.  The North East Mayoral Combined Authority (NEMCA) is the latest recipient of this form of government largesse, covering an area from Berwick upon Tweed to Bishop Auckland, and able to access £4.2 billion in spend over 30 years.

The fact that the NEMCA budget is a drop in the ocean compared with the cuts endured by local authorities in the North East over the past 30 years is largely overlooked by local politicians desperate to sell the deal as good news.  Local authorities overall  have faced a 40% cut since the Tories lit the austerity bonfire in 2010, cheered on by their Liberal Democrat partners for the first five years.

Meanwhile local leisure, library, arts and museum provision continue to face significant reductions, or even closure, not being high on the government’s agenda.  It is no surprise that they are services mainly accessed by communities in areas of high deprivation who are less likely to vote Tory or, increasingly, to vote at all.

The Daily Mail meanwhile sidesteps these concerns and bemoans the lack of any further money for the military in the budget, citing a report by the Public Accounts Committee that suggests the military is £29 billion short due to overspends, mismanagement and inflation.  The Mail’s response to this has been to launch a campaign, Don’t Leave Britain Defenceless, calling on ministers to increase funding for the Armed Forces “in response to the growing threats around the world.” 

The Ministry of Defence has always been famous for its poor budget management but to pour good money after bad to prop it up and to waste millions on more weapons of mass destruction when people are homeless and starving beggars’ belief. 

Hunt’s big ‘rabbit out of the hat’ moment was a 2p reduction in the rate of National Insurance, in an attempt to grab the headlines of the Tory press.  The reality is that the NI cut will be fine if you earn over £50,000 a year; you will save £1310 per annum. This is five times more than a worker on £20,000 and 15 times more than someone on £15,000 a year.  So, the Tory position remains as ever, the well off do well, while the poor get punished!

Hunt was also keen to try and steal what few clothes Labour have by announcing the abolition of non-dom tax relief for those in Britian whose permanent address is elsewhere.  However, there is the caveat of a five year transition period, so no doubt the tax dodgers at the top of the tree will, as usual, find new ways to avoid paying their fair share before this measure hits.  

Whatever the Tories, the Daily Mail or its readers may think, the threat to Britian does not come from Russia or China, or even maverick international terrorism.  The enemy, to coin a phrase, is within.  The Tory Party, the billionaires and corporations which fuel and fund them, the military industrial complex which feeds off the belligerent pro-US foreign policy, are all the enemies of progress, enemies of the working class and enemies of change.

A budget by Jeremy Hunt or any other Chancellor, Tory or Labour, will not change this reality.  Only mass extra parliamentary pressure for socialist change can begin the process of really transforming Britain in the interests of the working class.  As Canadian poet and songwriter, Leonard Cohen, famously wrote “there is a crack in everything/it’s where the light gets in”.  There is certainly a crack in capitalism and it is the light of socialism which needs to pour in.