“A less noticed implication of Trump tariffs” posted by Prabhat Patnaik on Peoples Democracy on August 17, 2025.
DONALD Trump’s tariffs are being discussed in the media in a routine manner without considering their specific context. This context is one where the US government is unwilling to spend the revenues accruing from higher tariffs on buying goods and services – a matter that is explained below. Other countries that may be losing the US market owing to the consequences of Trump tariffs are also unable to compensate for this loss by enlarging their own domestic markets. Such enlargement can occur through larger government spending only if it is financed either by a fiscal deficit or by a tax on the rich; but both these are anathema for globalised finance capital whose writ must be obeyed by the nation-state under the prevailing neoliberal arrangement. American protectionism therefore entails a shrinking of overall world aggregate demand and hence an accentuation of the crisis of neoliberal capitalism. This fact, namely that the Trump tariffs, even if they raise domestic output and employment within the US, worsen the world capitalist crisis and hence reduce the level of output taking both the US and other countries together, has received scant attention. Let us see how this reduction in world aggregate demand happens.
Read more here
David Legge
Leave a Reply
You must be logged in to post a comment.