By Felipe Alegría and Ricardo Ayala
There is a veritable earthquake occurring in the global division of labor (GDL) caused by the clash between the global nature of production chains and the national borders within which they operate. Trump, playing on inequalities between countries, is using tariffs in a quarrelsome and reactionary manner, with the aim of favoring to the bitter end an industrial sector that knows no borders and is not subject to tariffs. We are referring to the Big Tech Industry in their relentless accumulation of capital.
They are a small core of companies that can be counted on the fingers of one hand, American and Chinese, which are at the top of the value chain, completely ignore national borders, and are at the center of current capitalist accumulation. Meanwhile, the rest of the companies, within the framework of the current production chains, are subject to tariffs, which tie countries to their hierarchy within the GDL. Big Tech companies support and feed off this GDL without being subject to state borders.
The current situation, with Trump in the White House, has brought this contradiction to a head. Imperialist capitalism, bound by the mediocre foundations of private property and profit, unable to allow new devices and advances to flourish globally and without restrictions, subjects them to the limitations of nation states.
Trump does not intend to reindustrialize the US, but rather to bring back to the country industries that are at the cutting edge of technology (semiconductors) and, at the same time, impose colonial-style domination on the rest of the world, not only on the semi-colonial countries but also subjecting the second- and third-tier imperialist countries to unprecedented levels of subjugation.
Just look at the embargoes on China in the war for technological supremacy. Trump imposes on semi-colonial countries relations similar to those of the 19th century, based on the parasitism that Lenin already denounced. The example of the tariff on Brazil is enlightening.
He imposes a 50% tariff on Brazil and justifies it by saying that the Brazilian justice system cannot convict Bolsonaro, his protégé, for the attempted coup. However, all the serious bourgeois press in Brazil warns that the Bolsonaro affair is nothing more than a smokescreen. What is really behind Trump’s measure are the interests of Zuckerberg (Meta), Visa and MasterCard, opposition to the agreement reached with China for the construction of a railway to transport soybeans from Brazil to the port of Chancay on the Pacific coast (built and managed by the Chinese company Cosco), cutting Brazilian exports by 10 days… as well as Lula’s tirades on multilateralism and the place of the dollar in the world.
The newspaper O Globo, which is not exactly nationalist press, explains that before the launch of the instant electronic payment system “PIX,” controlled by the Brazilian central bank and completely free of charge, “Meta had announced that it would launch a payment service through WhatsApp. Brazil would be a kind of model for Mark Zuckerberg, the owner of Meta, to expand the operation to other markets. There was great anticipation because the messaging service [WhatsApp] was almost ubiquitous in the country,“ it adds, but ”PIX quickly caught on with Brazilians… Today, it is used by 93% of the country’s adult population (…) and has become the most popular payment method in Brazil. PIX has taken market share away from physical cash, receipts, and debit cards [Visa and Mastercard…], mainly. With the development of tools such as PIX Installments and PIX Automatic, it is also beginning to compete with credit cards, a segment that continues to grow in the country.”
In this article, we will also see how Big Tech, closely associated with the Pentagon and the military, are playing a fundamental role in the Israeli genocide in Gaza and the West Bank. On the other hand, as we will see throughout the article, the world order advocated by Trump in the service of Big Tech leads to the crushing of all dissent, first and foremost that of the US mass movement, then in the rest of the world, and finally that of the bourgeois sectors that do not fit into a world order where there is no “coffee for everyone.”
* * *
The US trade deficit is linked to the functioning of a monetary system based on the dollar, which requires the US to remain at the top of the global financial system and its technological oligopolies to continue setting the pace of the technological revolution.
To this end, Trump is fighting to reform the technology, media and telecommunications (TMT), bringing strategic technology sectors (microprocessors, batteries, etc.) to the US and ending dependence on the supply chain of China and countries whose future is unclear, especially Taiwan.
The US, as we analyze in the article, has a large surplus in its services balance. But this terminology hides more than it reveals about the content of these services. Gustavo Machado, a researcher at ILAESE and scholar of capital, made a valuable observation about the accumulation of capital by Big Tech, masked in the services balance sheet accounting, when he read the draft of this article.
The observation undoubtedly goes beyond the scope of this article: “They sell services because they merely sell the right to use goods that remain the property of US companies. When we pay Google, Windows, ChatGPT, etc., we do not buy the product, but rather pay for the right to use it. The new technological revolution underway has created an infinite number of these basic products.
It is the process called ‘servitization’, which is not the replacement of goods by services, but the replacement of the sale of goods by payment for the right to use them.”
This form of capital accumulation places Big Tech beyond the borders of states. These companies fly over national borders, rendering them obsolete, evading taxes, tariffs, and competition regulations.
“All of this is linked,” Gustavo adds, “to the new digital revolution, which has centralized the use of all electronic equipment in clouds and data centers, so that computers, televisions, and smartphones are nothing more than points of contact with these networks. This revolution has been the salvation of the United States from a technological standpoint over the last two decades, as it leads the software sector by a wide margin through gigantic global monopolies (Google, Microsoft, Meta, Apple, Amazon, etc.).
This sector is not subject to deindustrialization, as most of its core innovation and primary source code is produced in the United States. A quick and approximate survey I conducted shows that: 1. At Google (Alphabet), 60-70% of the core code is developed in the US. 2. At Microsoft, 70% of key product development (Windows, Azure) is done in the US. 3. At Meta (Facebook), 80% of algorithm and product innovation is done in the United States. These companies produce goods, merchandise: this is the digital industry. But their products, which are worth billions or even hundreds of billions of dollars, are not sold as goods, but rather billions of people, directly or indirectly (through advertising), pay for their use. This is what is now called “servitization,” which, from the point of view of official economic accounting, does not enter the trade balance, but rather the services balance.“
If we were to use Gustavo’s criteria and include the business of the Big Tech companies in the US trade balance, it would show a huge surplus. In truth, we are facing a super-scam that uses a supposed trade deficit as an excuse to impose a new order in which large technology companies reign supreme. The problem is that this requires the semi-colonization of Chinese supply chains and means that China is the main enemy to beat, with its data centers, digital currency, and companies that integrate instant messaging and online sales (one step ahead of Zuckerberg).
China, as a new imperialist power, tends to reproduce the same type of hierarchy in the global division of labor promoted by the US, concentrating high technology and value in China and extending the lower rungs of its production chain to its areas of influence. Today, as we explain in the article, China is struggling to survive the Trump blockade, amid considerable and growing overproduction of capital. At the same time, the higher China rises in the productive hierarchy and the more its productivity increases, the more incapable it becomes of generating enough work for its population.
There is a struggle between the US and China that only the future will resolve and that is determined by time: How long will it take China to get out of this crossroads? Will the US enter recession first? What if one, the other, or both are the target of an uprising by the working masses? And along with that, what will be the course of the war in Ukraine against Russian aggression, the development of the battle against Zionist genocide, the crisis and the mass response in Europe and in the semi-colonial countries of Latin America and the different continents? Here are the keystones of the situation.
1. The “tariff policy” of Trump
One of the big stories of Donald Trump’s election campaign was that, through the general imposition of tariffs, he would end the US trade deficit, bring industry back to the country, and cause a sharp increase in employment. He would also finance federal spending and reduce taxes. In short, the US would enter into a new golden age.
Certainly, the tariff conflict is playing a prominent role in these first months of the Trump administration. But the problem, in truth, is not tariffs. Trump’s tariff policy is one of the different mechanisms he is using to confront the decline of US imperialism and the challenges to its hegemony.
When the US, the great Western power that emerged victorious from World War II, maintained unquestionable productive and technological supremacy, that is, during the Cold War and afterwards, when it promoted neoliberal globalization, its banner was free trade. The US maintained a self-serving commercial generosity toward a number of countries, initially Europe and Japan, which were necessary for the expansion of its multinational businesses. The same can be said of its expansion into China.
Globalization meant that the industrial value chain, with its designs, raw materials, components, and assemblies, became global, spread throughout the world, with a special emphasis on China, where a huge number of industrial companies with a strong US presence were relocated. Globalization gave rise to what we knew as the Chimerica, where China, with a cheap and rights-free working class, became the great workshop of US multinationals (and other European countries and Japan).
During this period, particularly during the Chimerica era, the huge US trade deficit with China, far from being a problem, was the other side of a gigantic transfer of value from China (the value created by its working class) to the US, as a result of the unequal exchange between the two countries, which was the result of the enormous US technological advantage and the resulting productivity.
On the other hand, reducing economic exchange to the official trade balance is a crude deception, because it leaves out the services balance, which accounts for the enormous revenues collected by large US high-tech companies for the use of their products. Nor does the trade balance account for the financial services charged by US banks and financial institutions, which dominate world markets. And, of course, they forget to include in their calculations the transfer of profits by US multinationals, banks, and investment funds abroad.
As for job creation, Trump supporters such as Stephen Miran, head of Trump’s economic advisory council, reveal their demagoguery when they limit industrial return to high-tech manufacturing linked to the control of technology and its military applications. However, these industries are irrelevant in terms of job creation.
The problem of US imperialism is not the trade deficit with China, but the end of the Chimerica and the fact that China has become a serious technological competitor and represents a threat to the continuity of US hegemony. This and no other is its big problem.
The tariffs that Trump is negotiating seek to slow down Chinese development, aggravate its overproduction of capital, and torpedo the expansion of its supply and assembly chains in neighboring countries, on which he has announced exorbitant trade tariffs of between 25% and 40%. At the same time, Trump seeks to establish a trade embargo on US high-tech exports to China (particularly those related to next-generation semiconductors) and also to prevent other countries from linking up with Chinese technology networks. However, the US is also heavily dependent on China for much of its supply chain, particularly for rare earths, where China currently has a virtual monopoly.
The tariffs announced by Trump on semi-colonial countries are exorbitant, with virtually all of them having to pay a toll of more than 25% to sell in the US, forcing them to sell their exports at bargain prices. They represent the imposition of a degree of plunder clearly greater than that suffered for decades and seek servile submission to the US. The negative consequences for workers in these countries will be enormous. The case of the 50% tariff on Brazil (with which the US has a trade surplus) is an extreme expression of Trump’s policy. The argument of Bolsonaro’s trial to justify it, beyond its indecency, hides the defense of the interests of large US technology and financial companies.
In the case of the European Union (EU), the US’s largest trading partner, Trump has just threatened in a letter to impose general tariffs of 30%, which, according to European Trade Commissioner Maros Sefcovic, “would practically prohibit trade.” This is an extremely aggressive policy that Trump dares to implement by exploiting the differences in interests between the various EU member states, which Trump seeks to deepen. Similarly, Trump has also caused a real shock in Japan and South Korea, which have been threatened with or already punished by a 25% general tariff.
2. Trump’s aggressive and blackmailing policy does not reflect the strength of US imperialism but the need to rebuild its hegemony in crisis
For many decades, since the end of World War II, from which it emerged as the great victor, the US has been the undisputed dominant power. Its overwhelming hegemony was based on its economic supremacy, founded on superior productivity, its size, and its unquestionable global financial dominance. Throughout this period, the US made use of so-called multilateral institutions where, under its leadership, rules were agreed upon, giving an air of democracy and allowing, in a favorable economic situation, the various powers and semi-colonial bourgeoisies to also get a share of the spoils.
Of course, when necessary, the US imposed its will directly, as when Nixon ended the gold standard or Reagan forced the Plaza Accord. The culmination (and final stage) of this process was neoliberal globalization, with the famous “Washington Consensus” and the complete freedom of movement of capital and goods.
In the background of this process, of course, was always the US military, with its gigantic arsenal, its more than 700 bases around the world, and its selective military interventions, which have continued over time, in addition to its covert operations (military coups in Indonesia, Chile, etc.).
However, US supremacy began to enter into crisis with the emergence of Chinese imperialism in 2008. As the article “China, the emerging imperialist power in conflict with the US”[1] points out: “The US continues to maintain global economic hegemony, sustained by overall productivity that exceeds that of China, to which must be added its global financial (and, of course, geopolitical and military) dominance. The US remains the leading power in terms of the production of final consumer goods (digital industry, cutting-edge electronics, pharmaceuticals, and aerospace). China, however, already accounts for 12.24% of world production in this field and is, at the same time, the largest global producer of means of production (30.83% in 2023). It is by far the ‘world’s manufacturing superpower’ and, at the end of 2024, it was the world’s largest economy in terms of GDP ‘purchasing power parity’ and the second largest in terms of current dollar GDP after the US. To all this must be added the decisive factor represented by its emergence as a major technological power.
Trump’s aggressive approach, expressed in his ‘tariff war’ and embargo policy, shows the deterioration of US economic primacy in cutting-edge sectors and reflects, overall, the loss of global influence.
Under Trump, the US has begun to act outside multilateral institutions[2]. The very foundation of US financial hegemony has also begun to show cracks in the face of the size of the federal debt and the emerging weight of other currencies in world trade.
3. A global strategy to reaffirm US supremacy
Trump’s tariff offensive, which currently occupies a prominent place in the media around the world, is only part of a global strategy to try to revalidate US supremacy. It integrates different elements:
a. Ensuring the maintenance of US technological superiority over China.
b. Preserving US dominance of the global financial system.
c. Reshaping the global division of labor: 1) concentrating strategic technological production in the US; 2) stifling Chinese development and expansion and exacerbating its overproduction and excess capital; 3) squeezing the others; and 4) subjecting semi-colonial countries to a qualitatively higher degree of plunder.
d. Nullify the EU as a potential alternative pole, marginalizing it in the international sphere and promoting divisions within it.
e. Ensure the continuity of US military supremacy in an unbridled arms race. This supremacy is linked to technological hegemony and the central economic role of the US arms industry, of which the Big Techs are a prominent part.
f. 1) Make its allies in Europe and Asia pay for the deployment of its troops and redistribute and concentrate them in the Indo-Pacific region, opposite China; 2) Delegate to Israel the task of policing the Middle East, supporting the Palestinian genocide and reconfiguring the Middle East around the Abraham Accords with the reactionary Gulf regimes; and 3) Hand over part of Ukraine to Putin, at the expense of the Ukrainian people, and drive Russia away from China.
g. Modify the pattern of exploitation in the US by lowering wages, pensions, and labor rights, cutting basic services (Medicare, Medicaid, education, social assistance), and reducing taxes on the richest.
The deportation of immigrant workers seeks to impose terror, reduce their wages, and degrade their working conditions to a state of semi-slavery. Elon Musk and then Sergey Brin (co-founder of Google) have been among the first public figures to demand the establishment of 60-hour or longer work weeks, emulating Chinese magnate Jack Ma (Alibaba), a staunch defender of the 9-9-6 system (from 9 a.m. to 9 p.m., six days a week) in force in large sectors of the Chinese economy.
h. To advance, therefore, towards authoritarian presidentialism: a political regime defined by severe cuts to democratic rights and the disappearance of the balance of powers characteristic of a liberal democracy, to the benefit of a presidential Bonapartism with virtually no checks and balances. This policy, far from being limited to the US, is being actively promoted throughout the world.
4. The battle for technological superiority
We have just pointed out that maintaining its technological hegemony is a vital priority for the US. This hegemony is particularly linked to its big tech companies, its developments in artificial intelligence (AI) and the associated latest-generation semiconductors (chips). Without a doubt, the enemy to beat here is China.
In the article cited in Marxism Today No. 41, we said: “Shortly after Trump took office, major US technology companies announced a multi-billion-dollar investment of US$500 billion at the White House. The objective: to secure US monopoly over AI, necessary for the global appropriation of technological superprofits and for US global hegemony.“ [However] ”the emergence, a few days later, of the Chinese AI chatbot DeepSeek challenged these plans and cast doubt on US primacy in AI and the role that China will play in this vital field.”
Similarly, the new Huawei chip (Ascend 920C) for AI should be noted, as it represents a significant advance, gives China a significant degree of autonomy from Nvidia, and allows it to market it in the so-called “Global South,” starting with Southeast Asia, creating an area linked to its technological model.
The US currently maintains its technological hegemony, although the end of the story has not yet been written. It is not surprising that Jake Sullivan, Biden’s former national security adviser, stated at a conference entitled Special Competitive Studies Project (September 16, 2022) that “they would not allow China to lead AI because the country’s geopolitical dominance was subordinate to hegemony in this field.”
The big tech companies, i.e., the Magnificent Seven (Alphabet/Google, Amazon, Apple, Meta/Zuckerberg, Microsoft, Nvidia, Tesla), plus the rest of Silicon Valley’s tech oligopolies such as OpenAI, Palantir (Peter Thiel) and Anduril, have integrated their businesses with the military-industrial complex, alongside the now classic cohort of Boeing, Lockheed Martin, Northrop Grumman and General Dynamics. A merger between the US tech elite and the military elite is taking place before our eyes, manifested in the Pentagon’s recent appointment of four lieutenant generals to the senior management of Meta, OpenAI, and Palantir. We should not be surprised, then, that these high-tech companies are playing a key role as necessary collaborators with the Israeli army in the Palestinian genocide, as recently denounced by Francesca Albanese, the UN Special Rapporteur.
The tech oligopolies and the military-industrial complex, closely linked to the big banks and investment funds of Wall Street, form the core of US capitalism. The Trump cabinet is its political expression.
5. Maintaining military supremacy
Military supremacy is the area where US dominance remains strongest and where Trump relies most heavily, as we have seen in his policy of modernizing the arsenal, his close collaboration with Israel in the Palestinian genocide, and the bombing of Iran’s nuclear facilities.
We are experiencing a powerful wave of rearmament in which every week we witness new military developments, including the modernization and strengthening of nuclear arsenals, as well as the massive emergence of new-generation weapons equipped with new technologies, particularly AI, and adapted to new forms of warfare, in many cases tested in Ukraine and Gaza.
The US leads global military spending (US$997 billion/year), followed at a distance by China (US$314 billion), Russia (US$149 billion) and, further behind, Germany (US$88.5 billion), the United Kingdom (US$81.8 billion), France (US$64.7 billion)[3] and others.
Amidst rampant rearmament, Trump is working on two fronts: on the one hand, making its allies in Europe and Asia pay for the global deployment of its troops and, on the other, trying to redistribute and concentrate its forces in the Indo-Pacific region, opposite China[4], while delegating the task of policing the Middle East to the genocidal state of Israel and seeking a deal with Putin’s Russia.
Trump has recently succeeded, in a repulsive display of servility by the European NATO countries (whose military systems are not European but primarily national), in getting them to increase their military budgets to 5% of their GDP. This brutal increase, which implies severe attacks on the welfare state, comes on top of continued technological dependence on US weapons systems and is accompanied by huge orders from large US arms companies. The latest US arms shipment to Ukraine will be paid for by the European NATO countries.
All this considerably strengthens the US arms industry, reinforces the global economic weight of its exports and maintains US political and military primacy. For example, the F35 fighter jets, manufactured by Lockheed Martin, which are the most advanced military aircraft used by most EU countries, cannot take off without permission from the Pentagon.
6. Preserving the dominance of the international financial system
One of Trump’s central objectives is to maintain the dominance of the global financial system, in place since World War II, based on the role of the dollar as the universal currency and reserve currency, dominant in global trade and finance. As a result, a veritable mountain of federal debt, 25% of Treasury bonds, is held by other countries. This role of the dollar is the “exorbitant privilege” referred to by former French President Giscard d’Estaign: it allows the US to finance its budget and trade deficits with money from other countries.
The dollar is not in danger of being dethroned in the short term. However, the size of the federal debt (which no longer enjoys the “maximum creditworthiness” rating given by rating agencies) is opening up significant cracks in its role as a universal currency. According to the Federal Reserve Bank of St. Louis (a member of the Federal Reserve), federal debt in 2024 was 120.7% of US GDP (US$40 trillion!). The rating agency Moody’s predicts that debt will reach 135% in 2035, with a federal deficit of 9% of GDP (in 2024 it was 6.4%). The Congressional Budget Office has indicated that the recently passed tax law will mean an increase of $3.3 trillion in federal debt over 10 years.
All this represents a huge increase in public spending on interest payments, which, like a snake biting its own tail, undermines the international role of the dollar. Added to this are the effects of Trump’s tariffs, which will also strengthen the role of other currencies (such as the yuan and the euro) in global trade.
7. Transforming American liberal democracy into a Bonapartist presidential regime
A key component of Trump’s strategy is the transformation of American liberal democracy into a Bonapartist presidential regime. This means dissolving the traditional separation of powers in favor of unlimited presidential power, imposing severe restrictions on democratic freedoms and rights, repressing dissent, establishing tight control over the population, subjugating the media, and militarizing the country.
Robert Reich[5] denounces in a recent article “the inherent danger of Palantir’s super database[6] [obtained from Elon Musk’s DOGE] on all Americans [which includes personal, employment, medical, banking, and social media data], fed by artificial intelligence.”
This policy, far from being limited to the US, encompasses the rest of the world and is expressed in Trump’s open collaboration with the German AfD, Bolsonaro, Meloni, Orbán, Milei, Bukele, and other far-right forces.
[1] Published in Marxismo Vivo magazine, issue 21
[2] Trump has cornered the World Trade Organization (WTO), withdrawn from the WHO, the International Criminal Court (ICC), the UN Human Rights Council, and the Paris Climate Change Agreement. He already did so with UNESCO in 2017. And he has had no qualms about claiming the annexation of Panama, Canada, and Greenland (both NATO members, moreover), contrary to UN precepts.
[3] According to the SIPRI institute in Stockholm.
[4] The hottest military conflict point with China is undoubtedly the Taiwan Strait and the South China Sea. In September 2024, Admiral Lisa Franchetti, then head of the US Navy, stated that naval combat in the Red Sea and the Black Sea served to “prepare for a Chinese attack on Taiwan”: “I am very focused on 2027.” Trump’s new Secretary of Defense, Pete Hegseth, has stated in an internal memo that the defense of Taiwan is the only scenario for which a major war is planned, which means reinforcing the US military presence in the region, particularly submarines, bombers, drones, special units, and marines.
[5] https://open.substack.com/pub/robertreich/p/palantir-the-worst-of-the-corporate?utm_campaign=post&utm_medium=web
[6] Palantir is a Silicon Valley technology company owned by Peter Thiel, a rabid right-winger. Originally from South Africa, he is one of Trump’s biggest supporters and the godfather of Vice President Vance. Closely associated with the Pentagon, he is involved on the front lines of the Palestinian genocide in Gaza and the West Bank.
