Contents "The internationalist proletarian" n.17
THE PARABOLA OF THE US TARIFFS GAMBLE: FUNCTIONAL COLLAPSE
The tariffs annulled by the Supreme Court
On February 23, 2026, the US Supreme Court ruled that the tariffs imposed by the ruling faction less than a year earlier – which had been pompously announced on April 2, 2025, and proclaimed “liberation day” – were illegal.
These tariffs, which had become the hallmark of those advocating a protectionist retreat, have clashed with the bourgeois societal body, which has forced their annulment through its judicial organs, with even two of the three Supreme Court justices appointed by Trump voting against them.
Now the courts will have to settle the refund of the amounts collected from US importers who had already filed a lawsuit or who will file one following this Supreme Court ruling: “About $170 billion is at stake – the amount the Trump administration has reportedly collected so far (…). In fact, in addition to the thousands of claims expected to arrive in the coming days, there are more than 1,500 importers and retailers that have already filed their own lawsuits with US trade authorities” (Expansión, 02-21-2026).
Immediately afterward, the discredited buffoon Trump announced a general tariff of 10%, proclaiming that he would raise it to 15%, which he later failed to do. The new tariffs are based on Section 122 of the Trade Law, which requires congressional approval (currently uncertain) to maintain them beyond July 24, 2026, when they will have been in effect for 150 days.
A promisingly stumbling start
We have already seen in “The Internationalist Proletarian” no. 16 (April 2025, pages 15-23) the hesitations that preceded this announcement, the immediate consequences that led to a general suspension of tariffs for 90 days, except for China, on which the US tried to concentrate the pressure, and the tariff escalation resulting from the forceful response of Chinese imperialism.
Let us examine the trajectory taken since that beginning and the overall results of the process, as well as the self-inflicted stumbling of US imperialism in its attempt to impose its tariff wall on the other competing imperialisms.
First agreement, with the United Kingdom
The first agreement to prevent the unilateral application of tariffs by the US was reached with the United Kingdom on May 9, 2025.
On the part of US imperialism: “Tariffs on steel and aluminum are being reduced from 25% to 0%, (…) Washington also agrees to lower tariffs on vehicle imports from 27.5% to 10% (…). There will be a quota of 100,000 vehicles, a number that practically covers all UK sales to the US. (…) For the rest of the sectors, tariffs will remain at 10%, the standard rate” (Expansión, 09-05-2025). For its part, British imperialism made quite limited concessions, removing tariffs “on US imports of ethanol, used in beer production, and has agreed to reciprocal access for beef (…) the digital services tax remains unchanged. It is a 2% rate” (Expansión, 09-05-2025).
The evolution of the US-China tariffs escalation
Although this initial agreement was announced with the usual triumphalism, the US was quick to announce, in the same month of May, the suspension of the additional tariffs imposed on China. Thus, the US lowered its tariffs on China from 145% to 55% (the minimum rate of 10% for “reciprocal” tariffs, along with the 20% imposed in February under the pretext of fentanyl and the 15% already imposed by the previous ruling faction before leaving office, plus another 10% established two terms ago), and China has lowered the tariffs it had imposed on the US from 125% to 10%.
As part of this trade truce, the US announced “a reduction in tariffs on small packages from China, known as de minimis, from 120% to 54%, while maintaining a flat rate of $100 per package (…) a relief for Silicon Valley tech giants such as Meta and Alphabet (Google), whose digital advertising income depends heavily on Chinese advertisers (…) China also lifted yesterday the ban it imposed a month ago on the delivery of Boeing aircraft to airlines from the Asian country” (Expansión, 14-05-2025).
Meanwhile, the real leaders of US big capitalism clearly understand that their businesses need China to develop: “Yesterday, Dimon, whose bank holds an annual conference in Shanghai, met with Ren Hongbin, president of the China Council for the Promotion of International Trade. (…) Apple CEO Tim Cook and investor Ray Dalio attended a conference in the Chinese capital in March and also met with He Lifeng” (Expansión, 24-05-2025).
After several extensions, bluffs, and further mutual pressure, in October 2025 the US and China signed a one-year truce at the Asia-Pacific Economic Cooperation Forum held in South Korea: “The US president said he had agreed to cut the fentanyl-related tariff on China from 20 to 10 per cent (…) China’s commerce ministry confirmed that Beijing had agreed to suspend the implementation of the rare earths export controls and that the US would put on hold for a year its own recently announced plans to extend technology-related export controls to subsidiaries of Chinese companies. (…) China’s commerce ministry said the US had also agreed to suspend recently imposed port fees on China’s maritime, logistics and shipbuilding industries for one year, after which Beijing would suspend its countermeasures targeting US-linked ships” (Financial Times, 30-10-2025).
Does this mean that China was immune to the tariffs and could remain in this situation indefinitely? Not at all, otherwise, they wouldn’t have agreed to a truce.
For example: “Shenzhen Cross-Border E-Commerce Association, an industry group representing more than 2,000 Chinese merchants, said many of them were “extremely anxious” and had told factories and suppliers to halt or delay deliveries. This had prompted some factories to suspend production for one to two weeks” (Financial Times, 24-04-2025).
But it does mean that Chinese imperialism has demonstrated that it possesses tools of pressure (and particularly its control over rare earths) that have rendered the tariff blackmail attempted by US imperialism completely ineffective, and that all the additional tariffs with which US imperialism hoped to bring China to its knees have had to be eliminated, in a full-scale retreat.
A very significant aspect of the trade war between the US and China is the former’s attempt to block the latter’s access to advanced chips. This has forced companies such as Xiaomi, Alibaba, and Baidu to design their own chips, which are manufactured in Taiwan (TSMC). The US attempt to block access to chip design software in early June was withdrawn a month later as part of a retreat in the face of China’s counteroffensive and also because “Chinese EDA [electronic design automation] makers, led by Empyrean Technology, have already developed a rival ecosystem of software increasingly used by Chinese chipmakers” (Financial Times, 02-06-2025), meaning the ban would have simply handed the Chinese EDA market over to Chinese companies, a market currently still dominated by the German group Siemens and the US companies Synopsys and Cadence: “Between the three, they control nearly 80% of the EDA software market in China” (Expansión, 04-07-2025).
On the other hand, the US ban on H20 chips caused a $4.5 billion hole in Nvidia's own finances, and furthermore: “The US risks losing its leadership in AI to Chinese companies, such as Huawei, if it bans the export of critical technology” (Expansión, 07-16-2025). This market is so important that “Nvidia and AMD have agreed to pay the United States 15% of their revenue” (Expansión, 12-08-2025).
But the most significant development has been the response from the Chinese imperialist side: “The Chinese internet regulator, the CAC, sent a message to major tech companies such as ByteDance and Alibaba, citing security concerns and ordering them to suspend new orders for Nvidia’s H20 chips” (Financial Times, 22-08-2025). And not just the H20: “The Chinese internet regulator (CAC) has banned major domestic tech companies from purchasing artificial intelligence (AI) chips from the US-based Nvidia, (…) This week, the CAC has asked giants such as Tencent, ByteDance (TikTok), and Alibaba to conclude testing and orders for the RTX Pro 6000D chip, the processor that Nvidia manufactures specifically for the Chinese market” (Expansión, 18-09-2025). And in parallel: “Huawei Technologies Co. is preparing to sharply ramp up production of its most advanced artificial intelligence chips (…) The Chinese company plans to make about 600,000 of its marquee 910C Ascend chips next year, roughly double this year’s level” (Bloomberg, 29-09-2025). In other words, China has banned the import of lower-end chips, relying on its own capacity to produce them. Result: “[The US] granted Nvidia permission on Monday (…) to sell its second-most-powerful chip, the so-called H200, to customers in China and other countries” (La Vanguardia, 10-12-2025). And there is no lack of buyers: “Alibaba and ByteDance had earlier told Nvidia in private that they are interested in ordering more than 200,000 units each of the H200. Both companies – alongside prominent Chinese startups, including
DeepSeek – are rapidly upgrading their models to compete with OpenAI and other US rivals” (Bloomberg, 23-01-2026).
The US has, however, managed to partially impose its will on Apple and Taiwanese companies by requiring them to make investment commitments in the US. In the first case, $100 billion, and in the second, $500 billion, to be able to import 2.5 times their planned capacity duty-free on US soil, with the hope of regaining part of the US share of chip manufacturing that “fell from 37% in 1990 to less than 10% in 2024” (Expansión, 21-01-2026).
It's easier said than done
The US reached agreements with other imperialism along a path fraught with bluffs, sabre-rattling, and backtracking, such as the 50% tariffs with which the US threatened the EU or the 35% tariff with which it threatened Japan. In general, the tariffs (whether agreed upon or not) that took effect in August 2025 were lower than those initially announced: Bangladesh (from 37% to 20%), Cambodia (from 49% to 19%), South Korea (from 25% to 15%), Japan (from 24% to 15%), Madagascar (from 47% to 15%), Iraq (from 39% to 30%), Indonesia (from 32% to 19%), Laos (from 48% to 40%), Sri Lanka (from 44% to 30%), Thailand (from 36% to 19%), Taiwan (from 32% to 25%), the EU (from 20% to 15%), and Vietnam (from 46% to 20%).
Myanmar, Serbia, and the Philippines saw very small adjustments, and in the case of Mexico, tariffs remained at 30% (only for products not covered by the free trade agreement and not yet in effect, with a 90-day extension).
The countries most affected by higher tariffs were Canada (from 30% to 35%), Switzerland (from 31% to 39%), Brazil (from 10% to 50%), India (from 26% to 50%), and China (as part of the escalation and subsequent suspension we have seen above).
Switzerland's integration into the EU market
The Swiss bourgeoisie is unlikely to forget the imposition of 39% tariffs it was subjected to, even though the US eventually reduced them to 15% in November 2025, in exchange for a promise of investment in the US in pharmaceutical production, gold refining, and railway equipment. The real result of this US action: Swiss capitalism has been pushed into the arms of European imperialism.
In March 2026, an EU-Switzerland agreement was signed under which: “For the first time, Switzerland will be integrated into the EU’s internal electricity market (…), a Common Area of Food Safety will be created (…) Switzerland will be able to participate in a wide range of European Union programs covering research, education, space, and health (…) Switzerland agrees to the dynamic application of EU law in the sectors covered by the package (…), it must adopt new laws enacted by the European Union (…), and matters relating to EU law will be referred to the CJEU (…); Switzerland commits to a permanent financial contribution (…) an annual contribution of 375 million euros from the agreement’s entry into force until 2026, in addition to the 140 million euros the country has been paying since late 2024. Access to the single market also entails the free movement of people between the EU and Switzerland, which will no longer be limited by quotas or caps” (Expansión, 03-03-2026).
Attempt to submit Brazil: EU-Mercosur agreement
The US ruling faction announced 50% tariffs on Brazil in response to the trial of former President Bolsonaro.
Despite the bombast of the headline, the reality revealed the limits of the pressure the US can exert on Brazil: “Exports accounted for less than 20% of Brazil’s GDP last year, according to the World Bank. Of this figure, only 12% of its exports went to the US (…). Nearly 700 products will be exempt from the tariffs. These include petroleum products, iron ore, wood pulp, fertilizers, natural gas, aircraft, and aircraft parts. This means that nearly half of Brazil’s exports to the United States would be exempt from the new tariffs” (Financial Times, 07-08-2025).
While it is true that tariffs hit certain industries, such as the footwear sector (Brazil exported some 5.8 million pairs of shoes to the US in 2024), overall: “the increase in exports to other markets, particularly China and Argentina, offset the decline. Brazil maintains a trade surplus of $6.13 billion, representing a 35.8% increase over the 2024 figure” (América Económica, 04-09-2025). Therefore, as in other cases, even in the limited scope where US tariffs appear to be successful, they typically only lead to a redirection of certain trade flows.
In any case, one of the US’s main Achilles’ heels regarding China is rare earths, and Brazil ranks second in rare earth reserves (with 21 million metric tons of oxides, compared to China’s 44 million and the US’s 1.9 million). This means that the US has no interest in breaking off relations but rather in trying to gain access to these reserves, which provides Brazilian capitalism with an important foothold.
What has the US failed to stop? China’s consolidation as the “main trading partner of many Latin American countries, supporting their foreign trade in the region in the face of US tariffs. This is the case in Brazil and Argentina, although the Asian giant continues to expand its presence in other markets, such as Peru, a move that has led to new tensions with the United States as the year draws to a close. Specifically, the port of Chancay, inaugurated last year to directly connect South America and China, joins other initiatives such as vehicle factories in Mexico and Brazil, copper and iron mines in Chile, railway projects in Argentina, and lithium mining operations in those two countries and Bolivia” (Expansión, 29-12-2025).
But that’s not all, a direct result of US tariff policy has been the signing of the free trade agreement between the EU and Mercosur (Brazil, Argentina, Uruguay, and Paraguay), “which will create an integrated market of 780 million consumers” (Bloomberg, 17-01-2026). The agreement was made possible, after 25 years of fruitless negotiations, thanks to US intervention. The final blow came from the escalation regarding Greenland, amid the US’s emboldened stance following its military intervention in Venezuela (see p. 16 in this review), during which the US threatened to impose an additional 25% tariff on several EU member states (a threat that – incidentally – it did not carry out). This helped overcome internal resistance within the EU, finally pushing Italy to accept the agreement.
And this is not the only EU free trade agreement with another bloc that has been “unblocked.” In addition to the one we will see later with India, the EU has also reached similar agreements with Australia and Indonesia.
Returning to the tariffs on Brazilian imports, they have finally dropped to 10%, which is the standard rate imposed by the US government as an immediate measure following the US Supreme Court’s overturning of the previous tariffs. But by November 2025, three months after imposing tariffs on Brazil, the US had reversed course on 100 products: “Following the executive order signed by Donald Trump, Washington is eliminating the remaining 40% of the surcharges imposed in July, after having withdrawn the initial 10% a few days earlier. (…) The elimination of the remaining 40% of the tariffs allows strategic sectors – especially the agri-food sector – to regain some of their competitiveness in the US market. Among the products included are meat, fruits, nuts, coffee, tea, spices, roots, tubers, processed foods, beverages, fertilizers, and fossil fuels” (América Económica, 21-11-2025).
And it wasn’t just about Brazil, but rather a more general, though not complete, retreat that highlights the US’s weakness in the face of… ITS OWN tariffs: “The US has announced framework trade agreements with Argentina, Ecuador, Guatemala, and El Salvador, as part of the Trump administration’s effort to lower food prices for American consumers (…) Washington stated in separate communiqués that it would eliminate tariffs on products from Ecuador, El Salvador, and Guatemala that ‘cannot be grown, mined, or produced naturally in the US in sufficient quantities’. Tariffs on textiles and clothing from El Salvador and Guatemala would also be reduced, according to the statement. (…) In a joint statement with Buenos Aires released by the White House on Thursday, Washington announced the elimination of reciprocal tariffs on imports of ‘unavailable natural resources’ and certain ingredients for pharmaceutical products. Argentina, in turn, agreed to open its market to US livestock, according to both sides, in addition to easing restrictions on certain US dairy products and lowering tariffs on a range of goods such as certain medicines, chemicals, machinery, medical devices, and motor vehicles” (Financial Times, 15-11-2025).
India, Russia, China, the EU, and Canada
Indian imperialism has been buying Russian oil at a discount since the start of the war in Ukraine, with the permission of the US: “Russian crude oil exports to India, (…) have soared since 2022, currently reaching $140 billion (about €120 billion) and accounting for more than a third of its imports” (Expansión, 24-10-2025). Faced with Russian imperialism’s resistance to accept a deal in Ukraine, the US attempted to force Indian imperialism to stop buying oil from it, imposing a 50% tariff starting in August 2025 in response to its refusal to give up this highly lucrative business.
This presented an opportunity for Chinese imperialism, which did not hesitate to take advantage of it: “China’s Ministry of Foreign Affairs said Thursday that Beijing stands ready to work with New Delhi to ‘properly handle differences in the face of the big picture.’” (Bloomberg, 14-08-2025). It didn’t take long for action to follow, and China and India announced the resumption of direct flights between the two capitalist states.
After seven years of not visiting China, a few weeks later, the Indian president attended the Shanghai Cooperation Organization summit in Beijing, featuring staged moments of Modi hugging Putin and getting into his limousine, as well as the meeting between Modi, Putin, and Xi Jinping. The summit was attended by: “the permanent members of the SCO (China, Russia, Kazakhstan, Kyrgyzstan, Uzbekistan, India, Pakistan, Iran, and Belarus) and 14 other dialogue partners, such as Turkey, Saudi Arabia, Egypt, and Myanmar (…) The Secretary-General of the United Nations (…) and that of the Association of Southeast Asian Nations (ASEAN) were also invited for the occasion” (El País, 01-09-2025). However, to maintain a certain distance, Modi did not participate in the massive military parade designed to showcase China’s military might, which the presidents in attendance reached in a procession led by the trio of China, North Korea, and Russia.
Rather than distancing Indian imperialism from Russian imperialism, the US intervention has brought them closer together, with Putin’s visit to India in December 2025 and the signing of an economic cooperation program that aims “to increase bilateral trade to $100 billion, with the vast majority of transactions already conducted in national currencies” (Banca y Negocios, 05-12-2025).
On another note, the US raised the cost of obtaining a new H-1B visa to $100,000. This decision, easy to connect with the migration agenda of the ruling faction in the US – an agenda it had, curiously enough, expressly renounced –, is a blow aimed specifically at India and its $280 billion IT outsourcing business model. In 2024, 71% of H-1B beneficiaries were Indian workers, 12% were Chinese workers, followed by 3% each from the Philippines, Canada, and South Korea. The retaliation is primarily aimed at: “Indian outsourcers led by Tata Consultancy Services Ltd. and Infosys Ltd., who use the program to deploy tens of thousands of engineers across American clients from Citigroup Inc. to Walmart Inc. (…) Infosys employs thousands of people across its delivery centers in states including Texas, Indiana, and North Carolina” (Bloomberg, 21-09-2025).
As is often the case, this does not mean that this visa restriction will result in more US citizens being hired for these positions; instead, “it is likely to increase costs for US companies and push them to accelerate the expansion of their so-called ‘global capacity centers’ in India. Companies such as Microsoft Corp., Google, Goldman Sachs Group Inc., JPMorgan Chase & Co., and Morgan Stanley already have large centers of this type in India” (Bloomberg, 21-9-2025). On the other hand, there are those who are waiting with open arms (though not without some internal resistance) for the engineers the US is expelling: “Beijing hopes that the K-visa program, (…) will be attractive to overseas Chinese and skilled workers from developing countries, boosting the growth of its science and technology industries (…) With the K visa, a greater influx of people from India, Russia, Southeast Asia, and the Middle East, regions full of STEM (science, technology, engineering, and mathematics) talent at a lower cost, is expected” (Financial Times, 01-11-2025).
The US has tried unsuccessfully to get more capitalist states to join in the pressure by “warning the European Union that tariffs on Indian and Chinese imports must take priority in light of these countries’ purchases of Russian oil” (Expansión, 13-09-2025). It has also tried to do so with the G-7, without success in either case. Not only did it fail to get tariffs imposed on India, but after 20 years of negotiations, India signed an agreement with the EU: “a free trade pact that creates a market of nearly 2 billion people and accounts for no less than a quarter of global GDP. (…) Under the new agreement, tariffs on 96.6% of goods exported from the EU to the Indian market will be eliminated or reduced. This move will save companies in the region 4 billion euros in tariffs each year, according to Brussels’ calculations. On the EU side, the tariff reduction will be equivalent, although in some sectors it will be faster than that faced by India due to the greater maturity of its industry. (…) In the industrial sector, key industries such as machinery and electrical equipment (currently with tariffs of up to 44%) and aircraft and spacecraft (up to 11%) will see their tariffs reduced to 0% for nearly all products. Similarly, chemicals, iron and steel (both with current rates of up to 22%), and pharmaceuticals (at 11%) will see tariffs reduced to 0% on virtually all products. For optical, medical, and surgical instruments, the 27.5% tariff will drop to 0% on 90% of products, while in the plastics sector, the 16.5% rate will be eliminated almost entirely. In more sensitive sectors, pearls, precious stones, and metals will see their 22.5% tariff drop to 0% for one-fifth of products, with additional reductions on another 36%, and motor vehicles will experience a massive cut from 110% to 10% for a quota of 250,000 units” (Expansión, 28-01-2026). The reaction on the other side of the tariff wall was not long in coming: “Following a phone call with Modi, Trump said on social media that he would cut a US levy on Indian goods to 18% from 25%. The US president is also removing an extra punitive 25% duty applied in response to India’s purchases of crude from Russia” (Bloomberg, 02-02-2026).
Regarding this agreement, following the US Supreme Court’s overturning of the tariffs, reactions within Indian capitalist circles have centered on attempts to renegotiate it: “Opposition leaders called for Prime Minister Narendra Modi’s administration to renegotiate the nation’s trade deal with the US, while the head of the Federation of Indian Export Organizations said ‘we all have a level playing field now.’” (Bloomberg, 21-02-2026).
The justification given by the US ruling faction for domestic and foreign consumption to justify such a climbdown (tariff reduction), carried out at the last minute to avoid completely losing India as an “ally”, is that India had committed to no longer purchasing Russian oil. This alleged commitment has not been confirmed by India and has been denied by Russia. It took less than a month for the US to officially allow India to purchase Russian oil again, as we will see later.
This does not mean that India is not diversifying its resources, seeking to purchase Venezuelan oil (despite the obstacles we will examine later, see p. 16), negotiating a trade agreement with Chile to gain access to its mineral reserves, with Brazil for access to rare earth minerals, or with Canada (another target of US tariff measures) for the supply of oil and LNG: “Ottawa will commit to ship more crude oil, liquefied natural gas and liquefied petroleum gas to India, while New Delhi will send more refined petroleum products to Canada” (Bloomberg, January 27, 2026). The explanation given by the representative of Canadian imperialism is significant in terms of the reason for their actions: “‘Canada used to provide 98% of its energy exports to a single country [US]’, Hodgson said at the conference. ‘We are committed to diversifying.’” (Bloomberg, 27-01-2026).
Further tariff reductions
While we noted above the additional tariff reductions initiated with Latin American countries, in January 2026 the announced tariff increase for upholstered furniture, kitchen cabinets, and dressers, which were set to rise from 25% to 50%, was postponed.
In February 2026, the US lowered the general tariff on Bangladesh by just one percentage point but included a “mechanism allowing certain textile products to benefit from a total exemption from tariffs (…) The exemption will benefit Bangladesh, the world’s second-largest exporter of apparel after China. The sector accounts for more than 80% of the country’s total exports and around 11% of its gross domestic product” (Bloomberg, 09-02-2026).
In mid-February 2026, the US government was considering “reducing some tariffs on steel and aluminum products” (Financial Times, 13-02-2026).
Effects and internal resistance to tariffs
In early 2025, purchases surged in anticipation of the tariffs taking effect: “Official data from the US Department of Commerce shows that Washington’s trade deficit reached $465 billion between January and March 2025 – up from $278 billion a year earlier – due to the flood of advance imports” (El País, 27-08-2025). With these massive advance purchases, the impact of price increases resulting from the tariffs was postponed, but it has inevitably arrived, affecting the business network.
“The US distribution giant Walmart announced yesterday that ‘the tariffs imposed by President Donald Trump have led to an increase in the company’s costs.’ This rise in costs has been exacerbated by the US firm’s restocking efforts ahead of the holiday shopping season. (...) Walmart chief executive Doug McMillon explained that ‘(...) as we restock inventory at post-tariff price levels, we continue to see our costs rise every week (...)’” (Expansión, 22-08-2025).
“According to a report published yesterday by the JPMorgan Chase Institute, tariff payments by US medium-sized companies saw ‘a sharp increase starting in April 2025’, coinciding with the implementation of the first tariff hikes, after which they continued to rise gradually throughout 2025‘ and finally reached a level approximately three times higher than that recorded until early 2025’ (…) medium-sized companies employ some 48 million workers and generate one-third of private-sector GDP” (Expansión, 20-02-2026).
And these companies are passing on a significant portion of the increase to consumers: “After analyzing 25 million deliveries worth $4 trillion processed by US customs over the past year, they conclude that the country’s customs revenue has risen by $200 billion, but that the majority of this amount (96%) comes from the pockets of US consumers via price increases, since foreign exporters have absorbed barely 4% of the new tariffs into their costs. (…) The Tax Foundation estimates that every US household has had to bear an additional cost of $1,100 in 2025, which will rise to $1,500 this year” (Expansión, 26-01-2026). Opposition to the effects of the tariff offensive grew within the Republican camp itself: “On Wednesday, members of the Republican Party joined Democrats when the House of Representatives voted against Trump’s tariffs on Canada” (Financial Times, 13-02-2026).
Redirection of supply chains
While we have thus far traced the evolution of tariffs themselves, let us consider, before concluding, what the outcome has been in terms of the practical effects on the very cause that prompted the attempt to erect a tariff wall: the VOLCANO of production, whose avalanche of commodities floods the worldwide market, exporting its DEFLATION.
To begin with, China posted a record trade surplus of $1.3 trillion in 2025. The material basis for this VOLCANO is the reinvestment of the surplus value extracted from the working class into fixed capital, in the form of cheap robots to produce cheap commodities: “Chinese factories install around 280,000 industrial robots per year, half of the global total, placing the country’s robot density per worker above that of Germany and approaching that of South Korea, which leads the trend, according to the International Federation of Robotics. According to the Chinese research group MIR Databank, half of these robots are manufactured by domestic groups such as Chengdu CRP Robot Technology. (…) Their welding robots are sold at a price well below that of their Japanese rivals Yaskawa and Fanuc, as well as those of ABB and Kuka” (Financial Times, 01-09-2025).
As shown in the graph in the next column, the record trade surplus does not mean that all Chinese industries are experiencing the same level of export growth. For example, toys, clothing, and furniture have seen year-over-year declines of between 5% and 15%, but exports of batteries, automobiles, and integrated circuits – sectors that are substantially more important from the standpoint of capitalist production, have seen increases of over 20%.
The reality is that, to the extent that the US has managed to reduce the inflow of Chinese commodities, it has forced those commodities to flood into other markets, where the US also aims to sell, and where the mass of unsold commodities increases the pressure to export to markets such as the US itself.
What has occurred is a redirection of trade flows, but this has not led to a decrease but rather an increase in the total volume flooding the global market: “The United States was the only major region to record a decline in Chinese exports between January and February, with sales falling by 11%. Shipments to Africa surged by nearly 50% during that period—the fastest increase globally—followed by a rise of more than 29% to ASEAN countries in Southeast Asia and an increase of nearly 28% to the European Union” (Bloomberg, 10-03-2026).
The following graph shows how the volume of imports into the United States has increased by 2025.
The following graph shows the specific shift in export channels flooding the US: the portion not purchased from China is purchased from other Southeast Asian countries.
And this should not be interpreted to mean that China exports products to these countries so that they can be relabeled there and then exported to the US This has certainly been happening via Mexico and, more recently, Vietnam in particular, but it is not the main aspect of the phenomenon, far from it.
As supply chains have partially shifted to other countries, China has become the main exporter of the materials and machinery used and manufactured in those countries. For example: “Exports to China’s neighbor reached a record $12.5 billion last month, driven largely by the rapid shift of iPhone production by Apple Inc. suppliers from their Asian neighbor to India. However, those companies continue to rely on components and tools manufactured mostly in China. In July, Chinese companies shipped computer chips worth nearly $1 billion and phones and components worth billions of dollars more to India, according to data released by Beijing” (Bloomberg, 23-09-2025).
Schematic results
Notwithstanding the fact that we will revisit the trade war and the tariff-related struggles between various imperialist powers, we are interested in highlighting the following schematic results of the implementation of the ruling faction’s proposed tariff wall in the United States:
- The US has reached some investment agreements within its territory, most of which are still pending concrete details.
- However, the tariffs effectively imposed or agreed upon were lower than those announced.
- A few months later, the US had to begin withdrawing some of the tariffs to mitigate the impact of its own tariffs on its economy.
- The US’s dependence on other imperialist powers and its vulnerability to its own tariffs have been further exposed.
- Tariffs have harmed US companies themselves to such an extent that the Supreme Court has had to overturn the main policy of the current ruling faction.
- The US now faces thousands of legal claims demanding that it return to its own companies the money collected through tariffs.
- The US tariff overreach has forced other imperialist powers to strengthen ties, despite the contradictions that remain among them, deepening the US’s isolation.
- The US has had to give up on its attempt to bring China to its knees, lifting the additional tariffs, backing down on semiconductors, and exposing its vulnerabilities.
- Overproduction has not stopped, nor has the flood of commodities that is inundating the global market, and China’s trade surplus has continued to grow.
The annulment of the tariffs by the US Supreme Court itself brings us, quite significantly, to one week before the start of the Israeli and US attack on Iran (see p. 20). But before analyzing the development of this conflict, we must break down other factors that have accumulated over time and that, taken together, explain the causes and the detonation and development of this imperialist war.