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Trump blinks again as the world economy stutters

Marxist Analysis · 2026-05-13

Core Argument

The article argues that Trump's trade war with China is not an aberration from capitalist normalcy but the expression of intensifying inter-imperialist rivalry as the world economy approaches a new recession. The central claim is that the ruling classes of the US and China are on a collision course determined by structural economic pressures, not personal diplomacy. Trump's tactical retreats — "blinking" — reflect the contradiction between the need to inflict damage on a rival and the fear of triggering a domestic crisis that would threaten his re-election. The trade war is presented as a symptom of the exhaustion of the post-Cold War globalisation project, not a policy error that can be reversed by better statesmanship.

Theoretical Grounding

The analysis draws on the Marxist theory of imperialism, particularly the Leninist understanding that inter-imperialist rivalry intensifies as the world market contracts and the rate of profit falls. The article does not deploy the vocabulary of overaccumulation or fictitious capital explicitly, but the underlying logic is present: the trade war is a response to the inability of the major capitalist economies to sustain growth through expanded reproduction alone. The reference to the inverted yield curve — at its lowest since 2007 — is a concrete indicator of the tendency for the rate of profit to fall, as it signals that capital can no longer find productive outlets and is piling up in negative-yielding bonds.

The analysis sits within the Trotskyist tradition's emphasis on the permanent character of inter-imperialist conflict under conditions of capitalist decay. The article's framing of Trump's "blinks" as tactical rather than strategic echoes Trotsky's analysis of the relationship between bourgeois nationalism and the world market. The piece also implicitly critiques the Keynesian and liberal-institutionalist view that globalisation was a stable, progressive development that has been disrupted by irrational political actors. Instead, it treats the breakdown of the WTO-led order as the necessary expression of underlying economic contradictions.

Conjunctural Relevance

The article is written in August 2019, at a moment when the US-China trade war had escalated to cover virtually all Chinese exports. The specific data points are:

  • The S&P, Nasdaq, and Dow Jones had fallen approximately 5 percent from their July peaks.
  • The inverted yield curve had reached its lowest level since 2007.
  • Chinese urban unemployment had risen to 5.3 percent, with industrial production growth falling to 4.8 percent year-on-year in July, down from 6.3 percent in June.
  • The German economy had contracted in Q2 2019.
  • One quarter of the world's bond stock was already in negative territory.

The article identifies the Christmas shopping season as a key pressure point for Trump, linking the tariff postponement to the electoral cycle. It also notes that Beijing's currency devaluation was a double-edged weapon, risking inflation and capital flight at home. The broader conjuncture includes the Japan-South Korea trade dispute, the Brexit process under Boris Johnson, and the general retreat from multilateralism.

Where the Argument Continues

The article explicitly references a piece published a year earlier on the same site, which predicted that the US-China conflict would intensify when the next recession came. That earlier analysis is the natural starting point for tracing the argument's development. The broader corpus of In Defence of Marxism contains extensive coverage of the trade war, the COVID-19 recession, and the subsequent inflationary period, which together form a continuous analysis of the breakdown of the post-2008 stabilisation.

The argument about the end of globalisation is taken up in later articles on the fragmentation of supply chains, the rise of regional trading blocs, and the implications for working-class strategy. The piece also connects to the broader Marxist literature on the long downturn, particularly the work of Robert Brenner and the Monthly Review school on overcapacity and inter-imperialist rivalry, though the article itself does not engage these sources directly.

Connections

  • Lenin, Imperialism, the Highest Stage of Capitalism — The theoretical foundation for understanding trade wars as expressions of inter-imperialist rivalry rather than policy errors.
  • Trotsky, The Permanent Revolution — For the relationship between national bourgeoisies and the world market, and the impossibility of stable capitalist development in the periphery.
  • Robert Brenner, The Economics of Global Turbulence — For the analysis of overcapacity and the long downturn that underpins the trade war's material basis.
  • In Defence of Marxism, "Trump and Xi: the coming trade war" (2018) — The direct predecessor to this article, predicting the intensification of conflict with the next recession.
  • Against the Stream episodes on US-China relations — The podcast series has covered the trade war, Taiwan, and the semiconductor conflict in greater depth, particularly the geopolitical dimensions.

Key Quotes

  1. "Neither Trump nor Xi can afford to appear weak at this moment, as they face serious political challenges at home, and, as we have explained a year ago, the ruling classes of the two countries are on a collision course."

  2. "The conflict between China and the US will only intensify over the coming period, particularly when the next recession comes."

  3. "It's gradually dawning on the bourgeois that the period of globalisation has come to an end."

  4. "The US, which led in creating global institutions such as the World Trade Organization, now leads in crippling them."

  5. "The move to protectionism will intensify the economic contradictions, and the class struggle. Yet, under the pressure of the crisis, maintaining the status quo is impossible."

  6. "As class conflict rises, the bourgeoisie is increasingly attempting to export their social problems. Or, at least one wing of the bourgeois is. The other wing is desperately attempting to cling on to the old world order, for fear of the consequences."