Trump’s tariffs and the New Cold War on China

The article below is based on a speech by Friends of Socialist China co-editor Carlos Martinez to a webinar held by the Black Liberation Alliance on the subject of ‘Trump’s Tariff Wars on the Global South and the New Cold War’, held on 8 May 2025.

Carlos positions the tariff war within the broader US-led New Cold War on China. The tariffs are essentially “a continuation and a deepening of Obama’s so-called Pivot to Asia, designed by Hillary Clinton and first announced in 2011”.

The Trump administration’s justifications for its tariff war – that it will result in re-industrialisation of the US and increase in income – are patent nonsense. “In fact, US treasury secretary Scott Bessent stated openly last month that the objective for the tariffs is to persuade Japan, South Korea and India to participate in a ‘grand encirclement’ strategy to isolate and weaken China.”

Carlos writes that “the US is seeking to punish China for its success in building a modern economy, for developing its sovereignty, and for its refusal to bow down to US hegemony… China’s rise disrupts the whole imperialist system. It gets in the way of the relationship the US wants to have with the rest of the world, whereby it can design the global economic and financial system in its own interests.”

The article observes that the tariff war has no chance of being successful: “The US ruling class wants to isolate China, but actually it will end up isolating itself.” However, with the failure of the tariff war comes the possibility of further dangerous developments:

The obvious concern following on from that is that US imperialism’s next weapon against China may be not be a metaphorical one; that the New Cold War will turn hot. Anti-war movements in the West need to be highly vigilant on that score.

The other speakers on the panel were Radhika Desai (International Manifesto Group), Margaret Kimberley (Black Agenda Report) and Myriam Kane (Black Liberation Alliance).

The first thing to say about the Trump administration’s tariff war is that it is primarily designed to weaken, undermine and isolate the People’s Republic of China.

It’s part of a broader program of “decoupling” from China and a broader New Cold War on China – a system of hybrid warfare incorporating economic measures, diplomatic measures and propaganda measures, along with a significant military component: the deployment of hundreds of thousands of troops to the Pacific region; the US military bases in the Philippines, Guam, Okinawa, Japan, South Korea, Australia; the deployment of sophisticated weapons systems to the region; and the various attempts to create some sort of Asian NATO.

As such, Trump’s tariffs are just a continuation and a deepening of Obama’s so-called Pivot to Asia, designed by Hillary Clinton and first announced in 2011. This ‘pivot’ has been pursued – and deepened – by every administration since then. Trump launched a trade war against China in 2018 and revived the Quad grouping. Biden launched a semiconductor war against China and created the AUKUS grouping. Now Trump’s returning to economic coercion – the Art of the Deal writ large.

All of these US administrations, Republican and Democrat, have pursued so-called freedom of navigation operations in the South China Sea and insisted on sailing warships through the Taiwan Straits. All of them have ramped up the supply of US weapons to Taiwan Province. All of them have encouraged Taiwanese separatists and undermined the One China Principle, with a view to creating a trigger point for a potential hot war on China.

This is the geopolitical context for Trump’s tariff madness. And as such it doesn’t really constitute a fundamental break with existing US foreign policy.

Stated objectives of the tariff war are nonsensical

Are the tariffs really about China? Well, they can hardly be about anything else. It’s perfectly clear that the US government’s stated objectives for their tariff war are utter nonsense.

Nobody in their right mind believes that global tariffs will succeed in reviving US manufacturing. To do that, the US government would need to embark upon a systematic long-term program of state-backed investment and cultivation of human capital via education and training. And the Trump administration is even less likely than previous administrations to do those things.

Meanwhile, global production chains are incredibly complex. Relocating manufacturing is not simply a matter of building a few factories and hiring a few workers. The US is to a significant extent a post-industrial economy – the result of neoliberal policies pursued for the last 50 years.

So commerce secretary Howard Lutnick’s notion that the US working class is going to turn into an “army of millions and millions of human beings screwing in little screws to make iPhones” is beyond absurd. This is a bizarre fantasy being sold to the working class in order to win its support for a trade war that is very much not in its interests.

Nor can the tariffs increase US income. Quite the opposite. Tariffs are paid by the importer, and that cost is typically passed on to the consumer. So there is no increased income; at best there’s a transfer of wealth from consumers (the majority of whom are working class) to the treasury – which, having demonstrated its remarkable generosity with wide-ranging tax cuts for the ultra-rich, is in need of a boost.

But of course higher prices will mean fewer sales, and so overall national income will decrease rather than increase.

So it’s clear that the tariffs are a geopolitical weapon, not an economic one. And the focus on China can be seen in the fact that it’s been subjected to the highest level of tariffs – 145 percent, compared to the mere 10 percent being imposed on countries like Britain that do whatever Trump tells them to do – and in the fact that all countries other than China are enjoying a 90-day pause on their tariffs.

In fact, US treasury secretary Scott Bessent stated openly last month that the objective for the tariffs is to persuade Japan, South Korea and India to participate in a “grand encirclement” strategy to isolate and weaken China.

Why isolate and weaken China?

Essentially, the US is seeking to punish China for its success in building a modern economy, for developing its sovereignty, and for its refusal to bow down to US hegemony.

China’s rise has come as something of a shock to the US ruling class. China’s reform and opening up from the late 1970s involved gradually integrating into global value chains, at the very bottom rung of the ladder. China had a huge, well-educated, capable and cheap labour force, perfect for labour-intensive manufacturing in fields like textiles, toys, and very simple electronics.

Of course it was never the Chinese leadership’s plan for China to remain at the bottom of that ladder, but that was what US strategists were banking on. In the course of the next four decades, a lot of Americans got extremely rich investing in China and outsourcing their production to China.

But China continued to climb up the value chain and to grow its economic strength, to the point where it’s now a science and technology powerhouse, a global leader in telecommunications, in advanced manufacturing, in infrastructure construction, in space exploration, in supercomputing, in quantum computing, in renewable energy, in electric vehicles, and many other fields. Of the world’s leading research institutions, several are in China. China produces more academic research papers than any other country.

Furthermore, it’s caught up to the US in overall economic size. Measured by nominal GDP, China is set to overtake the US in a few years’ time. Measured by purchasing power parity (PPP), China overtook the US a few years ago. Either way, China as a serious economic competitor is the last thing the US expected to see.

China’s rise disrupts the whole imperialist system. It gets in the way of the relationship the US wants to have with the rest of the world, whereby it can design the global economic and financial system in its own interests. It gets in the way of loan conditionality; it gets in the way of unilateral sanctions; it gets in the way of multiple forms of economic coercion. Why would an African country go to the IMF for a loan on condition of privatising its water system, when it can get a loan from China at much lower interest rates and with no punitive conditions? How can the West use sanctions to force Russia, Cuba and Venezuela into submission when those countries can trade at high volumes with China?

And China’s rise is also a significant ideological problem. China has caught up with the US in terms of economic size, and China’s economy is still growing much faster than the US or the other major capitalist countries. Socialism with Chinese Characteristics is proving itself in reality to be more effective than US-led neoliberal capitalism.

It’s four decades ago that Deng Xiaoping said that “the superiority of the socialist system is demonstrated, in the final analysis, by faster and greater development of the productive forces than under the capitalist system”. Fast forward to 2025 and that superiority really is being demonstrated. As Xi Jinping often says, China’s socialist system allows it to mobilise vast resources for major undertakings that meet the people’s needs and priorities.

Why has China made this incredible progress in renewable energy and electric vehicles? Because the government coordinated a national campaign, involving the education sector, the public sector and the private sector, to make it happen. It’s very difficult to do that sort of thing under capitalism, particularly its neoliberal variant. In the US, the fossil fuel lobby gets in the way of meaningful progress on renewables. In China, there is no fossil fuel lobby. China’s rise undermines the whole Washington Consensus.

So, for a number of reasons, the US is desperate to undermine China’s economic growth; they want to force China to accept the US’s terms of trade; and and they want to bully other countries into siding with the US against China.

Can the tariff war work?

What do they want from China in this tariff war? Essentially they want China to buy hundreds of billions of dollars’ worth of US products that the Chinese people don’t need, in order to prop up the US economy. It’s good old-fashioned ransom, and it has the same basic substance as the first iteration of Trump’s trade war on China, in 2018.

What does the US want from other countries? The US wants other countries to lean away from China and towards the US. To participate in “decoupling” from China. Remember it was under Trump that the US led a global campaign to persuade countries around the world to remove Huawei from their network infrastructure. That of course was rather unsuccessful – it was only hopeless lackeys like Britain that went along with it.

This tariff war operates on the same principle but at a larger scale. The US is telling countries around the world: divest from China. Trade less with China. Accept less investment from China. Work with us to impede China’s development.

And because the US doesn’t have a positive alternative to offer, it has to resort to threats. In the absence of carrots, they’re using a stick: do what we say, or we’ll effectively cut your access to the US market.

None of this is working.

China has been abundantly clear that it doesn’t want a trade war, that it doesn’t benefit from a trade war, that it seeks peaceful and mutually beneficial relations with the US and indeed all countries. But China will not back down in the face of US bullying. Foreign Minister Wang Yi put it bluntly: “The US has long reaped enormous benefits from free trade, yet it now wields tariffs as a bargaining chip to make exorbitant demands on other countries. If we choose to remain silent or to compromise and back down, it will only embolden the bully.”

It’s not 1839 any more. The Century of Humiliation is over. China is not going to sign any unequal treaties in 2025. Every tariff increase the US has announced, China has announced retaliatory tariffs.

What’s more, as a Bloomberg article noted recently, China has “trade-war-proofed its economy” by diversifying its trading partners and supply chains, by building up domestic consumption, and by developing its own technological and scientific self-reliance. Its reliance on imports from the US, and exports to the US, has decreased significantly in the last few years.

China is the largest trading partner of two-thirds of the world’s countries. Increasingly, the global economy needs China more than it does the US. The US ruling class wants to isolate China, but actually it will end up isolating itself.

Meanwhile, the US is digging its own grave in terms of its role in the world. All countries can see that the US is a gangster regime and not a reliable partner; that it doesn’t consider itself bound by international law or norms of behaviour.

So the tariff war will fail in both its stated objectives and its real objectives.

The obvious concern following on from that is that US imperialism’s next weapon against China may be not be a metaphorical one; that the New Cold War will turn hot. Anti-war movements in the West need to be highly vigilant on that score.