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The real stakes in the Trump-China trade war

Marxist Analysis · 2026-05-13

Core Argument

The article argues that the Trump-era trade war with China is not a product of one man's erratic diplomacy but the surface expression of a deeper structural conflict between imperialist powers over the future of global supply chains and technological supremacy. The central thesis is that China's attempt to move up the value chain — from low-wage assembly to high-tech production — places it in direct, unavoidable competition with the US, Europe, and Japan. This is not a dispute that can be resolved by renegotiating trade balances; it is a struggle over which bloc will dominate the industries of the future. The article claims that the US ruling class, despite its tactical disagreements with Trump's methods, is united behind the strategic goal of containing China's technological development. For China, accepting limits on that development would trigger an internal social and political crisis far more dangerous than any external pressure. The conflict, therefore, has no stable resolution and will intensify with the next recession.

Theoretical Grounding

The analysis is grounded in the Marxist theory of imperialism, understood not as a simple matter of military conquest but as the competitive struggle between capitalist states for markets, raw materials, and spheres of investment. It draws on Lenin's understanding of inter-imperialist rivalry as an inevitable feature of the monopoly stage of capitalism, and on Trotsky's concept of uneven and combined development — the idea that late-developing capitalist states can leapfrog established powers by adopting the most advanced techniques and state-directed industrial policy. The article also implicitly deploys the Marxist critique of "free trade" ideology, showing that the US and European bourgeoisie only champion free trade when it serves their interests, and turn to protectionism when their technological monopolies are threatened. The concept of the state as an instrument of class rule — whether in Beijing or Washington — is central: both regimes are understood as capitalist states managing their respective bourgeoisies' interests under conditions of intensifying global competition.

Conjunctural Relevance

The article was written in October 2018, at the height of the first Trump tariff escalation. It correctly identifies several features that have only become more pronounced since:

  • The technological front: The US campaign against Huawei and ZTE, the ban on advanced semiconductor exports to China, and the CHIPS Act are direct continuations of the "Made in China 2025" conflict the article describes. The Biden administration has deepened, not reversed, Trump's approach.
  • Supply chain decoupling: The article speculates about "multiple supply chains" — this is now official US policy under the rubric of "de-risking" and "friendshoring."
  • The debt overhang: China's total debt-to-GDP ratio has continued to rise, reaching over 300% by some measures. The property sector crisis (Evergrande, etc.) and local government debt problems are the direct consequence of the credit binge the article flags.
  • Labour unrest and political nervousness: The 2021 crackdown on labour organising at foreign-owned factories, the tightening of surveillance in Xinjiang, and the broader authoritarian turn under Xi Jinping all confirm the regime's fear of social instability.
  • The recession trigger: The article predicts that the next recession will intensify the conflict. The post-COVID slowdown, combined with US interest rate hikes and China's property crisis, has indeed sharpened tensions, though a full-blown global recession has been deferred rather than avoided.

The article's key conjunctural insight — that the US ruling class is united behind containing China, regardless of which party holds the White House — has been borne out by the continuity between Trump and Biden on tariffs, technology bans, and military posture in the South China Sea.

Where the Argument Continues

The article opens several lines of analysis that are developed elsewhere in the IDOM corpus:

  • The internal contradictions of Chinese capitalism: The article notes the tension between rising wages, slowing growth, and the need to move up the value chain. This is explored in greater depth in IDOM articles on the Chinese property crisis, the Evergrande collapse, and the limits of state-directed development.
  • The nature of the Chinese state: The article describes China as a "socialist market economy" only in the sense of state-directed capitalism. The Marxist analysis of China as a bureaucratic-capitalist state — not socialist in any meaningful sense — is a settled position of the RCI tradition and is elaborated in other IDOM pieces on the Chinese Communist Party's class character.
  • The trajectory of US imperialism: The article's analysis of Trump as a disruptive force who ultimately aligns with the broader ruling class is consistent with IDOM's treatment of Trumpism as a symptom of capitalist decay, not a break from it. This is developed in articles on the 2020 election, the January 6 insurrection, and the Biden administration's foreign policy.
  • The next recession: The article's warning that trade wars will explode when recession hits is a recurring theme in IDOM's economic analysis, particularly in pieces on the tendency of the rate of profit to fall and the fragility of the post-2008 recovery.

Connections

  • Lenin, Imperialism, the Highest Stage of Capitalism: The theoretical foundation for understanding inter-imperialist rivalry as a structural feature of monopoly capitalism.
  • Trotsky, The Permanent Revolution and Results and Prospects: The theory of uneven and combined development, which explains how late-developing states like China can leapfrog established powers.
  • IDOM articles on the Chinese economy: Particularly those analysing the property bubble, the debt crisis, and the limits of state capitalism.
  • IDOM articles on Trump and US politics: For the broader analysis of Trumpism as a symptom of capitalist decay and the realignment of the US ruling class.
  • Against the Stream episodes: Several episodes have covered the US-China rivalry, the semiconductor war, and the prospects for a new cold war. These provide more granular updates on the conflict's evolution since 2018.

Key Quotes

  1. "The question isn't really how China is doing it but that it is doing it. Chinese production of electronics uses semi-skilled labour and parts produced in other countries... What China is attempting to do is enter higher up the supply chain and capture the markets for the high-tech components used in electronics."

  2. "If China were to accept putting a limit on its development of new technologies, it risks creating an economic, social and political crisis on a level that would dwarf Tiananmen."

  3. "The US ruling class is, therefore, attempting to cling on to those markets where it, along with its allies, is currently dominating. It is not prepared, in these conditions, to allow the development of a rival on the scale of China."

  4. "The American and European bourgeoisie would much prefer if China stuck to its traditional role of assembly and manufacture of more low-tech goods."

  5. "Some kind of agreement is not excluded in the short run... This agreement would have a temporary character. The conflict between China and the US will only intensify over the coming period, particularly when the next recession comes."

  6. "As far as trade wars are concerned, the genie is clearly out of the bottle. For a whole period, trade wars were excluded from the arsenal of weapons in international conflict. Trump has brought them back to the table."