By Chuang¹

Trump's trade war is back — bigger, louder, and somehow even dumber. Some say it's different this time. But like most sequels, the plot is familiar. The characters are worn out. The filmmakers seem determined to shoot the same scenes over and over again. How does it end? Probably a hell of a lot like the original. While in Trump I, he fired shots at big trading partners like China and Europe, in Trump II, he's opened fire on the global order itself, and this time, the system shoots back.

Trade war déjà vu all over again

Flashback to Trump I. In 2018, the administration launched a barrage of tariffs on China, claiming it would curb years of Chinese "abuse" of American workers. Beijing hit back more narrowly and cautiously, and the whole thing dragged out into grinding negotiations. In January 2020, the "Phase One" deal was signed, with China pledging to ramp up purchases of U.S. goods, in an attempt to appease one of the central tenets of Trumpian trade theory: buy American. A "Phase Two" deal was teased but never materialized. What happened in the aftermath? The U.S. trade deficit with China dipped briefly... then climbed right back up by the time Biden took office in 2021, just as the pandemic scrambled global trade flows across the board. Biden, for his part, quietly kept most of Trump's China tariffs in place, signaling continuity rather than reversal. In sum, Trump I ended with a whimper: two underwhelming deals, a handful of factories dubiously "reshored" (mostly in press releases), farmers were given bailouts, and the trade deficit barely budged. In the end, the battle lines returned almost exactly to where they'd started.

As the opening scenes of Trump II pan over the smoldering American wasteland, we can expect more of the same: loud threats, vague hopes of new deals, modest tweaks in purchasing patterns, and at best a marginal dent in what remains a yawning U.S.-China trade deficit. But this time, Trump is bucking harder, against not just China, but the global economic system itself. He's testing its limits, lashing out in every direction, and ruffling the feathers of certain functionaries of global capital. Still, unless he actually breaks something, like triggering financial contagion, or pushing the "big red button," the system will, once again, absorb the shock and buck back.

Trump already got a small taste of that after he fired the opening shots on "liberation day": markets took a downward turn and deficits widened, until he of course blinked, softening tariff threats and promising to settle the turbulent macroeconomic waves with a series of trade deals. But the global relations of production cannot be remade overnight, either by raising trade barriers or any number of "buy American" deals. You can't just slap a tariff on a washing machine and expect world-spanning supply chains, built over the course of decades, to simply reverse their currents on command.

The soybean saga

In Trump I, much of the action centered on the saga of the soybean. After the initial tariffs were levied, China slapped retaliatory tariffs on U.S. soybeans and dramatically cut purchases... at first. Imports from Brazil surged, with Brazil supplying as much as 82% of China's soybeans in 2018, while U.S. market share collapsed. But that wasn't the end of the story. American soybeans didn't just vanish. They were rerouted to other markets like Mexico, Egypt, and Southeast Asia, often at lower prices. China, meanwhile, still needed soybeans to feed its massive pork industry, and eventually resumed some purchases from the U.S., tariffs and all, especially during off-season periods when Brazilian supply was low.

The basic structure of global trade didn't collapse. Rerouted materials flowed in the same general direction, sold by the same consortiums of established firms and bought by the same customers, only with more middlemen. The real result was a global game of musical chairs, not a revolutionary decoupling. The "soybean triangle" between the U.S., Brazil, and China proved remarkably resilient — proof that deep supply chains and agricultural dependencies aren't undone by a few press conference threats and tariff hikes. Life went on. Chinese workers paid more for pork. Americans paid more for electronics. The world economy adjusted, because that's what it does.

The production networks that power "Chimerica" took at least thirty years to build. Factories have been fine-tuned to serve foreign markets. Buyers and suppliers have developed trust, contracts, and logistical pipelines that can't be easily liquidated by executive order.

In the present sequel, then, we can assume that Trump will most likely settle — just as he did last time — for a modest uptick in purchases and prices by China and allies, hammered out through a series of Mar-a-Lago accords. The script will likely follow the tariff regime laid out by advisor Stephen Miran, neatly sorting allies and adversaries into different "buckets" defined by their level of market access (and perhaps even security arrangements) — with China dumped into the most punitive one, of course.

Ultimately though, the real drama of the trade wars does not play out among cargo containers, but in the underlying forces that make them move, including the dollar-based financial currents that pull goods across the globe, the grinding conditions of labor that keep them flowing, and the thin profit margins that keep the whole system afloat. These are the deep mechanics of the system, and when pushed hard enough, they push back.

Can China wage-hike a trade war away?

Still early in the first act, the stutter of initiated, paused, reinitiated, and paused-again tariffs are adding instability to China's already shaky economy. Chinese exports are nonetheless still landing in the U.S., though at a higher price, or flooding into alternative markets in Europe or Southeast Asia. So far, the tariffs have again exerted no real impact on the basic structure of global trade.

The turbulence still matters, however, especially for workers. Even a modest downtick in China's export engine threatens the livelihoods of the millions who depend on its relentless churn. As the Wall Street Journal reports, exports make up about 13% of China's GDP, and exports to the U.S. alone account for nearly a quarter of that, representing close to 3% of China's entire economy. Analysts now expect China's exports to the U.S. to take a major hit, and China's total exports to fall by as much as 10% this year. While that might not seem like much, this blow will also land in the labor market: tariffs could put up to 15.8 million Chinese jobs at risk across the manufacturing, logistics, raw materials, and financial sectors. This is in addition to a slow wave of bankruptcies in the manufacturing sector over the past several years — leading to an uptick in defensive strikes and labor arbitration cases — and historically high unemployment rates, especially among youth just entering the workforce.²

Another proposed solution for absorbing the output of China's vast export-oriented industrial base is to redirect it inward, to the domestic market. The mounting threats to China's export engine have reignited calls, both inside and outside the country, for a long-discussed macroeconomic reform: boosting domestic consumption. While this may sound absurd given the sheer scale of China's export capacity, it is precisely what many policy wonks have been calling for. For some Chinese analysts, boosting domestic consumption would mean that China's economy would become less reliant on foreign markets. Foreign capital also hopes for China to domestically "consume away" at least a portion of the products that it normally manufactures for export. Some even claim that such a shift would result in Chinese wage growth and further crack open Chinese markets to foreign investment as well as products (from European cheese and wines to American airplanes and TV shows), at the expense of Chinese producers, thus putting more money into the hands of western industry.³

But even the experts know this is a pipe dream that has never come true, despite years of promises.⁴ Meaningful increases in household consumption would require seismic structural shifts like raising wages, expanding social security, and dismantling the vast financial infrastructure built up around producer-friendly policies. But those changes would gut profit margins and risk causing countless (already struggling) firms to go belly-up. Profit rates have been falling both across the Chinese economy as a whole and within the industrial sectors specifically since the early 2010s. The decline has been particularly sharp in sectors like garments, for example, resulting in a near-continuous stream of offshoring for the last decade. In more difficult-to-relocate sectors like electronics, cutthroat competition has led profitability to drop to an all-time low. Meanwhile, in sectors like steel, many firms (whether nominally state-owned or private) have only been kept alive through subsidization and targeted purchase agreements.

As a result, implementing the sort of social policies necessary to elevate consumption would therefore require both an impossibly massive stimulus to prevent bankruptcies, and the rapid creation of offshore supply chains through direct investment on the part of Chinese firms, capable of feeding newly-cheapened consumer goods back into the Chinese market. There is, however, no short-term fix, and even this long-term structural transformation would be an enormous risk, likely slowing growth and generating new forms of social instability.⁵ Ultimately, it is more likely that the state would buy excess capacity off of firms (something it's already done for years with its excess capacity in the steel industry) before pushing for widespread and substantial wage increases.

As a case in point, China is currently drafting its 15^th Five-Year Plan. Looking back at the 13^th Plan (2016-2020), the administration was already pledging to balance imports and exports, a move hailed as a pivot toward more sustainable, consumption-driven growth.⁶ Nearly a decade later, however, the export gap has only widened. The domestic market remains incapable, in its current state, of absorbing export volumes, and media fantasies about redirecting goods inward mostly ignore the basic math.

Let's take a look at umbrellas. Those bound for export leave Chinese ports at an average valuation of $3 to $4 USD per umbrella (21-29 yuan),⁷ while the average umbrella sells from the factory to domestic wholesalers at around 10 yuan.⁸ China produces around 1.2 billion umbrellas per year, 900 million of which are exported,⁹ with the U.S. as the largest buyer.¹⁰ For reference in term of China's economy as a whole, total export size is equal to roughly half of household consumption per annum.¹¹

No one, not even Trump, is suggesting that China should stop selling to the world. However, despite years of official rhetoric about rebalancing the economy toward domestic consumption, the scale of China's export sector makes any serious change of direction extraordinarily difficult, especially at this precarious moment in history. Even substantial gains in household spending wouldn't come close to replacing the demand currently supplied by global markets. China's economic rise remains fundamentally dependent on foreign buyers, and above all, on the developed world's willingness to continue buying Chinese goods. Trump can rage against the imbalance all he wants, but at best he'll extract minor concessions, a few symbolic purchases of American goods, and a new round of made-for-TV promises.¹²

Sink or serve

The trade war will likely spark a new wave of strikes and worker unrest in China, if it hasn't already. But the impact won't be limited to Chinese labor. We should also expect it to accelerate firms' plans to diversify their supply chains across Asia, with new hubs in Vietnam, Indonesia, and even India. As a result, new strike waves among the younger generation of workers will follow, just as they followed similar waves of industrial relocation throughout the 20^th century in places like Italy, South Korea, and of course mainland China itself. But these are not overnight shifts. They unfold slowly, like a changing tide carving new contours into an old shoreline. Similarly, there is no guarantee that even these "friendshoring" fixes will be seen as acceptable within an increasingly volatile political environment — as when Apple's pivot toward India, driven by pressure from the Trump administration as early as 2016, was then personally criticized by Trump for the decision in 2025, who told CEO Tim Cook outright: "I don't want you building in India."¹³ The overall structure of global production may remain largely intact, but the fault lines are widening.

At the same time, as China's economic situation worsens, the Chinese proletarian condition looks similar that in the U.S., though perhaps unfolding at a faster rate: meaningless service jobs and isolated lives with little hope for children, family, or community. No future. When China's official urban youth unemployment rate recently hit 16.9 percent (far higher if ruralites are taken into account), the government soon thereafter called for China's youth to throw themselves into volunteer work, and dedicate themselves to Chinese modernization — without pay.

This is classic state paternalism, just one of the many "fuck you" responses to the suffering faced by China's young people in recent years, emerging from the terror of the pandemic only to find no solace but instead an economic crisis awaiting them on the other side. During the pandemic, Chinese youth coined terms like neijuan (内卷 or "involution"), a crippling disgust reaction to the endless, competitive hamster-wheel of labor, and tangping (躺平or "lying flat"), a passive refusal to play the game. The government responded directly to the rise of these buzzwords in speeches and other public pronouncements, and the reply was blunt: we're not doing any lying down. Get up, and back to work. And yet the basic problem remains: what will work look like for this generation as deindustrialization accelerates and growth continues to slow?¹⁴

Against the tide of dollars

One of the strangest features of Donald Trump's aggressive break with U.S. hegemonic norms is how it highlights the strength of the very global system he claims to oppose. For all the talk of American decline, Trump's own tariffs and threats have only underscored how deeply entrenched the foundations of U.S. dominance remain. This is especially visible in the role of the dollar. Global capitalism doesn't function without a lead currency: gold in the 19th century, sterling in the early 20th, the dollar today. But this poses a conundrum: managing the global currency means letting the rest of the world into your house, so to speak. The U.S. opens its financial system — its markets, its real estate, its government bonds — to anyone with dollars to spend. That's the cost of issuing the global reserve currency. It means accepting an extreme degree of openness, legal convertibility, and capital account flexibility that no other country is willing to stomach.

Certainly not China. Beijing will not allow foreign investors to roam freely through its economy, buying land, companies, or debt at will (as the U.S. more or less allows). The Chinese government wants trade surpluses without the structural exposure that comes with being a global financial hub. And that's why — even as Trump lobs tariff threats — China's central bank continues to quietly recycle its export dollars into U.S. Treasuries and makes no move to offer the renminbi as an alternative reserve currency. Not because it likes America, but because there's nowhere else to park that kind of money safely, and at scale. Even if BRICS schemes up a new clearing mechanism, it's little more than a small island in an ocean of dollars — useful for managing some intra-bloc flows, but powerless against the tidal pull of the global dollar system that still dominates trade, finance, and reserves. The dollar system remains the only option and, on top of that, Trump is out there to defend it. In fact, he threatened 100% tariffs on BRICS countries when Russia floated a BRICS currency workaround to bypass the dollar.

A recent Chinese study projects that even by 2050, under a baseline scenario, the renminbi might account for just around 10% of global reserves — still a distant second to the dollar. As of late 2024, the dollar still makes up nearly 58% of global foreign exchange reserves, with the euro trailing at around 20%, the Japanese yen at nearly 6%, and the renminbi stuck at just over 2%, roughly on par with the role of the Australian and Canadian dollars). In other words, even after decades of talk about multipolarity and internationalization, the dollar remains ubiquitous, leaving the world financial system swimming in a sea of dollars for the foreseeable future. And, with no serious alternative on the horizon, the entire global economy, including the U.S. itself, remains at the mercy of the volatile tides of (largely dollar-based) global currency flows. Even Trump has felt it: when he started rattling markets too hard, especially around the Treasury bond market, his wealthy allies made it clear he was rocking the boat too much, and he backed off. Trump may be back at the helm of the ship, attempting to turn the massive, slow-moving vessel of the U.S. economy, but he is still navigating an ocean of dollars that obeys deeper currents than any one helmsman.

Flip the script

As in any sequel, the flashy advertising campaign showing a blitz of action is usually a sure sign that the end product will overpromise and underdeliver. For communists, there's at least one simple lesson here: don't mistake elite chaos for transformative change. Trade wars may shake the system, but they often end in half-measures and backroom deals. Our work is elsewhere — on the ground, building networks of friends and comrades across borders, and building a collective brain bent on the creation of another world. As the system careens forward, lurching from tariff threats to real war, we'll need more than resistance: we'll need imagination. If Trump can try to rewrite the global order from a golf resort, we can surely dare to imagine something better. The future isn't theirs by default. It's a contested space, and we should treat it like one.

Chuang is a communist media collective based in China and several other countries that produces research, analysis, and translations focused on the development of capitalism in the region, its historical roots, and the revolts of those crushed beneath it.