Donald Trump’s dramatic, April 2 tariff announcements tanked share markets across the globe and unleashed a wave of mass media commentary claiming the policy is “irrational”, “economically illiterate” and reflective more of Trump’s egotistical ignorance than any clear policy objectives.

Trump’s personality obviously has an effect on policy and the way it is implemented, however, there is a growing consensus among the US ruling class about the urgent need to of revive US manufacturing capacity for “national security” reasons.

Trump’s tariff policy is one way of attempting to achieve this outcome. Biden’s massive suite of industrial subsidies and policies was a different method. Before Biden there was the first round of Trump tariffs. Those followed on from the Obama administration’s tax and other incentives for “re-shoring” production to the US. US oil production began rising in 2009 to become the world’s biggest oil producer by 2019.

None of these policies were substantially reversed by changes of government. Biden retained the tariffs from the first Trump administration. Today Trump does not propose canceling Biden’s industrial policies, though they may be modified. Both Republicans and Democrats have steadily increased the range of US products banned from export to China under US technology prohibitions. Both parties also support sanctions on Russia, China, Iran, Venezuela and other countries.

The problem for the US ruling class is not – as Richard Wolff and others argue – that it is unable to compete in “free market” competition with China. If that were the case, it’s declining position would be reflected in declining national wealth and income. In fact, average US income increased in dollar terms by 55 per cent over the ten years to 2023 to almost US$83,000 per person according to World Bank data. While much of that was offset by rising inflation, in 2023 Chinese income was just $US12,614 dollars, over seven times lower.

US capitalism and other imperialist states such as Australia can continue to leverage their technological dominance to make huge super-profits in the globalised economy while outsourcing routine production processes to lower cost economies like Mexico, China or Vietnam. Their ability to keep doing that is why much of the capitalist press sees Trump’s policy as “economically illiterate”.

The problem that Trump, his advisors and US imperialism’s key political strategists seek to fix is not a lack of US profitability relative to its competitors but something else.

The global division of labour that has developed within the framework of US dominance has undermined US manufacturing capacity specifically. While US capital may design, develop, organise, control, market and deliver a product, less actual fabrication is taking place in the US. This weakness in manufacturing specifically makes US imperialism vulnerable to strategic catastrophe in the event of a breakdown of the world trading system, as would likely occur in another major war.

Military Vulnerability

Obviously for US imperialism ideologues, the notion of “vulnerability” has a particular meaning. No country can dream of actually attacking the US. Vulnerability means losing its ability to dominate Asia, Europe and the rest of the world militarily. That requires not only, for example, digital dominance but also massive volumes of hardware, like vehicles and weapons systems and ammunition, which all require basic industry to produce.

The urgency of this vulnerability became more widely understood during pandemic-era supply chain disruptions. One example was a global microchip shortage that slowed or halted much US auto manufacturing. Modern vehicles are built with large numbers of basic chips.

Escalating US wars since 2022, first against Russia in Ukraine, and then in West Asia in collaboration with the Israeli apartheid regime, has also made glaringly obvious the weaknesses in US capacity to ramp up military production.

During World War Two all the competing imperialist states (and also the Soviet Union) waged “total war” by gearing their entire national economy towards meeting the needs of the war machine. Prior to that, the US had a relatively small military. However, by retooling the world’s largest and most advanced industrial economy towards production of weapons and war equipment, it was able to prevail.

Today the US remains the most scientifically advanced economy (rivalled only by the other rich countries). However, measured in tons of steel, kilowatts of electricity, numbers of cars, bullets or ships and the like, it is no longer dominant. It had already been surpassed by the Soviet Union by the late 1970s-early 1980s in many basic measures of industrial output like tons of steel and aluminium. However, at that time the US still retained a more or less complete domestic industrial capacity that was also far more advanced and efficient than Soviet industry.

The “strategic” problem for US imperialism today is that globalised labour-process specialisation has hollowed out the US industrial economy to such an extent that entire spheres of production cannot be carried out in the US at all. Nor can they be rapidly started because entire skill sets, workforces, supply chains and specific types of technical knowledge have ceased to exist at scale domestically. These have moved off-shore to Global South countries like Mexico, China and Vietnam as well as to other imperialist states that, unlike the US, do tend to specialise in manufacturing, especially Japan, South Korea, Germany and Italy.

Military Objective is No Secret

It is easy to see that readiness for war production motivates Trump’s tariff policy by looking at how the policy is explained by the White House itself. The April 2, “emergency” Presidential executive order that created the policy states:

“Large and persistent annual U.S. goods trade deficits have led to the hollowing out of our manufacturing base; inhibited our ability to scale advanced domestic manufacturing capacity; undermined critical supply chains; and rendered our defense-industrial base dependent on foreign adversaries.”

Peter Navarro, White House Senior Counselor for Trade and Manufacturing has been doing the rounds on US television popularising the same point. Asked by a Fox News reporter on March 30 how the administration responded to falling stock market prices after the tariff announcement, he argued,

“… the bigger picture here is restoring the American manufacturing base. We don’t have that. We’re an assembly… you remember… something called the Arsenal of Democracy back in World War II? That was how we beat the Japanese and the Germans with our military might. When [US General George] Patton [and the US army] went to Berlin [in 1945] it was with trucks, jeeps and tanks that were made in the auto plants of the Midwest [of the US] and right now the only thing that looks like the Midwest [did] back then is Mexico. You go across the diaspora [sic] of cities in Mexico, there’s… 50 football field size assembly plants that are down there [and that] make the engines for here. We can’t do that. The Germans and the Japanese the South Koreans and the Mexicans have taken our manufacturing capabilities so we’ve got to get that back. […] If we don’t have a solid auto industry, when we have problems in the world, we’re going to be speaking some other language.

Navarro claimed that only 19 per cent of automobiles purchased in the United States have American made engines and transmissions. Germany and Japan combined produce 50 per cent of the engines for cars sold the US.

Trump’s Treasury Secretary Scott Bessent told Meet the Press April 6,

“This is a national security problem which we saw during Covid… optimal supply chains are not resilient… The only good outcome from Covid is it was a bitter test for what would happen if our supply chains got broken and President Trump has decided that we can not be at risk like that for our crucial medicines, for semiconductors, for shipping…”

US Military Production Shortfalls

US production of military goods has a different dynamic from civilian industry because production is done under government contract. However there are powerful linkages and overlaps between them.

In the longer term, US imperial strategists worry that inadequate domestic civilian industry means an insufficient reserve capacity available for conversion in times of war. More immediately, there is also a consensus that current military production is too low and cannot be increased quickly enough. This is due to factors like skilled labour shortages and an anaemic or non-existent industrial eco-system, which matches the problems that bedevil civilian industry. Discussion of this problem has been widespread in the military press and mass media for years.

In November 2024, Military.com quoted the head of US Indo-Pacific Command, Admiral Samuel Paparo, who claimed that “providing or selling billions of dollars worth of air defenses to both Ukraine and Israel is now impeding [US] ability to respond in the Indo-Pacific, such as if China invades Taiwan”.

US involvement in those two wars is “now eating into stocks, and to say otherwise would be dishonest,” Paparo said. “We should replenish those stocks and then some.” Before the US interventions in Ukraine and Palestine “I was already dissatisfied with the magazine depth. I’m a little more dissatisfied with the magazine depth [now],” that is, with the quantity of munitions available.

Prior to the war in Ukraine, the US could build about 14,000 of the widely used, standard 155mm artillery shells per month. It now has a monthly target of 100,000. By October 2024 production had risen to 40,000.

According to January 2023 analysis by Mark F. Cancian, a senior analyst at the Center for Strategic and International Studies (CSIS) the US had by that time already provided over 1 million of this type of shell to Ukraine. That is, just 11 months into the Ukraine war, the US had provided what it would take 25 months of all US production to create. According to Cancian it would take 5 years to fully replenish the arsenals for 155mm shells.

The CSIS analysis sites six critical weapons where depleted stocks would take years to replenish. These included Javelin missiles (5.5. years to replenish), HIMARS (2.5 years) and Stinger missiles (7-18 years). Since that analysis was published the Ukraine war has gone on for another 27 months and the US has massively supplied Israel’s multiple invasions and its aerial defence. It has also repeatedly bombed Yemen.

Pete Hegseth, Trump’s new Secretary of Defence, published a January 25, Message to the Force shortly after his confirmation, promising that,

“we will rebuild our military by matching threats to capabilities. This means reviving our defense industrial base, reforming our acquisition process, passing a financial audit, and rapidly fielding emerging technologies.”

The US Department of Defense (DoD) does not lack funding for new weapons, with Congress often granting, with bipartisan support, more funding than the Pentagon had requested. Parts of its huge budget go unspent. DoD cannot find enough suppliers and seeks to reform its procurement process to bring more suppliers into defence contracting. This process was advanced under Biden through the Replicator Initiative, which was largely aimed at contracting civilian producers to supply large numbers of drones.

Ship building represents a particular bottleneck. On March 4, Trump announced a new United States Office of Shipbuilding within the White House to guide the strengthening of civilian and military production.

A March 11, 2025 CSIS report warned,

“The erosion of U.S. and allied shipbuilding capabilities poses an urgent threat to military readiness, reduces economic opportunities, and contributes to China’s global power-projection ambitions. […] In only two decades, China has grown to be the dominant player in shipbuilding, claiming more than half of the world’s commercial shipbuilding market, while the U.S. share has fallen to just 0.1%, posing serious economic and national security challenges for the U.S.”

Non-naval shipbuilding has is now concentrated in East Asia where – by tonnage – 51 per cent is built in China, 28 per cent in South Korea, 15 per cent in Japan, with only 6 per cent in the rest of the world combined – and little of that is in the United States.

In December 2024, Biden’s Secretary of Defense Jake Sullivan told the Aspen Security Forum in Washington that “we don’t have the backbone of a healthy commercial shipbuilding base to rest our naval shipbuilding on top of […] that’s part of the fragility of what we’re contending with and why this is going to be such a generational project to fix.”

The current rate of production of Virginia Class submarines is 1.1 per year, not enough to fulfil US obligations under the AUKUS defence agreement with Australia and the United Kingdom to supply vessels to target China.

Capitalism in One Country?

In the extreme form announced by Trump on April 2 of targeting every other country it was difficult to see US tariffs being effective at strengthening the US position, even in military related production. Modern production of complex products requires a globalised division of labour. The scale and complexity of this type production has developed well beyond what can be feasibly achieved by any one country, even the biggest one. It cannot be achieved without the commitment of colossal social resources, which is not feasible in the production scenario structured by US imperialism’s capitalist market system.

Complex products are produced globally not only in order to locate the simpler processes (or parts) in Global South countries using cheap labour. They also involve an international division of labour among the rich, imperialist states. The imperialist division of labour leverages the particular specialities of each state. This is a key way that China is contained. It is not really China versus individually the USA or Japan or Europe or Australia, Canada, Korea, Israel or New Zealand but all of them together. This because they all occupy a structurally similar position in the world economy and benefit from the exploitation of China and other Global South Countries.

In the context of a collapsed global trading system the US would need to continue to cultivate some significant imperialist and Global South vassal states to maintain a division of labour that remains international, even if not global. That was the structure of the world economy during the first Cold War. Prior to 1991, or earlier, the US and other imperialist states could and did survive without benefiting from the exploitation of Chinese and Eastern European labour or Russian resources. Maintenance today of something like the US-Mexico-Canada free trade agreement (USMCA) gives US imperialism access to a huge local pool of cheap labour and natural resources at scale.

Today, no attempt at capitalism in one country is feasible. Ultimately the US (like all imperialist states) relies on the exploitation of Global South labour and resources for a significant part of its national income and capital accumulation. There is no sense in world domination without the ability to exploit that domination for one’s own benefit. Under capitalism that means realising super-profits (i.e. above average profits). In modern capitalism as we know it, at least until now, value transfer to the imperialist centres mostly occurs through trade. And presumably war production, while sometimes not carried out for the market also requires similar efficiencies of scale and labour division.

Reflecting this reality, on April 9 Trump announced (1) a reduction in Tariff rates to 10 percent on most countries (for 90 days) and (2) a massive escalation of rate on China. The April 9 announcement clearly points to the intention of the policy: incremental ramping up of US based production (in collaboration with “international partners”), coupled with radical escalation against China. Once again, this is consistent with Obama, Trump 1, Biden and now Trump 2. Each of the last four administrations have progressively escalated hostilities against China and attempted to re-shore production. Trump is attempting this same objective in his own way.

Trump’s team obviously have other policy objectives in mind besides just military preparedness and attempting to kneecap China. They wish also, if possible, to increase the profits of US billionaires and they hope government income from the tariffs can fund another income tax cut as Trump’s 2017 Tax cut expires this year. But it is clear the “defense-industrial base”, as the April 2 Presidential decree put it, is central in their thinking.

Making American Imperialism Secure Again?

It is interesting to watch the MAGA politicians like Navarro motivating a policy that will almost definitely lower consumption levels for the majority, at least in the short term, by raising the cost of living. By partially isolating US capitalism from the abundant cheap products of global cheap labour, Trump’s tariffs will lower the income of both US workers and capital by raising prices and squeezing profits.

Lower consumption, at least in the immediate period, is not exactly admitted by Navarro, Bessent or Trump, but hardly denied either. Their approach is to do something rarely seen in mainstream politics: they argue for an idea. They propose that whatever pain is to come (and they say it will not be much) is necessary for the long-term security and health of the society.

The realism of their argument in imperial terms might make it possible to consolidate Trump’s base among a population so thoroughly imbued with national chauvinism. This could be a possibility especially when no different, competing, socially progressive idea about the future is widely disseminated. The democrats don’t really disagree with Trump’s objectives, while some union leaders, including the United Autoworkers Union President, Shawn Fain, have come out in support of the new tariffs. The Party for Socialism and Liberation, while growing rapidly, is still too small to widely disseminate the ideas of a revolutionary socialist alternative for humanity.

If Trump does not significantly back down, his dynamite to the international trading system won’t be the first example of US state-imposed, mass austerity since the Second World War. The first was when Richard Nixon ended the convertibility of the US dollar to gold in 1971. The second, when Paul Volcker as chair of the US Federal Reserve sharply raised interest rates to 19 per cent for around two years. Both “shocks” brought about global economic chaos and recession, sharply reducing working class income in the US. These shocks ultimately cleared the way for the neoliberal period that has been so beneficial to US imperialism but which has now run its course and is presently being abandoned.

Trump’s policy is bringing into being another chaotic shock. The MAGA posse must calculate that, as the strongest country, the US will ultimately fare the best, or the least badly, and come out the strongest even from a sharp economic contraction. But MAGA ideologues likely don’t yet even register the impact of the coming chaos on the progress of the US far left. Surely the coming austerity will help to fertilise the ground for groups like the PSL and others to argue to US working people that they do not need to accept yet another round of attacks on living standards; that a better system is possible.

If larger numbers of working people begin to break politically with the war-mongering capitalist owners and organise for their own rights, the MAGA bosses might come to realise that their fear of faraway China was very exaggerated. They might also better understand another mammoth historical benefit (to them) of the globalised production process they seek to wind back. Shifting production offshore was critical in smashing organised labour in the imperialist states. The US ruling class might be more careful what it wishes for, except that it has few choices besides digging this or that type of grave.