Business vs. capital: Two views on the tariffs

Losing the dollar might be in capital’s best interests

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Donald Trump’s voluntary economic crisis highlights a division that rarely appears in the normal course of events: the split between business and capital.

Look, for instance, at how different types of billionaires have reacted to the tariff news. Elon Musk holds his capital largely in businesses he helps to operate on a day-to-day basis. Hence his calling Trump’s chief tariff cheerleader Peter Navarro “truly a moron” along with other slurs for developmentally disabled people. The Washington Post reported that Musk personally lobbied Trump against the tariffs, a plea that seemingly went unanswered.

Jamie Dimon, on the other hand, like Musk, has his wealth tied up in his home company: JPMorgan Chase. But this company’s “product” is capital itself, giving him a different set of perspectives on policy at the moment. His shareholder letter immediately after the new policy’s announcement struck a non-committal tone.

“Whatever you think of the legitimate reasons for the newly announced tariffs – and, of course, there are some – or the long-term effect, good or bad, there are likely to be important short-term effects,” Dimon said. “We are likely to see inflationary outcomes, not only on imported goods but on domestic prices, as input costs rise and demand increases on domestic products.”

We must read these comments, however, in the context of Dimon’s earlier support for a protectionist tariff policy. Just before Trump’s inauguration, the banker told the World Economic Forum, “If it’s a little inflationary, but it’s good for national security, so be it. I mean, get over it… National security trumps a little bit more inflation.”

For normal purposes, we can consider capital and business to be a single entity, with identical interests. Capital is money that seems to turn itself into more money, and the capital class that owns it needs businesses to make that happen. Businesses produce goods and services for a profit, and they need capital to operate, paying capitalists back those profits in return. This mutual necessity means that on most questions the broad position of the capital class matches exactly that of business operators.

But at this moment, we see a growing slice of daylight emerging between these two sets of interests. The distinction arises from the different time horizons each side looks to for returns on their investments. Businesses have to recoup their costs on an ongoing, short-term basis. If tomorrow’s sales don’t cover the money a business spent to deliver the goods, they have to shutter parts -- or all -- of the company and tell those capital investors to forget about this year’s dividend check. Major increases in costs -- like the tariff policy -- make it harder to cover their expenses plus profit, and so business typically finds the tariffs unwelcome and unwise.

Capitalists, however, can almost always find a way to avoid or minimize losses in the immediate term: pull out of tariff-impacted businesses and park the money in an interest-bearing bank account until things settle down, for example. The long-term interests of their class as a whole matter much more, and policies which might harm business could ultimately benefit capital. The tariff policies, and more broadly speaking the epochal economic shift they represent, seem to present one such instance.

Dimon’s invocation of “national security” with regard to the tariffs gives away his longer-term concern: China. More broadly, China’s economic strategy centers on investing in Global South countries without the traditional strings U.S. investors have long attached, threatening Western capital’s historic dominance. Dimon and his peers expect the United States to stop this process through any means necessary, and this demands decoupling the U.S. and Chinese economies. The tariffs might cause a recession, Dimon says, but that doesn't mean he opposes them.

And here we see an even more surprising development: capital’s ambivalence towards the dollar’s dominance. The dollar system as we know it today emerged from the midcentury U.S. struggle against socialist governments and a rising Global South. Richard Nixon abandoned the gold standard in 1971, a move that, like Trump’s protectionism, proved unpopular and which caused more than a decade of roiling economic turmoil. In retrospect, however, everyone holding wealth in U.S. dollars agrees it benefitted capital’s lasting interests.

Would a reverse sort of move -- again to fight the Global South threat -- be best for capital now? People with the most wealth and power today will always favor maintaining the status quo, and most economic observers will scream “no,” shouting alarms about such a radical change. The relative quiet among people like Dimon, Goldman Sachs’ David Solomon, or Trump’s billionaire economic braintrust in Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick (both capitalists, not businessmen) should provoke even more concern.

A world without the dollar system -- they calculate -- would make constant U.S. deficits impossible, and such traditional budget discipline over the federal government would make every bit of the welfare state impossible to maintain. We must return to this touchstone again and again to understand our moment in history: the primary task for all mainstream parties today is the dismantling of the liberal state. Musk’s business-like DOGE experiment has run into the same political obstacles every budget cutter has faced over the last 60 years; now the capital class will try to undo the very foundations of liberal economics from the ground up instead.

Business remains an important constituency for this and any government, so the administration will keep making what we might call quantitative concessions -- carve outs for specific industries like we saw with smartphones, or pauses in hikes on certain countries. But there is no changing the qualitative direction of policy; it appears even massive economic upheaval won’t stop capital’s plans. Business may slow the momentum of this change, but it seems unlikely to reverse its direction.

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