Tariffs Are Taxes
“Tariff Wars” from a Working-Class Perspective
Ranganayakamma
"Tariffs,” “Retaliatory
Tariffs,” and “Tariff War!”
These terms have been hitting the headlines for the past several weeks.
In simple terms, “tariffs” are taxes that must be paid to governments. When a country exports its goods to another country, it must pay a tax to its government–the export tariff. The importer in the other country also pays a tax to their government–the import tariff. In a capitalist system, export and import tariffs become part of the commodity’s price.
Now, why has the term “tariff war” gained prominence? It’s because US President Trump significantly increased import tariffs on goods coming into the US from other countries. What is his justification? For years, different countries have imposed heavy tariffs on goods imported from the US, but the US has not done the same. As a result, the US loses a lot of revenue. Moreover, dependency on imported goods prevents the growth of domestic industries. When imports exceed exports, the US suffers, so claims Trump. In capitalist economic terms, this rationale is known as “protectionism.” The tariffs are called “protective tariffs.” Trump’s claim that domestic industrial growth would create jobs sounds good on the surface, but this “goodness” depends on many other factors.
Fundamentally, capitalism promotes the free movement of goods across borders without restrictions or barriers, called “free trade.” In free trade, tariffs are not a point of contention, and costs are minimised. However, capitalism also inherently breeds competition. Capitalists in certain countries adopt protective tariffs to win this competition. Trump’s tariff war is one such strategy.
Discussions in Newspapers and on TV are all focused on Trump’s tariff hikes. Higher import tariffs mean higher prices and lower profits; lower tariffs mean lower prices and higher profits. Since Trump’s tariffs vary by country and product, discussions now revolve around how much they hurt or benefit India. Since countries like China face higher tariffs, investors may shift their industries to lower-tariff countries like India. Which sectors might see this shift? However, all these discussions ignore that this tariff war is a profit-driven competition among capitalists in various countries.
As early as 1847, Marx highlighted this in his essay “On Protective Tariffs, Free Trade, and the Working Class.” He wrote: “The system of protective tariffs places in the hands of the capital of one country the weapons which enable it to defy the capital of other countries.” According to Marx, supporters of protective tariffs claim that “workers should be exploited by their countrymen rather than by foreigners.”
Tariff wars also create political illusions among the working classes of different countries. For example, people in a country that imposes higher tariffs may think: “It’s good our government is taxing foreign goods more. Their prices will increase, demand will fall, and domestic industries will grow, creating jobs.” Meanwhile, workers in exporting countries may fear job losses due to reduced exports and support their governments in trade negotiations. Thus, protectionist policies divide global workers, hindering unity and obscuring the fundamental nature of tariffs.
On the other hand, free trade advocates argue for unrestricted cross-border trade with no tariff hikes. Engels wrote from a working-class perspective in 1845, “We have no intention of defending protective tariffs any more than free trade, but rather of criticising both systems from our standpoint.”
However, compared to protectionism, Free Trade, according to Marx, “breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point and hastens the social revolution.” In other words, it is possible to raise the class consciousness so that people realise that the capitalists of all the countries exploit the workers of all the nations.
What must be understood is that whether domestic or foreign trade, traders earn commissions from the surplus value created by labour, not from anywhere else. The commissions from domestic trade come from domestic workers’ surplus value; those from foreign trade come from foreign workers. Globally, all trade profits are part of the global workers’ surplus value. Hence the slogan: “Workers of the world unite!”
The truth emerges only from a working-class lens, not a capitalist one. Unfortunately, intellectuals in this country have yet to awaken to this reality.
(Telugu original appeared in Andhra Jyothy, Daily, dt. 24-04-2025)
Back to Home Page
Frontier
Vol 57, No. 49, June 1 - 7, 2025 |