NEOMERCANTILISM IS NOW BIPARTISAN U.S. POLICY VIS-A-VIS CHINA

It was Trump's failed policy to slap high import tariffs on Chinese goods in the hopes of protecting domestic industries - all consideration of the sacrosanct principles of "free trade" and U.S. adherence to "the magic of the marketplace" be damned.

We have come full circle.

In the economic history of the United States, it was first forced to endure the colonial onerous mercantilist trade policies imposed by England - remember the Boston Tea Party revolt? But when the United States became a republic, it embraced protectionist trade policies itself, all through the 19th century - allowing British capital to invest in American soil, the principal source of capital for industrial/infrastructural growth for most of the century, but restricting British imports of commodities with high tariffs. This was meant to protect its nascent industries. It soon became the number one industrial capitalist country in the world - even whilst the British remained the sole trading, financial, and military superpower running the world economy.

By the early 20th century, the U.S. became the world's foremost champion of "free trade" and "free enterprise" imperialism, in the same measure as its mighty industrial exporting capacities far exceeded its own domestic markets. Its products were even better than the British, thanks to American innovations like the assembly line production we call fordism.

There was an interregnum of mercantilist barriers during the two world wars, but free enterprise capitalism became the international norm after the triumph of the American model of economy, firms, and geopolitics. Developing nations that were protectionists about importing U.S. manufactured goods - superior in every way to anybody else's after WW II and well into the 1960s - were encouraged to invite U.S. global corporations ("transnational corps.") to invest in setting up industrial plants in their countries and produce for their domestic markets.

Mexico, for example, became the poster boy, the "Mexican Miracle" for this "Import Substitution Strategy" development strategy: foment Mexican industry in alliance with U.S. transnational corporations for domestic markets, while maintaining high tariffs for the direct import of U.S. goods.

"Free Enterprise Imperialism" triumphed and the world witnessed its greatest period of material prosperity ever. By the 1970s, though, this model of development cracked, for a variety of reasons; and the U.S. felt compelled to launch, under the Reagan administration and all subsequent administrations, its now famous (or infamous) "globalization project" or neoliberal model of integrating the Global South to global markets.

It's called "neoliberal" because it proclaims the return of the unfettered free international markets in all aspects of formerly protected national economies, including the privatization of all state-own enterprises, the abolishment of all tariffs, the deregulation of imports and exports, the deregulation and opening up to foreign interests of all domestic economic activity through "free trade agreements", including services (health, education, entertainment, energy, the environment, water, etc.).

The mechanism to coerce and enforce compliance with this new model of denationalization of each countries' economies and their reintegration to a world market dynamic under the unfettered movement of capital, was the huge national debts the Third World countries were allowed to run up by the 1970s.

Mexico went first with its sovereign bankruptcy of 1982. To get any further loans from the IMF and World Bank and other banks like the Inter American Development Bank and the Wall Street banks, Mexico had to agree to so-called "structural adjustment loans" that committed the country to abandon its prior nationalist model of development and embrace what became known as the "Washington Consensus."

By 1994, Mexico, the U.S. and Canada began to enforce NAFTA, which abolished most tariffs and opened up the country side and urban industries to U.S. conglomerates. Millions of farmers and urban workers were displaced and forced into irregular migration, informal sector precarious work, or criminal activities.

The rebellion to this "globalization project" under neoliberal principles of the unfettered free market in international affairs soon appeared. In Mexico, the Zapatista rebellion of 1994 coincided with the activation of NAFTA, and in South America, beginning with the election of Hugo Chávez in Venezuela in 1999, a huge wave of protest led to the so-called "Pink Tide" of anti-neoliberal regimes that lasted until 2015.

Since then there's been a back and forth between the two competing models in countries of the Americas, with the Morena regime since 2018 adopting a "semi-neoliberal" regime with a strong state social sector component and control over energy, to various grades of shifts to the right and the left in Brazil, Bolivia, Colombia, Argentina, and others.

In the U.S. itself, the trend since Trump came to power in 2016, and through the Biden regime to date, has been unmistakably to toss overboard all talk of "free trade" and "free enterprise" in its relations with China - its emerging global rival - and impose draconian tariffs on Chinese imports. Trump even imposed various tariffs on its closest neighbors and "partners", like Mexico and Canada (e.g., aluminum and steel), and threatened to impose even higher ones on all Mexican imports if it did not bow to his dictates to contain migrant flows.

When Biden came to office, there was the expectation he would reverse course with China, but he did not. He not only maintained Trump's tariffs, but increased the banning of U.S. exports of high tech products to China, and now he has slapped huge tariffs on imports of Chinese electric vehicles and other things - Protectionist Mercantilism 101.

Say what you may about the wisdom or futility of such moves, but they certainly demonstrate the abandonment of the neoliberal globalization project of the 1980s and 90s, and the return to a 19 century zero-sum, hostile mercantilism in international trade policies between the U.S. and its economic rivals.

This turn of policy only signals the loss of the U.S. capacity to compete in a free market with Chinese firms, having to resort to coercive mechanisms like trade barriers to sustain its own inefficient firms and give them sole access to the domestic consumer markets.

Of course, the U.S. spent decades lecturing about the magic of the market and scolding those countries that engaged in any protectionist practices vis-a-vis superior American imports. Now that the table have turned, the U.S. is acting like just another mercantilist power, erecting trade barriers to prevent competition.

The story will not end well. The loss of global economic hegemony has led the U.S. to (a) vastly expand financial speculation as the only way it has to recycle its accumulated capital, which has caused various bubble bursts and meltdowns, and (b) resort to military assertions of geopolitical power to retain control of zones of the world-economy (like the oil-rich Middle East) it can no longer control solely through market dynamics (even Russian oil exports to Europe menace it).

This has happened before; in fact just before WWI and then again before WW II, combining great depressions and world wars to usher in the transition from one world order led by a global power (U.K.) to another (USA). It happened just the same in the transition from Dutch hegemony to British hegemony in the aftermath of the so-called Anglo-Dutch and Anglo-French world wars of the 18th and 19th centuries.

The world cannot resolve the current impasse of the terminal crisis of U.S. hegemony with a transition to Chinese global hegemony, for various reasons. One is the scale of integration and planetary challenges - not even China can assert global hegemony to solve the problems of climate change, establish a universal social contract, etc. The other one is the severe limits on war imposed by the nuclear age to resolve the systemic chaos and transit to a superior mode of global integration - not to mention other aspects of the "revolution in warfare" such as armed drones, robots, and AI.

The period of chaos and geopolitical tensions we are all in will only be resolved with a combination of initiatives by the major powers and the global south to cooperate in envisioning the new blueprint of the future, and the coordinated resistance of "global civil society" through its myriad and interconnected social movements in the digital era.

Meanwhile, American consumers are barred from buying state-of-the-art, superior electric vehicles for about $10,000, thanks to their dear leaders Biden and Trump. (And if these mercantilist leaders have their way, neither will Mexican or Canadian consumers - or even European ones.)

Let's see how long THAT lasts.

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ARTICLE: Biden Hits Chinese Electric Vehicles, Chips and Other Goods With Higher Tariffs