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US-China trade dispute Trumps recklessness deepens instability

Marxist Analysis · 2018-03-23

Core Argument

The article argues that the US-China trade dispute under Trump is not an aberration of irrational policy but a predictable expression of intensifying interimperialist rivalry driven by the crisis of overaccumulation in world capitalism. Trump's aggressive posturing — tariffs, ultimatums, and brinkmanship — is a calculated attempt to force China to absorb the costs of US capitalism's declining relative strength. However, the article insists that this strategy is inherently destabilising: it unleashes protectionist dynamics that neither side can fully control, and the underlying contradiction — that both powers must resolve their internal crises by expanding at the other's expense — cannot be resolved by any short-term deal.

Theoretical Grounding

The analysis is rooted in the Marxist theory of imperialism, particularly Lenin's conception of interimperialist rivalry as an inevitable feature of capitalism in its monopoly stage. The article draws on the concept of overaccumulation — the inability of capital to find sufficiently profitable outlets for investment — to explain why China is compelled to expand into high-tech sectors where US capital has long been dominant. This is not a matter of "unfair" trade practices but of structural necessity under capitalism. The piece also deploys the notion of "beggar-thy-neighbour" policies, a classical Marxist description of how rival capitalist states export their crises onto one another during periods of stagnation. The analysis sits firmly within the Trotskyist tradition's insistence that interimperialist contradictions cannot be permanently managed or reformed away, and that the nation-state framework is incapable of resolving the fundamental contradictions of world capitalism.

Conjunctural Relevance

Written in May 2018, the article captures a specific conjuncture: the early phase of Trump's trade war, before the full escalation of tariffs under Biden. The piece identifies several concrete forces and events:

  • Trump's imposition of 25% steel and 10% aluminium tariffs on 23 March 2018, followed by Chinese retaliation on 128 products including pork.
  • The US targeting of ZTE, a major Chinese telecoms company, with a seven-year ban on working with American firms — and Trump's subsequent intervention to rescue it.
  • The "Made in China 2025" industrial policy, which explicitly aims to master robotics, semiconductors, and electric vehicles — sectors where US capital has long held supremacy.
  • The fragility of global markets, with the US and China together accounting for nearly 40% of world GDP, meaning any escalation risks a world slump.

The article notes the contradiction between Trump's aggressive rhetoric and the need to backtrack when hostilities threatened core US economic interests — as with ZTE and Russian aluminium giant Rusal. It also observes the emerging cracks in US alliance structures following Trump's withdrawal from the Iran nuclear deal, which pushed European allies toward independent trade arrangements with China.

Where the Argument Continues

The article leaves several threads open. First, it does not develop a detailed analysis of the internal class dynamics within China — the relationship between the Chinese Communist Party, state capital, and the working class — which would be necessary for a fuller Marxist account of Chinese imperialism. Second, it gestures toward the One Belt, One Road Initiative as a counter-strategy to US dominance but does not explore its internal contradictions. Third, the piece does not examine the role of the European Union as an independent imperialist bloc caught between Washington and Beijing.

These threads are taken up in other IDOM articles, particularly those analysing the Belt and Road Initiative, the EU's strategic autonomy debates, and the long-term trajectory of US-China rivalry under Biden. Against the Stream episodes from the same period — especially those covering the 2018 G20 summit and the subsequent "phase one" trade deal — provide further conjunctural analysis. For the broader Marxist framework, readers should consult Lenin's Imperialism, the Highest Stage of Capitalism and Trotsky's writings on the interwar interimperialist rivalries.

Connections

  • Lenin, Imperialism, the Highest Stage of Capitalism — the foundational text on interimperialist rivalry and the export of capital.
  • Trotsky, The War and the International — analysis of how capitalist states export crisis onto one another.
  • IDOM articles on the Belt and Road Initiative — exploring China's strategy for resolving overaccumulation through infrastructure-led expansion.
  • Against the Stream episodes from 2018-2019 — covering the G20 summit, the phase one deal, and the escalation under Biden.
  • Martin Wolf's Financial Times editorial — cited in the article as a representative bourgeois warning against Trump's recklessness.

Key Quotes

  1. "The real issue is not China's infringement on 'fair' trade, but that China seeks to develop its economy in advanced sectors where US companies have been dominant for decades."

  2. "Trump is trying to bully China, but he is unleashing forces he can't control."

  3. "The fundamental problem remains that Chinese and American capitalism are still at loggerheads. The conditions of this conflict are determined by the impasse of world capitalism."

  4. "Each ruling class seeks to protect its own economic interests, giving rise to protectionist tendencies. But protectionism invites further protectionism, and a beggar-thy-neighbour approach by the ruling class internationally could serve as the catalyst for another world slump."

  5. "Whether China and America manage to patch up a 'mini deal' in the short-term will do nothing to alleviate the underlying contradictions that put them at odds to begin with."

  6. "Trump doesn't realise that once he sets in motion a process, it acquires a logic of its own. At that point, you cannot 'be cool' and turn back time to the original position."