What do Trump’s Trade and Tech Wars Mean for Global Capitalism? | Socialist Alternative

Rising U.S.-China Tensions: A New Era of Conflict

The escalating U.S.-China conflict is nothing short of a major crisis for global capitalism. With negotiations having all but collapsed there seems to be no “exit ramp” from the trade war that began in July 2018. This crisis points to a prolonged and increasingly rancorous struggle with potentially serious global effects economically, politically, and even militarily.

The month of May saw a dramatic escalation with President Trump initiating a new round of tariff increases on Chinese goods and then broadening the conflict into a tech war, the costs of which could dwarf those flowing from his trade measures. Xi Jinping’s regime responded with retaliatory tariffs against the U.S., but its reaction has been cautious and measured, showing that for the time being it still hopes to avoid further escalation.

The executive order signed by Trump that bans U.S. companies from supplying Chinese telecom giant Huawei Technologies is nothing less than a state-led campaign by the U.S. to drive the company out of business and prevent Huawei, which has close links to the Chinese state, from achieving global dominance over 5G (fifth generation) wireless technology, the roll out of which is imminent. Trump’s decision puts Huawei on what is informally called a “kill list.” Currently Huawei, the global leader in 5G networks, sources half its microchips from U.S. companies.

This opens a new and potentially much more serious front in the superpower conflict. If the planned meeting between presidents Trump and Xi goes ahead on the sidelines of the G20 summit in Japan in late June it could still possibly produce some form of truce or cosmetic trade agreement. But with the gap between the two sides widening such an outcome looks increasingly unlikely.

These events confirm our assessment that the start of this conflict last year marked a key turning point in world relations. It is the beginning of a new era of sharpening imperialist conflict between the U.S. and China, which are “contesting every domain” as the Economist recently put it. In a different historical epoch these processes would probably lead to war, but in the age of nuclear weapons and mutual assured annihilation, with governments’ and the ruling classes’ lack of stable support and fear of mass unrest, thankfully this scenario is not posed.

It is vital, however, that the workers’ movement in both countries and globally develops an independent political position towards the Trump administration’s measures based on working class internationalism, opposing in equal measure the protectionism of nationalist politicians like Trump and Xi Jinping, but also the capitalist alternative of neo-liberal globalization. Under capitalism, both trade wars and trade deals are pursued in the interests of big companies and the financial elite, based on a never-ending race to the bottom in terms of workers’ livelihoods, democratic rights and the environment.

The escalation of the conflict has unsurprisingly sent shockwaves through global financial markets, which had “priced in” a U.S.-China trade deal. This false optimism was based mainly on the propaganda of Trump officials and the president himself. Like global capitalism as a whole, the Chinese “Communist” Party (CCP) dictatorship has once again been thrown off balance by Trump’s abrupt shifts. With the latest increases, almost half of China’s imports to the U.S. (worth $250 billion) are covered by 25% tariffs. In addition, Trump is threatening to extend the tariffs to all Chinese goods unless a deal acceptable to his government is reached.