Trump's tariffs: the labor-capital clash in the US

Stock market in the red and layoff warnings in Michigan: the tariff bill

One way to sum up the problem is in a single sentence: a tariff does not build even a single factory. It does not launch it, equip it with machinery, or train the workers. Yet, the thesis opening the debate is that Trump is the only politician to have made a move for wage labor in four decades. The starting point is older than it seems: for over 200 years, since the start of the Industrial Revolution, the conflict between labor and capital has almost always been resolved in the latter's favor, and the last 40 years have been the ultimate antiestéticast of financial engineering, bubbles, and bailouts paid with printed money.

The menu of data accompanying the argument is concrete: 10-year bonds down, cheaper mortgages, refinanced debt, falling oil, and cheaper gasoline. The stock market, however, is tumbling, and this is presented as the only bad news in the picture. With nuance: the Nasdaq went from 10,000 points in 2023 to nearly 20,000 a few weeks ago, and deflating that bubble is not a tragedy, it is an adjustment.

Why raise tariffs and what is the goal?

Because making foreign products more expensive makes manufacturing abroad less profitable than manufacturing domestically. If you want to sell in the American market, you either pay the tariff or bring the plant. The parallel with China appears as soon as you scratch the surface: the Asian giant industrialized by opening its market of millions of consumers in exchange for factories being built there. First they produced, then they produced cheaper, and finally they copied and competed. Capital moved without a second thought.

What is missing, critics argue, is exactly what the tariff mechanism does not carry: industrial policy. Without promotion, deadlines, and conditions, the tariff alone achieves little, and in a less globalized world, even less. The example put on the table is uncomfortable: some argue, based on what they have read, that the increase in tariffs on auto parts will cause layoffs at a plant in Michigan, because cars are increasingly manufactured in several countries at once, including the US. For critics, relocating four companies, with very specific conditions, does not equate to a new industrial phase.

The shopping cart and the car loan

Here the enthusiasm cracks. If the goal is to shift the cost to imports, part of it ends up in the local consumer's pocket: a more expensive shopping cart, the same salary, and the same car loan. Some estimate the loss of purchasing power at 20%. And the interest rate argument works against intuition: although bonds are down and credit has room, no bank will lend cheaply to someone whose financial risk has just worsened.

The counter-response appeals to character. According to this reading, the average American does not ask how much their car consumes, but how many gallons fit in the tank. The two best-selling models in the US in 2024 were pickups—the Ford F and the Chevrolet Silverado—priced at $40,000 and up. The mindset is not about spending, but about income: having a job, being able to switch companies because there are offers, and paying low taxes.

Capital is not patriotic

This is the closing argument that bothers the most optimistic. The American play—market in exchange for plants—could take European employment down: just imagine a component manufacturer opening in the US and laying off workers in Spain. Whoever says components says German manufacturers. And in the medium term, fewer German tourists on the coast. The adjustment does not stay within the borders that cause it.

On top of that hangs an older suspicion: that Trump does not represent labor in the abstract, but a very concrete interest, that of oil. A country built on private road transport, with testimonial public transport, has a clear incentive for the car to remain the only option. More employment, more commutes, more money circulating. And more underlying inflation. The chickens entering are the ones leaving.

The clash with China is not measured in days

For Beijing, four years are nothing. They plan by decades, even by centuries, and will wait for the occupant of the White House to leave to negotiate with the next one. Meanwhile, umbrella and matching tariffs in bulk. Alongside this circulates the thesis that the design of this policy does not come from Trump himself but from his economic team, and points to Bessent as the hand behind the measures.

And then there is the agricultural piece, with a detail that, according to another thesis circulating in the thread, almost no one looks at: large funds buying fertile land and controlling water, food, and energy. For those who hold this idea, whoever dominates these three vectors does not need to discuss tariffs. The bill is paid by the one who plows.

If the tariff convinces factories to cross the pond, the American worker wins the bet and Europe loses by elevation. If it does not convince, the bill comes in the form of prices, layoffs, and debt that the country already carries with itself. No one can close the forecast yet. That said: there is one prediction that never fails, and it is that the one who pays for the broken plates always finds out last.