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Trump - Hard as Steel

by Tomasz Konicz
There is outrage over the nationalist economic policy of "America First." The parallels to the 1929 system crisis are obvious. The unstable house of cards on the world financial markets could finally collapse. Credit-financed demand is created for a goods-producing industry that suffocates in its own productivity.

by Tomasz Konicz

[This article published on March 3, 2018, is translated from the German on the Internet,]

America's right-wing populist president Donald Trump seems resolved to permanently reduce the enormous American trade deficit [1] of $566 billion through penal duties – even at the expense of the export-fixated German political economy. Germany now finds itself in a very exposed strategic situation in the trade war that is now acutely threatening.

In the future, the United States wants to impose an import duty of 25% on steel and 10% on aluminum. [2] With this measure, the right-wing populist Trump wants to fulfill a nationalist election promise to initiate a re-industrialization of the United States by protectionist measures. US industry was treated "unfairly." Tariffs should be in force for a very long time so America will again have "news jobs" and "vibrant businesses," the president said at a meeting with businesspersons.

At his assumption of office, Donald Trump announced revising the de-industrialization of the United States that he blamed for America's extreme trade deficits toward China and Germany. [3] The US president explicitly criticized German car manufacturers then. [4] Goods manufactured in China or Germany were imported in the US and created jobs in the export countries – but not in the US.

Bad news for the export world champion

Thus, the United States with its gigantic trade deficit and correspondingly tremendous debts functions as a kind of debt-financed economic locomotive that takes over a large part of the global surplus production.

Washington now wants to revise this decades-long deficit-cycle [5] with the US as the credit-financed sales market of Chinese and German products manifest in the huge trade deficit.

This is bad news for all exporting countries – above all for the export world champion Germany. [6] The trade surplus of Germany compared to the US amounted to 50 billion euros in 2016. [7]

EU announces retaliation

In its president Juncker, the EU Commission immediately announced countermeasures to protect the interests of the EU. For months, there were lists with US products on which penal duties should now be imposed, the EU Commission said. Brussels would announce its "retaliatory" measures in the next days, Juncker declared.

The EU will react decisively and appropriately to defend its interests. Jean-Claude Juncker

There is outrage over the realization of the nationalist economic policy of "America First" by Donald Trump not only in Brussels and Berlin. Canada described the penal duties as "unacceptable." Mexico and Brazil are also considering retaliatory measures. [9] Both countries are important exporters of steel to the US.

China acted cautiously in view of its huge trade surplus toward the US. For a long time, Peking delayed announcing concrete measures. [10] Peking will not react since it did not want to look weak. However, this reaction may turn out "relatively reserved," analysts explained to the AP news agency.

The Berlin agitators or rabble-rousers [11] could have taken an example from the reserved reactions in Peking. Berlin obviously sits in a glasshouse on account of its one-sided export-orientation criticized internationally for years. [12]

Debts, unemployment, and de-industrialization are also exported with export surpluses and systematically promoted through internal devaluation in Germany since Agenda 2010. [13 However, the ruthless German Beggar-thy-Neighbor policy that paved the way for Germany's rise to Europe's dominant power now makes the export world champion very susceptible. [14]

Trade wars and export surplus

The side marked by export surpluses always has less pull in trade wars. The greater the export surplus, the greater the susceptibility of the political economy to protectionist measures of the other side. In the meantime, Germany's trade surplus reached astronomical levels of more than 8% of the GDP. [15]

The vehement international criticism of this German economic nationalism (a "Germany First," so to speak, that anticipated Trump's nationalism) long met with deaf ears in Berlin – and provokes rather infantile reactions. [16]

Berlin now sees itself confronted with a massive headwind, ultimately with a threatened collapse of capitalist globalization that was the basis of the German export world championship. All export zones could impose import restrictions on each other to keep their own balance of trade positive in a general trade war where US import duties lead the most important economic centers to reactions.

However, the export-fixated countries endure massive economic crashes that cannot be balanced by exports among each other since the US has by far the greatest trade deficit worldwide.

Unstable economic foundation

The parallels to the 1929 system crisis are obvious. At that time, the most important capitalist countries reacted to the outbreak of the worldwide economic crisis with protectionism that even intensified the socio-economic dislocations- and helped National Socialism to rise.

This seems to be the great socio-economic "success" of right-wing populism in the form of Trump. The lessons of 1929 drawn by middle-class economics seem forgotten.

The latest stock exchange turbulences [17] pointing to the exhaustion of the present liquidity bubble [18] make clear how unstable is the economic foundation of the late-capitalist world system after the crisis of 2008.

The gathering trade war may now again lubricate the stock markets that stabilized in the last days. The unstable house of cards on the world financial markets could now finally collapse.

The "trade wars" breaking out are consequences of the system crisis [19] in which the hyper-productive late capitalist world system finds itself that can only eke out a kind of zombie life through increased borrowing and continuous indebtedness.

The whole indebtedness of the late capitalist world system increases much faster than its worldwide economic output. [20] In the final analysis, credit-financed demand is created for a goods-producing industry that suffocates in its own productivity.

Still, not all regions and countries are equally indebted. This leads to the formation of the much-deplored global imbalances in the balances of payment and trade. States with extreme export surpluses (and thus carry on debt export) face indebted states with deficits.

A Germany inevitably concocts its Greece since it sets up the dear mathematics that in a finite world a deficit must correspond to every surplus.

Indebtedness pressure of late capitalism

The current trade wars that really only represent an intensification of the monetary wars customary since 2008 are consequences of the unconscious efforts of states and monetary zones to shift this systemic indebtedness pressure to rivals. [21]

Thus, only the "objective" systemic indebtedness pressure of late capitalism is executed by the "subjective" neoliberal predatory competition between the "locations" on the world market and the now threatening conflicts over trade policy.

The economic world market competition of the national "locations" lubricated in the epoch of crisis-laden capitalist globalization with a constantly growing global debt dynamic now seems to change quickly into political conflicts.

Moreover, Washington seems willing to enrich its protectionism with a geo-political calculus to delay the imperial descent, as the AP news agency noted. [22] As allies of the United States in the Pacific, Japan and South Korea set their hopes on carve-out clauses from the American penal duties.

In a countermove, the harsh measures toward the Eurozone could indicate Washington will not passively tolerate the increasing world-power ambitions of German Europe that come over more strongly in conflict with the US. [23]


The heavily-armed US in a geo-political descent as a "loser" of the globalized economic predatory competition seems to initiate a new crisis phase amounting to a "de-globalization." The globalized world market could collapse in the wake of these neo-nationalist conflicts and break apart in several regional economic zones.

The states will try to shift the crisis consequences to foreign countries by protectionism and export promotion. The epoch of crisis-laden neoliberal globalization that was a globalization of systemic debt dynamic now threatens to break down in a new crisis phase and change suddenly into in an era of authoritarian national crisis management that may produce the most serious socio-economic and political consequences given the global economic interlocking in late capitalism – particularly with export world champion Germany.

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