Donald Trump decided to transform the G7 meeting in La Malbaie, Quebec into a fiasco. Less than 24 hours after stating that relations between the United States and Canada “have never been better” and after the seven major powers signed a joint communiqué to bring the G7 to an end, the American president did an about-face. Following Canadian Prime Minister Justin Trudeau’s press conference closing the G7, Trump embarked on a series of attacks against him on Twitter, accusing him of “stabbing the United States in the back.” He also disassociated himself from the joint communiqué issued by the seven powers only a few hours after it was published. While it seemed as though tensions between Trump and the other six powers had been eased, at least temporarily, this “consensus” is now in ruins.
On the night of June 9th, a few hours after the end of the G7, Donald Trump posted the following tweet: “Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!”
And thus concludes Trump’s first visit to Canada.
So close, yet so far away
Having waited a year and a half before visiting his northern neighbour, Donald Trump promised to make his presence felt. Just one week before the G7, Trump imposed tariffs on aluminum and steel from Canada, threatening to trigger a trade war involving Canada, Mexico, and Europe. Trump succeeded in alienating the other members of the G7 in such a way that a member of the French government renamed the meeting the “G6 + 1.” According to some sources, Trump even considered not showing up at the last minute. He finally settled for arriving late and leaving early, which only served to accentuate the malaise surrounding his presence.
Trump arrived in Quebec with the clear intention of settling accounts with his “allies.” “We are going to talk about unfair trade practices against the United States,” he said on Friday when he arrived.
However, during the summit, it seemed as though the worst had been avoided. On Friday, June 8, Trump even allowed himself to make a few jokes, and he stated that “We are actually working on cutting tariffs in making it all very fair for both countries and we’ve made a lot of progress today. We’ll see how it all works out, but we’ve made a lot of progress.”
The joint communiqué of members of the G7 spoke of recognizing “free, fair and mutually beneficial trade and investment,” and fighting against protectionism. Everything seemed to be for the best of all worlds!
Then, in a typical Trump reversal, all the diplomatic efforts were reduced to nothing.
During the closing of the G7 conference, Trudeau reiterated that the tariffs imposed by the United States under the pretext of national security were “insulting.” This generated an immediate reaction from Trump on Twitter, which reneged on the G7’s final communiqué and addressed Trudeau as follows:
“PM Justin Trudeau of Canada acted so meek and mild during our G7 meetings only to give a news conference after I left saying that, ‘US Tariffs were kind of insulting’ and he ‘will not be pushed around.’ Very dishonest & weak.”
Following Trump’s tweets, the Canadian dollar dropped 0.43 cents against the US dollar, on fears that Trump would impose tariffs on the auto sector, which would have a huge impact on Canada. The future of NAFTA, which was already in danger, seems to be more and more uncertain.
Based on Justin’s false statements at his news conference, and the fact that Canada is charging massive Tariffs to our U.S. farmers, workers and companies, I have instructed our U.S. Reps not to endorse the Communique as we look at Tariffs on automobiles flooding the U.S. Market!
— Donald J. Trump (@realDonaldTrump) June 9, 2018
Peter Navarro, Trump’s trade advisor, stated that “There’s a special place in hell for any foreign leader that engages in bad faith diplomacy with President Donald J. Trump and then tries to stab him in the back on the way out the door.” Even though Navarro has since apologized, such bellicose language between the United States and Canada is clearly not a sign that the relationship between the two countries is “better than ever.” Quite the contrary.
While Trump and Co. are being bellicose towards Trudeau, the Liberals hope to appear as defenders of Canadian workers. Unfortunately, the federal NDP has given support to Trudeau in this inter-imperialist fight. All parties in the House of Commons voted on a motion condemning Trump and the U.S. for their attack on a “longstanding, mutually beneficial trading relationship”. This motion was actually proposed by an NDP MP. This is a serious mistake. The Liberals are no friend of the workers, and entering into a front with them against Trump can only help mask this fact in the eyes of the working class. Furthermore, this position helps divide workers along national lines. Trudeau didn’t hesitate to bail out Texas oil corporation Kinder Morgan in the pipeline dispute, and also stood idle while U.S. Steel walked away from its pension obligations to workers in Hamilton. Canadian workers’ interests are no different from the American workers’ interests; we must unite in a common struggle against U.S. and Canadian bosses. We must fight against both protectionists like Trump and liberal free-traders like Trudeau.
It is now clear that the G7 has in no way resolved the conflicts between Trump and his “allies,” and that the threat of a trade war is more present than ever. The US president again attacked supply management in Canada’s dairy sector and the 270 per cent tariffs imposed by this system. He cited these customs duties in particular to justify the tariffs imposed on aluminum and steel. Trump was careful not to mention that the US government spends $25 billion subsidizing farmers in his own country. In fact, the United States even posted a small trade surplus of US$8.4 billion with Canada in 2017. But that does not change anything for Trump, who is determined to “Make America Great Again” at the expense of all others.
Donald Trump’s about-face has also had an impact on his European allies. German Chancellor Angela Merkel said the G7 was a “sobering and somewhat depressing” experience.
Germany is the European country which exports the most to the United States. Its exports reached US$132.04 billion in 2017. With the threat of US protectionism, Germany is particularly worried about the possibility that Trump will impose tariffs on car imports, of which Germany is a major producer.
Germany wants to avoid a trade war with the United States, but the outlook is rather bleak. German Finance Minister Peter Altmaier began by saying that “I believe a win-win situation is still possible.” But he added, “at the moment, however, it seems that no solution is in sight, at least not in the short term… We have not made any progress in the last few days, but rather, as we saw with the rejection of the summit declaration, we have gone backwards.”
Following the G7, Merkel also said that the European Union would impose counter-tariffs on the United States in response to their tariffs on aluminum and steel. She used very similar language to Trump’s: “We won’t allow ourselves be ripped off again and again. We will act too.” Despite Germany’s desire to avoid a trade war, protectionism has its own logic, and each country must respond with its own protectionist measures. The intelligent bourgeois see the danger in rising tensions between Trump and the major Western powers. Some economists and analysts are even talking about the possibility of the collapse of the Western alliance.
It is important to understand that a trade war is not a zero-sum game where the gain of some automatically causes the loss of others. Trump’s protectionist measures will create losses for all. According to a recent study on Trump’s steel and aluminum tariffs, “About 6,000 jobs will be shed in the Canadian economy and GDP in this country will take a hit of 0.11 per cent. The tariffs will lead to approximately 22,700 job losses in the United States and reduce GDP by 0.06 per cent.”
This study was produced before Canada announced its retaliatory measures! It is important to remember that it was protectionism that turned the crisis of the 1930s into a deep slump. In the context of the current global economic instability, a trade war could push the economy into a new depression.
The new normal
For more than 70 years, the United States has been at the forefront of defending the global economic order based on free trade. Now under Trump, they are on the front line threatening the status quo, and are increasingly isolated from the other Western powers. This is a sign of weakness. While not so long ago the United States could impose its will on the rest of the world and dominate the various economic partnerships, the balance of power has changed against its favour. China in particular is now able to sign various trade agreements without the United States, and is taking a growing place in the global market to the detriment of the U.S. Donald Trump’s decisions, however, do nothing to strengthen the United States in the face of China. According to the study cited above, “The U.S. tariffs undermine the competitiveness of the NAFTA region, which works paradoxically to the benefit of most other regions.”
Donald Trump’s behavior threatens to pull down the global economy and end the alliance of Western countries that has dominated the world since the Second World War. The Financial Times commented on Trump’s behavior, “By isolating himself so thoroughly, Mr Trump has firmly decided to make the G7 a G6 plus one. A forum that used to act as the steering committee for the world economy is now merely another theatre of combat for the president’s misguided trade war.”
However, it’s not just about Trump. This is only the most extreme expression of a generalized process: the decline of free trade and globalization. World trade as a percentage of world GDP reached a peak of 61 per cent in 2008 and 2011, but has since fallen to 58 per cent. The common communiqué of G7 members, since renounced by Trump, spoke of the need for “free, fair, and mutually beneficial trade” and the importance of fighting protectionism. But these are just empty words. As the crisis of capitalism deepens and markets are saturated by global overproduction, the big powers are trying to protect their own markets first and foremost, and are increasingly resorting to protectionist measures. For Trump, it’s also a way to gain support at home, which we clearly saw when he said in a tweet late Sunday night, “Sorry, we cannot let our friends, or enemies, take advantage of us on Trade anymore. We must put the American worker first!”
The Chicago Tribune commented on the G7 meeting: “The disintegration of the liberal world order in place since the end of World War II and the potential for a serious international crisis no longer seem hard to imagine.”
This process of “the disintegration of the liberal world order” had begun before Trump’s arrival. However, the arrival of such an unpredictable character is speeding up the process. The tariffs imposed by Trump 10 days ago have already caused a response from Canada and Mexico, while the European Union has promised to do the same. The spectre of a trade war is now very real, and the G7 has done nothing to mitigate this threat. Fiascos between world powers like the G7 this past weekend are now the norm.
As Marxists, we do not choose sides in this war between the great imperialist powers. Neither Trump nor Trudeau serve the interest of workers. Neither protectionism nor free trade offers solutions to workers in North America, Europe, Asia, or elsewhere. On all sides, the various capitalists and their governments are trying to hog the sheets for themselves, to the detriment of the workers. This farce of a G7, costing $600 million for the seven leaders to meet safely, has revealed the tensions between the major powers. The fact that they tear each other apart in public is indicative of the depth of the crisis. Divisions in the ruling class are often the first signs of the growing tension in society as a whole. Sooner or later, these divisions will give way to class divisions and mass movements against all of these parasites. We must prepare for this here and now.