There isn’t a day going by without the press highlighting some off-key comment or response from Trump. The message again and again is that he’s a racist and he’s crazy. But there’s “system in his madness.” And more than likely, the underlying objectives, which point to an escalating conflict with China, will still be held by whoever holds the White House in November–if Trump hasn’t run amok by then.

Covid has accelerated the plunge into the crisis of the world economy. And the US is not doing well. Today, despite the reckless rush to resume production – which will probably cost thousands of deaths – the employment data are historically low, only comparable to the years following the crash of 29. Exports have fallen so much that China has been forced to lower tariffs on key products in order to meet the terms of the truce in the trade war.

In an economy that was already being displaced in key sectors for capital placement such as IA and 5G by the Chinese rise, the pandemic has introduced an extraordinary element of chaos. Entire sectors of American capital that already felt they were being left behind, that Chinese competition was “unfair”, expressed their fear and anger by demanding reparations from China… for the Covid. And of course Trump is using them. The Chinese government may try to respond to the campaign by rebutting and countering it with cross-accusations, but the bottom line is somewhere else, and all parties know it.

What was globalization?

The US led the opening of global capital markets and the dismantling of tariffs as long as it served capital accumulation. Bringing production to China, Mexico and other countries while maintaining domestic markets and opening up others increased the return on invested capital. It also brought new capital flows to countries hosting maquilas and factories. So-called “globalization” triggered precarization in the countries with the most concentrated capital, but it also created millions of industrial jobs in previously impoverished countries. Capital pretended to “rejuvenate” and took pride in reducing extreme global poverty even though over-accumulation made it clear that labor continued to lose its share of world income. In other words, the value of what is produced was increasingly lower in relative terms to the market created by production itself. The trend towards crisis continued and materialized in an exuberance of credit and fictitious capital that went as far as the financialization of key sectors (construction, transport, food distribution, etc.). The financial crash of 2008 made it clear that there was a limit to this bubble which allowed the fiction of anti-historical “development” to continue.

What is trumpism?

Less than a decade later, the fear of losing key technological races against Chinese capital, which was until recently a subordinate capital, and the accumulated erosion of the domestic market, which was expressed as the fragility of social cohesion, produced a strange protectionist alliance in the United States. The anger of a petty bourgeoisie that felt the threat of bankruptcies, massive land evictions in the countryside and pauperization, joined the anger of capital centered on the internal market – such as the extractive industries – and to a part of financial capital that bet on a change in the rules of the game of global capital and feared that waiting any longer would be too late. The result was a rupture in the American bourgeoisie that ended in Trump’s agonizing and controversial victory. And with it the move from “multilateralism” to the one-by-one renegotiation of trade and military agreements putting literally the entire US arsenal on the trade negotiating table. This had nothing to do with Democrats vs. Republicans beyond certain forms and embellishments, protectionist tendencies in the Democratic Party were also expressed under the rise of its “socialist” wing and have ended up being hegemonic in the whole of American capital. Trumpism was giving them good results although, perhaps, they might prefer other forms.

The core that is not going to change

What is increasingly clear to US capital is that it needs to recover the bulk of its productive machinery in order to maintain its global position. Covid has only reinforced this idea, precisely contradicting what Trump says. It is not because China is the cause of the epidemic, but rather because any random element, such as an epidemic elsewhere in the world, can take away extremely fragile and distributed production chains in a “just in time” system designed to extract the last drop of financial gain by eliminating even local warehouses.

Strategically, it is obvious that if the trend moves towards an increasingly open confrontation with China, maintaining the degree of supply dependency in China that the US currently faces is suicidal. But if “renationalization” and the trade war are to be sold as a national cause, it needs to be argued from another angle. The one that has always been Trump’s forte: “bring back the good jobs”. The discourse, despite what the European press reflects, is well constructed and bleats the idea of “stopping the feet” of capital, hinting at a subsidized path for companies. We can read the following today from Robert E. Lighthizer, the Trump government’s trade official:

It was pure regulatory arbitrage: companies could avoid US labor and environmental standards by manufacturing abroad while enjoying tax-free access to our market. These trade agreements also undermined a key competitive advantage for the United States: a commitment to the rule of law and an independent, functioning legal system. The agreements allowed companies to litigate disputes with foreign governments over expropriations and other matters, not through local courts, but through so-called investor-state dispute resolution provisions. In doing so, the federal government effectively purchased political risk insurance for any U.S. company that wanted to send jobs overseas.

Many companies have realized that offshoring creates risks that often outweigh the incremental efficiencies. Long supply lines flow at the whim of local politics, labor unrest, and corruption. In some countries, such as China , there have been government-wide efforts to steal intellectual property for the benefit of domestic companies that become the main competitors of the victims of theft.

At the same time, the trend in trade policy was also changing rapidly. Businesses have seen that President Trump did not support their blind pursuit of efficiency in the global economy. Instead, he focused on jobs, particularly in manufacturing, because he recognized the importance of productive work not only to our GDP, but also to the health and happiness of our citizens. Business success and economic efficiency, of course, remained important considerations. But they were no longer the beginning and the end of trade policy.

The new policy was to aggressively implement previous trade commitments, renegotiate labor-destroying trade agreements like NAFTA and the Korea Free Trade Agreement, and confront China’s predatory economic and trade policies. Many companies protested that this policy change created uncertainty. President Trump’s response was simple: If you want security, bring your plants back to the United States. If you want the benefits of being an American company and the protection of the U.S. legal system, bring the jobs back.

This economic nationalism is more than just a fairy tale, it’s a state policy. The US government is negotiating with Intel and other chip and semiconductor companies to reopen the factories they once had US territory.

China in the wake of Covid

China is increasingly cornered. The combination of an epidemic with a trade war has brought it to the brink of mass unemployment. Although it is creating a small credit bubble to regain a foothold, its imperialist framework is in the doldrums: China’s “new silk road” will take time to recover and is far from being a sufficient market, the Central Asian countries are already restructuring debt and those in Africa are trying to wriggle out of arrears as best they can.

Chinese capital is having a hard time. Its profits are plummeting, GDP is contracting in a way unseen since 1976 and obviously its influence is shrinking, starting with the US itself, where its investments are falling to 2009 levels.

The US is pushing beyond the trade war with China

Believe it or not, Covid has accelerated the withdrawal of US global military pressure that has been building up since Obama. Even in the Persian Gulf, the US is removing missiles from Saudi Arabia and beginning a certain pacification with Iran. The primary goal is to redistribute military spending in key regions with its “allies”, in Europe with NATO members, in Asia by charging Japan and Korea with some of the costs of their own deployment.

The goal of US foreign policy and militarism is increasingly focused on the only competitor that can dethrone US capital from global centrality: China. Symptoms of a spreading anti-Chinese war ideology are leading presidential candidates to compete over who has a tougher stance on China.

War tensions are growing by the day, and not a few people are talking about a new “cold war”. They are optimistic. It is no longer Trump but the US military and intelligence apparatus that has accused China of conducting a wave of cyber-crime to steal the results of research on a Covid vaccine. Meanwhile, US military pressure in the South China Sea is increasing and gaining increasingly active allies in countries like Indonesia. The slope of the war is so steep that attempts by Taiwan or South Korea to appease China and its direct allies in order to escape from military bloc formation are hopeless.

In China they are fully aware of the dangers that a warlike conflict with the USA, even limited to the control of the seas, would entail. But the debate is centered on whether to accelerate the nuclear program even more as a way to slow down the descent into war.

In Europe there are two bad echoes. The first is banal but significant: we only need to look at the University of Oxford, which just yesterday presented a report according to which the most nationalist and socially militarized societies in Europe – Greece and the former Stalinist states – are the most resistant to disasters like the Covid. The second is more than worrying. The planned EU-China summit, originally prompted by Merkel, has fallen off the official agenda of the German EU presidency. Why?