Trade War Means Class War
by John Clarke
There can be no doubt a major trade war with the US would have a devastating impact on the Canadian economy and there is every indication that such a situation is looming over us. Though Trump agreed to delay his specific tariff on Canadian exports, he has since announced a general tariff of 25% on steel and aluminum products from which Canada would not be exempted.
Clearly, the Trump administration has taken a major turn towards protectionism on a global scale and this brings with it the prospect of severe consequences that include considerable job losses and increased consumer prices. Obviously, a country as heavily dependent on trade with the US as Canada is would be particularly hard hit.
However, with this severe situation looming over us, it would be an enormous mistake to enter into an alliance with Canada’s capitalists in the supposed ‘national interest.’ On the contrary, there is an acute need for an independent working-class strategy based on mobilization, resistance and cross-border solidarity with working-class people in Mexico and the US.
We can immediately see that any such strategy will have to contend with an orchestrated mood of national feeling. The Guardian has pointed to “a groundswell of visceral patriotism” that has developed in Canada in response to the trade crisis. Capitalizing on this, Justin Trudeau declared recently that “we must pull together because we love this country,” modestly adding that “(w)e don’t pretend to be perfect, but Canada is the best country on earth.”
This refrain of ‘pulling together’ is a dangerous one and all the more so to the extent that it takes root on the left. I agree with Todd Gordon that “(n)ationalism is a political dead end for the left in Canada, no less today than in previous periods when it ensnared progressives.” Unfortunately, we can be sure that left nationalist ideas will be vigorously advanced and it will be vital to offer an alternative perspective.
If calls for national unity can have a strong immediate effect, they also contain major contradictions that will rapidly become apparent. A trade war will be used by employers as a pretext to intensify the exploitation of workers and governments will redouble their agenda of austerity and social abandonment. The class divisions within ‘Team Canada’ will assert themselves quickly and unmistakably.
Declining US power
Before considering Canadian responses further, it would be useful to stress that Trump’s turn to protectionism is no fleeting development. The adoption of tariffs on a greatly increased scale actually reflects the declining power of US imperialism and constitutes an enraged and desperate attempt to overcome this decline. With his cry of “America First,” Trump wants to rejuvenate US hegemonic power by discarding the costs and responsibilities that have come with it.
Though it was based on exploitation and ultimately rested on military violence, the post-war period of US domination was a sophisticated and complex operation. US state power was the cornerstone of an international order that involved a finely balanced multilateral framework. The ruling establishment within the US saw the need for stability and a level of acquiescence and ensured that local elites were rewarded and junior partners given their place at the table.
Today, US economic supremacy is declining and major rivals, especially China, have emerged. This has sent shock waves through US society and given impetus to the reckless and reactionary elements that Trump brings around him. His second term in office, moreover, draws strength from the disastrous failure of Biden’s effort “to re-establish US global leadership through serious engagement and cooperation.”
Trump now returns, openly contemptuous of notions of responsible stewardship. He takes a ‘transactional’ approach under which US power will be used to obtain immediate pragmatic gains. As the Canadian government has learned to its cost and the EU leaders have come to appreciate, this will include the demand that junior partners accept far less favourable terms of trade with the US.
Canada is most certainly not an oppressed country but a G7 power with the 9th largest nominal GDP in the world. It does, however, share a border with a very much greater economic giant that is also its major trading partner, with some 77% of Canadian exports going to US markets. In such a challenging situation, Canada’s ruling class will be compelled to develop responses and these will centre on preserving the flow of profits.
We may identify three by no means mutually exclusive approaches that can be taken in this situation. Firstly, there will be attempts to appease Trump and obtain a measure of compromise because Canada is not going to win a war of escalating trade restrictions with the US. The thirty day reprieve on tariff measures that Trudeau obtained from Trump involved some concessions and very much more substantial ones are entirely likely.
Secondly, there will be an effort to reverse the high level of integration with the US economy that has been established. This will mean a quest for new export markets but, as US tariffs are going to impact a range of countries, it will be a highly competitive game and a limited option.
Finally, as Canadian capitalists are forced into a trade war and their profits are squeezed, we may be sure that intensified exploitation of the workforce will be vigorously pursued. This will involve efforts to further weaken unions and undermine workers’ rights. It will also mean that the prevailing austerity agenda will be intensified and the assault on the social infrastructure taken to new levels.
Increased attacks on workers and communities are inevitable whichever option the ruling establishment pursues. To the extent that capitulation to Trump’s demands occurs, every effort will be made to ensure that the working-class pays the price. Attempts to find new markets will require an effort to render Canadian businesses more competitive, which will mean increased exploitation, reduced wages and precarious jobs. Whatever the particular developments, trade war opens the door to intensified class war.
Working-class strategy
Those who frame the official discourse are anxious to hide the opposing class interests at work in this situation and convince us to be part of a united patriotic alliance. Former central banker and contender for the leadership of the Liberal Party, Mark Carney, recently declared that “President Trump probably thinks Canada will cave in but we are going to stand up to a bully, we’re not going to back down. We’re united and we will retaliate.”
Sadly, Lana Payne, the president of Canada’s largest private-sector union, Unifor, conveyed much the same sentiment, commenting that “I believe Trump has underestimated Canadians. He has failed to realize that he has enraged and united an entire nation that is ready to fight to defend every last job in this country. We will never forget this act of hostility against our workers, and we must take every measure possible – utilize every ounce of creativity we have – to build a strong, resilient, and diverse economy to never be held hostage by America again.” The message that the enemy is south of the border and that we’re all in this together does not bode well for the struggles against Canadian capitalists and governments that must be taken up.
A viable working-class strategy must emphatically reject any alliance with our exploiters and resist their inevitable attempt to impose the costs of the trade crisis on us. This means fighting efforts to ‘make Canada more competitive’ by undermining working conditions and driving down wages. Unions must hold the line against any and all concessionary demands from employers.
As unemployment increases and the cost of consumer goods is driven up, a determined resistance must be taken up against social cutbacks. Indeed, a major offensive will be needed to greatly improve income support systems, repair public healthcare and create social housing on a large scale. After years of neoliberal austerity, systems of social provision are inadequate to deal with the impacts of the trade crisis and they must be greatly strengthened.
If working-class people in Canada have no stake in this trade war and no common interests with ‘their’ capitalists, the same is true of their counterparts in Mexico and the US. For this reason, an independent working-class strategy must put a premium on cross border solidarity. As workers and communities resist in each country, they must forge closer links and co-ordinate their struggles around common objectives.
Finally, it must be understood that the devastating trade war that looms over us is not a passing development that can be overcome through policy adjustments. We are not simply dealing with the whims of one particularly reactionary occupant of the White House. Global capitalism is in crisis and the efforts of the dominant US power to retain hegemony are very much part of that crisis. A united working-class fightback will be needed in the face of trade war but the system that is producing it must be challenged. This will require socialist perspectives and an uncompromising focus on working-class interests, in place of a mythical ‘national unity.’