By Diego Morra
The method behind the tariff assignment fabricated by Donald Trump has little to do with subsidies, tax policy or non-tariff barriers, wrote Dmitry Pozhidaev for the International Journal for Socialist Renewal on April 13, 2025. It follows a mechanical logic: Divide the US trade deficit with a country by the total value of imports, then halve the result. For countries with large and persistent trade surpluses with the US, this may seem internally consistent. But when applied to others, the logic collapses.
The Statistical Office of Serbia reported the country exported $556.9 million to the US in 2023 while importing $588 million, a modest trade deficit. Yet, Serbia has been slapped with a 37% tariff, as if it were a major surplus economy. Trump’s tariff measures are not meant to rebalance trade but to inflict hierarchical coercion, to abuse power by citing, ad nauseam, Trump’s claim of victimhood and the unequal terms of international trade under globalization that the US had championed in the past four decades, principally to amass superprofits for US corporations through offshore operations that rely on cheap labor. In Serbia’s case, it has become the cheap source of parts for cars, principally German cars, and with the US sticking a 37% tariff on its products, Serbia has no chance of exporting car parts to Detroit or to German carmakers with factories in the US.
Curiously, Canadian and US experts claimed that up to 50% of US imports actually come from subsidiaries, affiliates of US multinationals or foreign-based companies with substantial American equity. In short, the favorable duties extended by many countries to the US benefit these corporations while punishing consumers in the US retail market. On this basis alone, Trump’s willy-nilly, herky-jerky tariff policy shoots US companies in the foot. So content with profiting enormously by offshoring their operations, these US companies have overdeveloped their supply chains in China, Vietnam, Malaysia, Thailand, the Philippines, Indonesia, India, Bangladesh and in Taiwan that they would all be reluctant to shift their production hubs back to the US.
Pozhidaev argued that in the case of Serbia, its industrial structure was not designed to meet domestic demand but to serve the accumulation needs of the capitalist core. “Value is added here only to the extent that it facilitates value realization elsewhere. When accumulation in the centre is disrupted — whether by crisis, protectionism or political conflict — the periphery is exposed. Its prosperity is conditional, not sovereign,” he added. Similarly, Philippine microelectronics and semi-manufactured exports are dependent on the demands of US corporations and other foreign clients, and with such exports slapped with 17% tariffs, the prices of such goods would increase, thus dampening demand.
“Trump’s advocacy for tariffs is more than a populist talking point; it is a political response to contradictions within global capitalist accumulation. His argument works on two levels. On the surface, it invokes fairness and sovereignty. Beneath, it expresses anxiety over a system increasingly reliant on globalized production and financial abstraction,” Pozhidaev maintained. Trump claims the US is being “taken advantage of” by countries with trade surpluses — naming China, Germany and Mexico as culprits that distort trade through subsidies, currency manipulation and tariffs. This, he argues, harms US workers and producers, resulting in persistent trade deficits.
What this account ignores is the structural function of the US dollar. As the world’s primary reserve currency, the dollar places the US in a unique position. Surely, the US can run sustained trade deficits without facing balance-of-payments crises. “Other countries export goods to the US not due to weak negotiations, but because they need dollars — to service debt, stabilize exchange rates and accumulate reserves. Modern Monetary Theory (MMT) scholars correctly point out (even if their broader prescriptions are debatable) that the US is a monetary sovereign. It issues the global currency, faces no external constraint on its supply, and settles debts in its own units,” Pozhidaev added. Thus, global trade is not an exchange of goods for goods, but of goods for claims — namely, US Treasury securities and dollar reserves.
Critics note that this amounts to a structural exchange of material output for fiat tokens emblazoned with US ruling-class saints: presidents, a Treasury boss (Alexander Hamilton), and a polymath who never ruled but helped build the system (Benjamin Franklin.) This is an unjust arrangement since it permits the US to consume more than what it produces and finance its global dominance through a currency others must hold. The US has never been exploited by its trading partners, all because the US imports a lot of goods after it shifted its supply chains overseas to take advantage of low wages, reduced taxes and other incentives overseas. Far from being exploited, the US enjoys what former French President Valéry Giscard d’Estaing famously called an “exorbitant privilege” as it merely prints more dollars to keep up with the demand for greenbacks as the world’s reserve currency. Trump’s demand that countries buy more US goods while simultaneously threatening sanctions against those who de-dollarize, like the BRICS countries — Brazil, Russia, India, China and South Africa—betrays an internal contradiction. For the dollar to maintain its hegemonic role, others must sell more to the US than they buy — accumulating dollar reserves.
“Trump’s vision turns this logic on its head. The contradiction is not personal, but systemic: a reflection of a global economy stretched between the imperatives of imperial control and economic nationalism,” Pozhidaev says. Yet, what the US produces are goods that other countries do not want or need. Manufacturing now accounts for a low 8% of the US economy. This contradiction has two effects. First, it deepens financialization in the US, where capital abandons productive investment for speculative activities — propped up by foreign demand for dollar assets. Second, it offloads adjustment costs onto the periphery, where states lack the privilege of issuing a global reserve currency. In this light, Trump’s narrative of trade injustice reverses reality. It is not the US that suffers from the current order, but countries structurally tethered to a system they cannot control. #
